Transwestern 10-Q 2001 Q3 Quarterly report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

(Mark one)

[X]     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2001.

[   ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM __________ TO __________.

Commission File Number 333-42117
 
TRANSWESTERN HOLDINGS L.P.
(Exact name of registrant as specified in its charter)

DELAWARE	33-0560667
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

8344 CLAIREMONT MESA BOULEVARD SAN DIEGO, CALIFORNIA	92111
(Address of principal executive offices)	(Zip Code)

(858) 467-2800
(Registrant’s telephone number, including area code)

     Indicate by check mark whether each registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

TABLE OF CONTENTS

		CONSOLIDATED BALANCE SHEETS
		CONSOLIDATED STATEMENTS OF OPERATIONS
		CONSOLIDATED STATEMENTS OF CASH FLOWS
		NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
	ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED)
	ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
PART II. OTHER INFORMATION
	ITEM 1. LEGAL PROCEEDINGS
	ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
	ITEM 3. DEFAULTS UPON SENIOR SECURITIES
	ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
	ITEM 5. OTHER INFORMATION
	ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
SIGNATURES

TRANSWESTERN HOLDINGS L.P.
FORM 10-Q INDEX

		PAGE
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Balance Sheets as of September 30, 2001 (unaudited) and December 31, 2000		3
	Unaudited Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2001 and 2000		4
	Unaudited Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2001 and 2000		5
	Notes to Unaudited Consolidated Financial Statements		6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		13
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		19
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings		19
Item 2.	Changes in Securities and Use of Proceeds		20
Item 3.	Defaults upon Senior Securities		20
Item 4.	Submission of Matters to a Vote of Security Holders		20
Item 5.	Other Information		20
Item 6.	Exhibits and Reports on Form 8-K		20
SIGNATURES			21

2

TRANSWESTERN HOLDINGS L.P.
CONSOLIDATED BALANCE SHEETS
(in thousands)

			SEPTEMBER 30,			DECEMBER 31,
			2001			2000
			(UNAUDITED)
ASSETS
Current assets:
	Cash		$	28,844		$	1,961
	Trade receivables, (less allowance for doubtful accounts of $12,594 at September 30, 2001 and $10,419 at December 31, 2000)			94,763			48,988
	Deferred directory costs			24,084			11,848
	Other current assets			3,558			1,334
		Total current assets		151,249			64,131
Non-current assets:
	Property, equipment and leasehold improvements, net			6,856			4,238
	Acquired intangibles, net			269,906			90,033
	Other assets, primarily debt issuance costs, net			14,586			8,627
		Total non-current assets		291,348			102,898
Total assets			$	442,597		$	167,029
LIABILITIES AND PARTNERSHIP DEFICIT
Current liabilities:
	Accounts payable		$	15,981		$	9,908
	Salaries and benefits payable			14,646			5,378
	Accrued acquisition costs			12,269			2,095
	Accrued interest			10,449			2,715
	Other accrued liabilities			1,697			812
	Customer deposits			29,406			17,449
	Current portion, long-term debt			4,844			2,041
	Equity trust distribution payable			2,902			—
		Total current liabilities		92,194			40,398
Long-term debt:
	Series D 9 5/8% Senior Subordinated Notes			141,230			141,381
	Series E 9 5/8% Senior Subordinated Notes			74,580			—
	Series B 11 7/8% Senior Discount, Notes			50,882			46,677
	Senior credit facility Term A Loan			31,500			62,678
	Senior credit facility Term B Loan			197,500			39,700
	Revolving loan			—			22,500
	Other long-term debt and liabilities			800			1,595
		Total non-current liabilities		496,492			314,531
		Total liabilities		588,686			354,929
Notes receivable from partners				(764	)		—
Partnership deficit				(145,325	)		(187,900	)
Total liabilities and partner deficit			$	442,597		$	167,029

See accompanying notes.

3

TRANSWESTERN HOLDINGS L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands)

		THREE MONTHS ENDED						NINE MONTHS ENDED
		SEPTEMBER 30,						SEPTEMBER 30,
		2001			2000			2001			2000
Net revenues		$	63,634		$	43,117		$	158,765		$	116,611
Cost of revenues			14,949			8,436			34,348			22,490
Gross profit			48,685			34,681			124,417			94,121
Operating expenses:
	Sales and marketing		29,015			18,155			73,331			49,718
	General and administrative		26,065			11,428			51,762			32,100
	Recapitalization transaction costs		—			—			15,371			—
	Contribution to equity compensation plan		616			—			5,805			—
Total operating expenses			55,696			29,583			146,269			81,818
Income (loss) from operations			(7,011	)		5,098			(21,852	)		12,303
Other income, net			343			122			287			288
Interest expense			(11,488	)		(8,051	)		(27,429	)		(22,945	)
Net loss before extraordinary items		$	(18,156	)	$	(2,831	)	$	(48,994	)	$	(10,354	)
Extraordinary loss			—			—			(3,515	)		—
Net loss		$	(18,156	)	$	(2,831	)	$	(52,509	)	$	(10,354	)
Net loss allocated to General Partner units		$	(312	)	$	(49	)	$	(903	)	$	(178	)
Net loss allocated to Limited Partner units		$	(17,844	)	$	(2,782	)	$	(51,606	)	$	(10,176	)
Net loss per General Partner unit		$	(31.9	)	$	(5.0	)	$	(92.2	)	$	(18.2	)
Net loss per Limited Partner unit		$	(9.4	)	$	(1.5	)	$	(27.1	)	$	(5.4	)

