Greg Gerber posted on March 17, 2008 10:20
VENTURA, Calif. -- Affinity Group, Inc., the parent company of Camping World, Freedom Roads and many RV-related clubs and publications, released its 2007 financial statement Friday.
The company reported revenues of $562.2 million, an increase of 9.3 percent over the 2006 level of $514.6 million. Gross profit was listed as $210.2 million compared to $193.8 million in 2006. The company posted net income of $6.3 million, compared to a net loss of $17.3 million in 2006.
However, same store sales continue to fall at Camping World locations. Retail revenue for 2007 of $321.7 million increased approximately $31.3 million or 10.8 percent from 2006. Store merchandise sales increased $24.8 million over 2006 primarily due to a $38.2 million revenue increase from the addition of 36 new stores over the past two years.
Same store sales decreased $13.4 million, or 6.8 percent, compared to a 3.5% decrease in 2006. Same store sale calculations for a given period include only those stores that were open both at the end of that period and at the beginning of the preceding fiscal year.
In addition, installation and service fees increased $1.3 million, and product extended warranty sales increased $1.0 million. These increases were partially offset by a $0.3 million decrease in mail order revenue.
Membership services revenues for 2007 of $149.9 million increased by $12.5 million or 9.1 percent from 2006. This revenue increase was largely attributable to a $6.7 million increase in extended vehicle warranty program revenue due to continued growth in the sales of one-year renewable warranty products. That included warranty sales through the network of Good Sam dealers, a $2.5 million revenue increase primarily due to increased enrollment in the Camping World President’s Club and the Camp Club USA, partially offset by reduced enrollment in the Golf Card Club and Coast to Coast Club, a $1.7 million increase in emergency road service revenue attributable to increased enrollment and price increase.
It also included a $1.2 million increase in marketing fee revenue from health and life insurance products, a $0.7 million increase in dealer program marketing revenue and a $0.4 million increase in marketing fee income recognized on RV financing products. These increases were partially offset by a $0.7 million revenue reduction due to the elimination of the RV Today television program.
Publications revenues for 2007 of approximately $90.6 million increased by $3.8 million or 4.4 percent from 2006. This increase was primarily attributable to $2.6 million of revenue associated with the acquisition of the publishing assets of American Guide Services, Inc. in August 2006, $2.1 million of revenue associated with consumer shows acquired over the last two years and $0.9 million of additional annual directory revenue.
These increases were partially offset by a $0.7 million revenue decrease from the elimination of the Cruising Rider title, a $0.5 million decrease in campground atlas revenue, which is scheduled for its bi-annual update and reprint in 2008, a $0.3 million decrease in advertising revenue for the RV magazine group, and a $0.3 million revenue decrease due to ten fewer issues of Snow Week magazine in 2007.
The company recorded $1.6 million of income tax expense for 2007, compared to a $22.3 million income tax expense for 2006. This expense decrease was primarily due to Affinity Group Holding Company's S corporation change of tax status election effective for the second quarter of 2006, which included AGI and all of its subsidiaries, with the exception of Camping World, Inc. and its wholly-owned subsidiaries which will remain Subchapter C corporations.
As a result, all deferred tax assets and liabilities were revalued with the exception of those related to Camping World, Inc. and its wholly-owned subsidiaries and other potential built-in gains. Further, the company increased its valuation allowance by $2.7 million for 2007 as it was determined that it is more likely that the company would have insufficient taxable income in the current, carryback, or carryforward periods under the tax laws to realize the future tax benefit of its deferred tax assets.
Segment Profit
Segment profit of $59.9 million for 2007 (before unallocated depreciation and amortization, general and administrative, interest, debt restructuring and income tax expense) increased by approximately $5.5 million, or 10 percent, from 2006.
Membership services segment profit of $50.5 million in 2007 increased by $5.8 million, or 13 percent from 2006. This increase was primarily attributable to a $3.9 million increase in profit associated with increased enrollment and increased interest income for the ERS programs, a $1.3 million increase in profit in the extended vehicle warranty program and a $0.6 million increase in profit from Camp Club USA.
Publication segment profit for 2007 of $17.5 million decreased by $2.3 million, or 11.8 percent from $19.8 million in 2006. The decrease in gross profit margin was primarily due to reduced profit related to the consumer shows of $1.0 million primarily related to increased amortization expense, reduced gross profit from the RV-related titles of $1 million and $0.3 million of additional new product development costs and overhead.
Retail segment loss for 2007 of $8.1 million decreased by $2.0 million from 2006. This reduced segment loss resulted primarily from a $14.2 million increase in gross profit and a $0.5 million decrease in depreciation and amortization expense partially offset by a $10.8 million increase in selling, general and administrative expenses primarily related to the increase in new stores, a $1.7 million increase in net interest expense and a $0.2 million loss on sale of equipment.
To read the complete financial statement, click here.