See accompanying notes.

4

TRANSWESTERN HOLDINGS L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)

			NINE MONTHS ENDED
			SEPTEMBER 30,
			2001			2000
OPERATING ACTIVITIES
Net loss			$	(52,509	)	$	(10,354	)
Adjustments to reconcile net loss to cash provided (used) by operating activities:
	Loss on early extinguishment of debt			3,515			—
	Write-down of investment of Eversave			250			—
	Depreciation and amortization			33,425			20,627
	Amortization of deferred debt issuance costs			1,407			868
	Amortization of premium			—			(152	)
	Amortization of Senior Discount Note			4,231			3,751
	Provision for doubtful accounts			16,742			11,434
	Changes in operating assets and liabilities, excluding the effects of acquisitions:
		Trade receivables		(1,350	)		(2,934	)
		Write-off of doubtful accounts		(14,567	)		(13,402	)
		Recoveries of doubtful accounts		1,468			888
		Deferred directory costs		(5,932	)		(3,463	)
		Other current assets		330			(102	)
		Accounts payable		(4,853	)		(306	)
		Accrued liabilities and other current liabilities		(13,089	)		(1,975	)
		Accrued interest		7,734			4,030
		Customer deposits		10,005			5,871
		Equity trust payable		2,902			—
Cash provided (used) by operating activities				(10,291	)		14,781
INVESTING ACTIVITIES
Purchase of property, equipment and leasehold improvements				(970	)		(1,826	)
Cash paid for acquisition of WorldPages.com net of cash acquired				(140,299	)		—
Acquisition of other directories				(14,748	)		(30,626	)
Deferred financing costs and other assets				(7,440	)		(1,121	)
Cash used for investing activities				(163,457	)		(33,573	)
FINANCING ACTIVITIES
Borrowings under long-term debt agreements:
	Revolving credit facility			61,700			49,500
	Senior term loans			235,220			40,000
	9 5/8% Senior Subordinated Notes			74,553			—
Repayments of long-term debt
	Revolving credit facility			(84,200	)		(65,400	)
	External debt payments			—			(3,315	)
	Senior term loans and note payable			(107,395	)		(1,308	)
	Repayment of debt assumed in acquisition of WorldPages.com			(73,534	)		—
Contributions from partners				124,291			(37	)
Redemption of partner units				(30,004	)		—
Cash provided by financing activities				200,631			19,440
Net increase in cash				26,883			648
Cash at beginning of period				1,961			1,167
Cash at end of period			$	28,844		$	1,815
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest			$	7,763		$	14,211

See accompanying notes.

5

TRANSWESTERN HOLDINGS L.P.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(ALL DOLLAR AMOUNTS ARE IN THOUSANDS)

1. GENERAL

     The accompanying unaudited consolidated financial statements include the accounts of TransWestern Holdings L.P. (“Holdings”) and its wholly owned subsidiary, TransWestern Publishing Company, LLC (“TransWestern” or “Company”). All significant inter-company transactions have been eliminated. Holdings’ only assets consist of TransWestern’s Member Units. TWP Capital Corp. (“Capital”) is a wholly-owned subsidiary of Holdings and TWP Capital Corp. II (“Capital II”) is a wholly-owned subsidiary of TransWestern. Neither Capital nor Capital II has any significant assets or operations. Target Directories of Michigan, Inc. (“Target”) and WorldPages, Inc. (“WorldPages”) and its subsidiaries are subsidiaries of TransWestern.

     These financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and, in the opinion of management, reflect all adjustments necessary to present fairly the financial position, results of operations and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States. All adjustments were of a normal recurring nature. These financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Form 10-K for the fiscal year ended December 31, 2000. The 10-K is available on the Internet at http://www.sec.gov.

     In June 2001, Holdings completed a recapitalization in which it received equity and debt proceeds totaling $435,055 (“the Recapitalization”). In the Recapitalization, New Investors including Thomas H. Lee Equity Fund V, L.P. and its affiliates along with other investors, existing limited partners of Holdings and the Partnership’s senior managers invested new and continuing capital of $125,055 in Holdings. The proceeds of the equity investment together with approximately $310,000 of Senior Credit Facility and senior subordinated debt financing were used (i) for $30,004 of consideration paid to redeem a portion of the limited partnership interests from certain existing limited partners, (ii) to acquire all of the outstanding stock and stock options of WorldPages for $141,417, (iii) to repay $137,502 of outstanding debt and accrued interest under TransWestern’s credit facilities, (iv) to repay $74,201 of existing WorldPages, debt and accrued interest after the consummation of the acquisition, (v) to pay $28,731 of costs, fees, and expenses associated with the Recapitalization and acquisition of WorldPages, (vi) to pay $3,250 to senior management for bonuses and deal fees associated with the Recapitalization of Holdings, (vii) to pay $5,189 to the Equity Trust for payment to senior and middle management associated with the Recapitalization, (viii) to pay $2,696 in fees and the discount associated with the issuance of $75,000 of Series E Senior Subordinated Notes and (ix) $12,065 for general corporate purposes, including working capital.

     The Recapitalization was financed with (i) the $125,055 equity investment, (ii) borrowings of $235,000 under a $300,000 (maximum) variable interest rate Senior Credit Facility and (iii) the issuance of $75,000 of Senior Subordinated Notes. The assets and liabilities of Holdings are stated at historical cost and were not revalued to fair market value at the date of the Recapitalization. As a result of the Recapitalization, Thomas H. Lee Equity Fund V, L.P. and its affiliates collectively own approximately 68% of the equity of Holdings.

6

TRANSWESTERN HOLDINGS L.P.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(ALL DOLLAR AMOUNTS ARE IN THOUSANDS)

2. NEW ACCOUNTING PRONOUNCEMENTS

     In July 2001, the Financial Accounting Standards Board (FASB) issued FASB Statement Nos 141 and 142 (FAS 141 and FAS 142), “Business Combinations” and “Goodwill and Other Intangible Assets”. FAS 141 replaces APB 16 and eliminates pooling-of-interests accounting prospectively. It also provides guidance on purchase accounting related to the recognition of intangible assets and accounting for negative goodwill. FAS 142 changes the accounting for goodwill from an amortization method to an impairment-only approach. Under FAS 142, goodwill will be tested annually or whenever events or circumstances occur indicating that goodwill might be impaired. FAS 141 and FAS 142 are effective for all business combinations completed after June 30, 2001. Upon adoption of FAS 142, amortization of goodwill recorded for business combinations consummated prior to July 1, 2001 will cease, and intangible assets acquired prior to July 1, 2001 that do not meet the criteria for recognition under FAS 141 will be reclassified to goodwill. Companies are required to adopt FAS 142 for fiscal years beginning after December 15, 2001, but early adoption is permitted under certain circumstances. In connection with the adoption of FAS 142, TransWestern will be required to perform a transitional goodwill impairment assessment. TransWestern has not yet determined the impact these standards will have on its results of operations and financial position.

7

TRANSWESTERN HOLDINGS L.P.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(ALL DOLLAR AMOUNTS ARE IN THOUSANDS)

3. FINANCIAL STATEMENT DETAILS

Property, Equipment and Leasehold Improvements

		SEPTEMBER 30,			DECEMBER 31,
		2001			2000
Land and building		$	611		$	183
Computer and office equipment			10,168			7,310
Furniture and fixtures			2,361			1,881
Leasehold improvements			544			458
			13,684			9,832
Less accumulated depreciation and amortization			(6,828	)		(5,594	)
	Net property, equipment, and leasehold	$	6,856		$	4,238

Acquired Intangibles

		SEPTEMBER 30,			DECEMBER 31,
		2001			2000
Goodwill		$	158,089		$	—
Customer base and assembled work force			211,258			158,021
Other			3,845			2,984
			373,192			161,005
Less accumulated amortization			(103,286	)		(70,972	)
	Acquired intangibles, net	$	269,906		$	90,033

Other Assets

		SEPTEMBER 30,			DECEMBER 31,
		2001			2000
Debt issuance costs		$	18,277		$	12,893
Less accumulated amortization			(3,691	)		(4,516	)
	Debt issuance costs, net	$	14,586		$	8,377
Investment in Eversave, carried at cost			—			250
Other assets, net		$	14,586		$	8,627

8

TRANSWESTERN HOLDINGS L.P.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(ALL DOLLAR AMOUNTS ARE IN THOUSANDS)

4. LONG TERM DEBT

     In connection with the recapitalization of TransWestern in June 2001, TransWestern entered into a new $300.0 million credit facility and drew $35.0 million under the Term A Loan and $200.0 million under the Term B Loan. In addition, in May 2001, TransWestern issued $75.0 million of Series E 9 5/8% Senior Subordinated Notes due 2007, (excluding unamortized discount of $0.4 million). Also in connection with the Recapitalization and acquisition of WorldPages, TransWestern re-paid $137.5 million outstanding under its prior credit facility and $74.2 million of debt it assumed as part of the WorldPages acquisition.

     As of September 30, 2001 Holdings had total outstanding long term indebtedness of $496.5 million, including $140.0 million of Series D Senior Subordinated Notes due 2007 and $75.0 million of Series E 9 5/8% Senior Subordinated Notes due 2007, (excluding net unamortized premium of discount of $0.8 million), $50.5 million of Holdings 11 7/8% Senior Discount Notes due 2008, (“Discount Notes”), $31.5 million of outstanding borrowings under the senior credit facility Tranche A Term Loan, $197.5 million outstanding under the senior credit facility Tranche B Term Loan, and $0.8 million in acquisition related debt, all of which ranks senior to the Series D and E notes. As of September 30, 2001 TransWestern had no outstanding borrowings under its revolving credit facility, with total borrowing availability of $65.0 million.

The following is a summary of the Holding’s principal maturities at September 30,

2002	$	4,625
2003		5,500
2004		7,250
2005		8,125
2006		9,000
Thereafter		466,382
	$	500,882

5. DIRECTORY ACQUISITIONS

     In the nine months ended September 30, 2001 TransWestern completed a number of purchase acquisitions. The accompanying consolidated financial statements include the results of operations from the date of acquisition. The acquisitions are as follows:

     BRI Publishing, Inc. On January 22, 2001, TransWestern purchased certain tangible and intangible assets of BRI Publishing, Inc. for a total of $0.7 million. TransWestern acquired one directory in the Lafayette, Louisiana area.

     Pacific West Yellow Pages. On February 9, 2001, TransWestern purchased certain tangible and intangible assets of Pacific West Yellow Pages for a total of $1.2 million. TransWestern acquired three directories in the Sacramento, California area.

     Silver Pages, Inc. On March 2, 2001, TransWestern purchased certain tangible and intangible assets of Silver Pages, Inc. for a total of $2.6 million. TransWestern acquired one directory in Northern California and one directory in Nevada.

     Rutter Directories, LLC. On March 30, 2001, TransWestern purchased certain tangible and intangible assets of Rutter Directories, LLC for a total of $2.1 million. TransWestern acquired five directories in Indiana.

     Alliance Media Group, Inc. On April 9, 2001, TransWestern purchased certain tangible and intangible assets of Alliance Media Group for a total of $6.0 million in cash. TransWestern acquired two directories in Kentucky and six directories in Texas.

9

TRANSWESTERN HOLDINGS L.P.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(ALL DOLLAR AMOUNTS ARE IN THOUSANDS)

     WorldPages. On June 28, 2001, TransWestern purchased the outstanding stock and assumed the debt of WorldPages for approximately $216.0 million. WorldPages is a provider of 42 directories in various markets throughout the United States.

     These acquisitions have been accounted for under the purchase method of accounting and accordingly the purchase prices have been allocated to the tangible and intangible assets acquired based on their respective fair values at the date of acquisition. The allocation of the purchase price of WorldPages is based on a preliminary allocation and is allocated as follows:

				Other
	WorldPages			Acquisitions			Total
Net tangible liabilities assumed	$	(45,180	)	$	(1,293	)	$	(46,473	)
Customer list		36,800			13,137			49,937
Goodwill		158,088			—			158,088
Noncompete		700			161			861
Assembled workforce		1,600			—			1,600
Total consideration	$	152,008		$	12,005		$	164,013

     Total consideration issued in the purchase acquisitions is as follows:

			Other
	WorldPages		Acquisitions		Total
Cash paid for acquisition	$	141,417	$	11,800	$	153,217
Merger fees incurred		10,591		205		10,796
	$	152,008	$	12,005	$	164,013

     Assuming that the above acquisitions had occurred on the first day of TransWestern’s nine month periods ended September 30, 2001 and September 30, 2000, the unaudited pro forma results of operations would be as follows:

	Nine months ended September 30,
	2001			2000
	(Unaudited)
Net revenues	$	237,829		$	197,094
Net loss		(71,963	)		(48,601	)

     The above pro forma results give effect to pro forma adjustments for the amortization of acquired intangibles and interest expense on borrowings that would have been required to fund the acquisitions.

10

TRANSWESTERN HOLDINGS L.P.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(ALL DOLLAR AMOUNTS ARE IN THOUSANDS)

6. GUARANTEE

     The following wholly-owned subsidiaries of Holdings, fully and unconditionally guaranteed TransWestern’s outstanding 9 5/8% Series D and Series E Senior Subordinated Notes due 2007 on an unsecured senior subordinated basis: Target Directories of Michigan, Inc. (“Target”), TWP Companies, Inc., and WorldPages , together with the following wholly owned subsidiaries of WorldPages: Great Western Directories, Inc., YPtel Corporation, YPTel, Inc., Pacific Coast Publishing, Ltd., 1 + USA V Acquisition Corp, ChoiceContent.com, Inc., ChoiceContent.com, LLC, ACG Holdings Company, and ACG Exchange Company. Following is summarized financial information concerning the guarantors as of September 30, 2001 and 2000, respectively and for the nine months ended September 30, 2001 and 2000, respectively. Since WorldPages was acquired on June 28, 2001, only summarized balance sheet data as of September 30, 2001 is presented.

Target:

	NINE MONTHS ENDED SEPTEMBER 30,
	(unaudited)
	2001		2000
Statement of Operations Data:
Net revenues	$	3,299	$	2,919
Gross profit		3,024		2,571
Operating income		445		1,202
Net income		93		30

	SEPTEMBER 30,		SEPTEMBER 30,
	2001			2000
Balance Sheet:
Current assets	$	1,819		$	1,682
Non-current assets		2,230			3,503
Current liabilities		14			641
Non-current liabilities		—			—

WorldPages and its subsidiaries:

	SEPTEMBER 30,
	2001
Balance Sheet:
Current assets	$	55,834
Non-current assets(1)		196,071
Current liabilities		19,619
Non-current liabilities(2)		211,900

(1)	Includes $203,569 of intangibles related to its acquisition by TransWestern.
(2)	Includes $212,800 of long term debt related to its acquisition by TransWestern.

7. EQUITY COMPENSATION PLAN

     In connection with the 1997 Recapitalization, Holdings established the TransWestern Holdings, L.P. Equity Compensation Plan (the “97 Plan”). The 97 Plan provides select key full-time employees with deferred compensation benefits for income tax purposes. Special distributions to the 97 Plan are recorded as expense in the accompanying statements of operations when declared by the Board of Directors, generally following a significant refinancing transaction. In June 2001, the Board of Directors approved a distribution of $5.2 million net of taxes and benefits.

11

TRANSWESTERN HOLDINGS L.P.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(ALL DOLLAR AMOUNTS ARE IN THOUSANDS)

     Employees receiving units in the 97 Plan are eligible to receive a ratable per unit share of cash distributions from the 97 Plan, if and when declared by the Plan Administrators. Generally, the Plan Administrators intend to distribute to employee unit holders all assets contributed to the 97 Plan within one year of the date of contribution. As of September 30, 2001, undistributed equity trust proceeds totaled $2.9 million.

     In connection with the 2001 recapitalization, Holdings established the 2001 TransWestern Holdings, L.P. Equity Compensation Plan.

8. RESTRUCTURING AND OTHER CHARGES

     In connection with the WorldPages acquisition, Holdings approved a plan to restructure the operations of WorldPages and its subsidiaries. Restructuring costs are composed of committed costs required to integrate the administrative, production and sales functions into the Company’s operations to achieve beneficial synergies and cost savings. WorldPages will recognize termination costs in accordance with EITF 95-3, Recognition of Liabilities in Connection with a Business Combination. The following table displays the liabilities related to the restructuring and other charges recorded in the net liabilities assumed in the acquisition of WorldPages:

Type of cost:	June 28,							Balance at
	2001		Payments			Adjustments		September 30, 2001
Employee separation	$	4,100	$	(1,858	)	$	-	$	2,242
Office lease settlement		986		(112	)		-		874
Redundant assets		800		-			-		800
	$	5,886	$	(1,970	)	$	-	$	3,916

     Management believes that the remaining reserves for restructuring are adequate to complete its plan.

9. LEGAL PROCEEDINGS

     On October 24, 2001, WorldPages, Inc. was sued in the 44th Judicial District Court in Dallas County, Texas by Ionex Communications, Inc., formerly known as Compass Telecommunications, Inc. (“Ionex”). Ionex is claiming that it should be indemnified by WorldPages for what it alleges are breaches by WorldPages’ of certain of its representations and commitments under that certain Stock Purchase Agreement dated as of July 14, 1999. Ionex is seeking approximately $6 million plus fees and expenses relating to (i) indemnification for alleged breaches by WorldPages of its representations relating to accounts receivable, software licenses, taxes and litigation and (ii) reimbursement for severance payments that Ionex has made to former employees of WorldPages. WorldPages intends to vigorously defend against these claims. However, at this time, it is not possible to assess with any degree of accuracy WorldPages’ likelihood of prevailing with regard to such claims.

12

TRANSWESTERN HOLDINGS L.P.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(ALL DOLLAR AMOUNTS ARE IN THOUSANDS)

     Holdings and/or its subsidiaries are parties to various other litigation matters incidental to the conduct of their business. Management does not believe that the outcome of any of these matters will have a material adverse effect on Holdings financial condition or the results of its operations.

ITEM 2:  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED)

     As used in this item and throughout this Quarterly Report on Form 10-Q, “we,” “us,” and “our” each refer to Holdings, TransWestern, WorldPages and all of their respective subsidiaries collectively unless the context requires otherwise.

Overview

     We recognize net revenues from the sale of advertising placed in each directory when the completed directory is distributed. Costs directly related to sales, production, printing and distribution of each directory are capitalized as deferred directory costs and then matched against related net revenues upon distribution. All of our other operating costs are recognized during the period when incurred. As the number of directories that we publish increases, the publication schedule is periodically adjusted to accommodate new books. In addition, changes in distribution dates are caused by market and competitive conditions and the staffing level required to achieve the individual directory revenue goals. As a result, our directories may be published in a month earlier or later than the previous year which may move recognition of related revenues from one fiscal quarter or year to another. Year to year results depend on both timing and performance factors.

     Notwithstanding significant monthly fluctuation in net revenues and EBITDA which is recognized based on actual distribution dates of individual directories, quarterly recognition of bookings, advance payments and total cash receipts generally occurs at a steadier pace throughout the year than net revenues and EBITDA. This is primarily the result of the fact that revenues and the associated EBITDA related to a directory are recognized when a directory is distributed. Our bookings and cash collection activities generally occur at a steady pace throughout the year and reflect the growth of our portfolio of directories and business as we add additional account executives from acquired companies. The table below demonstrates that quarterly bookings, collection of advance payments and total cash receipts tend to grow at a steady rate as compared to net revenues and EBITDA.

	2000		2000		2001		2001		2001		% Change
	3rd Quarter		4th Quarter		1st Quarter		2nd Quarter		3rd Quarter		3Q-00 to 3Q-01
Net revenues	$	43.1	$	60.7	$	40.7	$	54.5	$	63.6		47.6	%
EBITDA (a)	$	12.8	$	23.7	$	8.9	$	14.3	$	12.3		(3.9	%)
Bookings (b)	$	44.1	$	44.3	$	49.7	$	47.4	$	69.4		57.4	%
Advance payments	$	21.4	$	20.2	$	19.8	$	25.5	$	26.1		22.0	%
Total cash receipts (c)	$	39.8	$	41.7	$	41.2	$	48.8	$	47.2		18.6	%

(a) “EBITDA” is defined as income (loss) before extraordinary item, discretionary contributions to Holdings’ Equity Compensation Plan (such contributions represent special distributions to Holdings’ Equity Compensation Plan in connection with refinancing transactions), non recurring management bonuses and fees in connection with refinancing transactions, plus interest expense, and depreciation and amortization and is consistent with the definition of EBITDA in the indentures relating to TransWestern’s notes and in TransWestern’s senior

13

TRANSWESTERN HOLDINGS L.P.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(ALL DOLLAR AMOUNTS ARE IN THOUSANDS)

	credit facility. EBITDA is not a measure of performance under accounting principles generally accepted in the United States(GAAP). EBITDA should not be considered in isolation or as a substitute for net income, cash flows from operating activities and other income or cash flow statement data prepared in accordance with GAAP, or as a measure of profitability or liquidity. However, management has included EBITDA because it may be used by certain investors to analyze and compare companies on the basis of operating performance, leverage and liquidity and to determine a company’s ability to service debt. TransWestern’s definition of EBITDA may not be comparable to that of other companies.
(b)	“Bookings” is defined as the daily advertising orders received from accounts during a given period and generally occur at a steady pace throughout the year. Bookings generated by predecessor owners of acquired directories are excluded.
(c)	“Total cash receipts” includes both advance payments and collections of accounts receivable.

RESULTS OF OPERATIONS

The following table summarizes our results of operations as a percentage of revenues for the periods indicated:

	THREE MONTHS						NINE MONTHS
	ENDED SEPTEMBER 30,						ENDED SEPTEMBER 30,
	2001			2000			2001			2000
Net revenues		100.0	%		100.0	%		100.0	%		100.0	%
Cost of revenues		23.5			19.6			21.6			19.3
Gross profit		76.5			80.4			78.4			80.7
Sales and marketing		45.6			42.1			46.2			42.6
General and administrative		40.9			26.5			32.6			27.5
Recap. transaction costs		0.0			0.0			9.7			0.0
Contribution to Equity Plan		1.0			0.0			3.7			0.0
Income (loss) from operations		(11.0	%)		11.8	%		(13.8	%)		10.6	%
EBITDA Margin (a), (b)		19.3	%		29.7	%		22.3	%		28.6	%

     (a)  For a definition of “EBITDA” see the immediately preceding section.

     (b)  “EBITDA Margin” is defined as EBITDA as a percentage of net revenues. Management believes that EBITDA margin provides a valuable indication of TransWestern’s ability to generate cash flows available for debt service.

THREE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED TO THE THREE MONTHS ENDED SEPTEMBER 30, 2000

     Net revenues increased $20.5 million, or 47.6%, from $43.1 million in the three months ended September 30, 2000 to $63.6 million in the same period in 2001. We published 71 directories in the three months ended September 30, 2001 compared to 58 in the same period in 2000. The net revenue growth was due to $19.9 million from 19 new directories, $3.0 million from eight directories for which the publication date moved into the period and growth in the same 44 directories published during both periods of $2.8 million; offset by $5.2 million of net revenues associated with 14 directories published in the three months ended September 30, 2000 but not in the same period in 2001.

14

TRANSWESTERN HOLDINGS L.P.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(ALL DOLLAR AMOUNTS ARE IN THOUSANDS)

     As a result of a combination of factors, including the addition of new customers, price increases, increases in the amount of advertising by current customers and new directory features such as additional ad sizes and additional headings, our same book revenue growth for the 44 directories published in both periods was 7.4%.

     Cost of revenues increased $6.5 million, or 77.2%, from $8.4 million in the three months ended September 30, 2000 to $14.9 million in the same period in 2001. The increase was the result of $5.7 million of costs associated with 19 new directories published in the three months ended September 30, 2001, and $0.5 million in costs associated with eight directories published in the three months ended September 30, 2001, but not in the same period in 2000; offset by $1.3 million of costs associated with 14 directories published during the three months ended September 30, 2000, but not in the same period in 2001. Costs for the same 44 directories published in both periods increased $0.6 million for the 2001 period compared to the prior year. Production support costs increased $1.0 million in the three months ended September 30, 2001 due to the directories acquired since the third quarter of 2000.

     As a result of the above, gross profit increased $14.0 million, or 40.4%, from $34.7 million in the three months ended September 30, 2000 to $48.7 million in the same period in 2001. Gross margin decreased from 80.4% in the three months ended September 30, 2000 to 76.5% in the same period in 2001 as a result of higher direct costs on newly acquired directories and slightly lower margins for the same 44 directories published in both periods.

     Sales and marketing expenses increased $10.9 million, or 59.8%, from $18.1 million in the three months ended September 30, 2000 to $29.0 million in the same period in 2001. The increase was attributable to increases of $4.5 million in sales support costs, $5.2 million in direct sales costs and $1.2 million in the provision for bad debt (which was consistent with the increase in net revenues).

     The increase in sales support costs of $4.5 million was due to $3.7 million in higher sales costs incurred by offices acquired and established for new directories since the third quarter of 2000 and $0.8 million due to increased costs of running existing sales offices. The increase in direct sales costs of $5.2 million was as follows: $5.1 million of additional costs related to 19 new directories, $0.8 million related to eight directories moving into the period, and $0.8 million of higher costs associated with the 44 same directories published in both periods, offset by $1.5 million of costs associated with seven directories that were published in the three months ended September 30, 2000 but not in the same period in 2000. Direct sales costs as a percentage of revenue for the same 44 directories published during both periods increased from 20.5% to 21.2% for the three months ended September 30, 2001 compared to the same period in 2000.

     General and administrative expenses increased $14.7 million, or 128.1%, from $11.4 million for the three months ended September 30, 2000 to $26.1 million for the same period in 2001. The increase was due to: amortization of acquired customer base and other intangibles of $10.8 million, $2.4 million in expenses related to employees of WorldPages, and other increases in costs totaling $1.5 million.

     Contribution to Equity Compensation Plan of $0.6 million were incurred in the three months ended September 30, 2001 as compared to zero for the three months ended September 30, 2000 as a result of taxes and benefits incurred related to the contribution to the Equity Compensation Plan of $5.2 million made on June 28, 2001 in connection with the Recapitalization.

     As a result of the above factors, income from operations decreased $12.1 million from $5.1 million in the three months ended September 30, 2000 to a loss from operations of ($7.0) million in the same period in 2001. Income from operations as a percentage of net revenues decreased from 11.8% in the three months ended September 30, 2000 to (11.0%) in the same period in 2001.

15

TRANSWESTERN HOLDINGS L.P.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(ALL DOLLAR AMOUNTS ARE IN THOUSANDS)

     Interest expense increased $3.4 million, or 42.7%, from $8.1 million in the three months ended September 30, 2000 to $11.5 million in the same period in 2001 due to higher levels of debt partially offset by a decrease in the rates of interest paid as a result of decreases in Prime and LIBOR rates.

     As a result of the above factors, net loss increased $15.4 million from a net loss of ($2.8) million in the three months ended September 30, 2000 to a net loss of ($18.2) million in the same period in 2001.

NINE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED TO THE NINE MONTHS ENDED SEPTEMBER 30, 2000

     Net revenues increased $42.2 million, or 36.1%, from $116.6 million in the nine months ended September 30, 2000 to $158.8 million in the same period in 2001. We published 193 directories in the nine months ended September 30, 2001 compared to 159 in the same period in 2000. The net revenue growth was due to $34.4 million from 41 new directories, $4.4 million from eight directories for which the publication date moved into the period and growth in the same 144 directories published during both periods of $9.7 million; offset by $6.3 million of net revenues associated with 15 directories published in the nine months ended September 30, 2000 but not in the same period in 2001.

     As a result of a combination of factors, including the addition of new customers, price increases, increases in the amount of advertising by current customers and new directory features such as additional ad sizes and additional headings, our same book revenue growth for the 144 directories published in both periods was 8.7%.

     Cost of revenues increased $11.9 million, or 52.7%, from $22.5 million in the nine months ended September 30, 2000 to $34.4 million in the same period in 2001. The increase was the result of $10.1 million of costs associated with 41 new directories published in the nine months ended September 30, 2001, and $0.6 million in costs associated with eight directories published in the nine months ended September 30, 2001, but not in the same period in 2000; offset by $1.5 million of costs associated with 15 directories published during the nine months ended September 30, 2000, but not in the same period in 2001. Costs for the same 144 directories published in both periods increased $1.4 million for the 2001 period compared to the prior year. Production support costs increased $1.3 million in the nine months period ended September 30, 2001 due to the directories acquired since the third quarter of 2000.

     As a result of the above, gross profit increased $30.3 million, or 32.2%, from $94.1 million in the nine months ended September 30, 2000 to $124.4 million in the same period in 2001. Gross margin decreased from 80.7% in the nine months ended September 30, 2000 to 78.4% in the same period in 2001 as a result of higher direct costs on newly acquired directories.

     Sales and marketing expenses increased $23.6 million, or 47.5%, from $49.7 million in the nine months ended September 30, 2000 to $73.3 million in the same period in 2001. The increase was attributable to increases of $6.7 million in sales support costs, $12.2 million in direct sales costs and $4.7 million in the provision for bad debt (which was consistent with the increase in net revenues).

16

TRANSWESTERN HOLDINGS L.P.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(ALL DOLLAR AMOUNTS ARE IN THOUSANDS)

     The increase in sales support costs of $6.7 million was due to $4.2 million in higher sales costs incurred by offices acquired since the third quarter of 2000 and $2.5 million due to increased costs of running existing sales offices. The increase in direct sales costs of $12.2 million was as follows: $9.2 million of additional costs were for the 41 new directories, $1.0 million for eight directories moving into the period, and $3.8 million of higher costs associated with the 144 same directories published in both periods, offset by $1.8 million of costs associated with 15 directories that were published in the nine months ended September 30, 2000 but not in the same period in 2001. Direct sales costs as a percentage of revenue for the same 144 directories published during both periods increased from 20.6% to 22.1% in the nine months ended September 30, 2000 compared to the same period in 2001.

     General and administrative expenses increased $19.7 million, or 61.3%, from $32.1 million for the nine months ended September 30, 2000 to $51.8 million for the same period in 2001. The increase was due to amortization of acquired customer base and other intangibles of $14.6 million, $1.7 million for bonuses associated with the Recapitalization of the Company, $2.4 million in expenses related to employees of WorldPages, and other increases in costs totaling $1.0 million.

     Recapitalization transaction costs of $15.4 million were incurred in the nine months ended September 30, 2001 as compared to zero for the same period in 2000 as a result of the Recapitalization of the Partnership on June 28, 2001.

     Contribution to Equity Compensation Plan of $5.8 million were incurred in the nine months ended September 30, 2001 as compared to zero for the same period in 2000 as a result of a contribution to the Plan made on June 28, 2001 in connection with the Recapitalization of the Partnership.

     As a result of the above factors, income from operations decreased $34.2 million from $12.3 million in the nine months ended September 30, 2000 to a loss from operations of ($21.9) million in the same period in 2001. Income from operations as a percentage of net revenues decreased from 10.6% in the nine months ended September 30, 2000 to (13.8%) in the same period in 2001.

     Interest expense increased $4.5 million, or 19.5%, from $22.9 million in the nine months ended September 30, 2000 to $27.4 million in the same period in 2001 due to higher levels of debt partially offset by a decrease in the rates of interest paid as a result of decreases in Prime and LIBOR rates.

     Extraordinary loss in the nine months ended September 30, 2001 was $3.5 million compared to zero in the same period in 2000. Extraordinary losses were the costs associated with the write-off of debt financing costs upon entering into a new $300.0 million senior credit facility that was used in part to pay-off $137.5 million outstanding under the prior credit facility of the Company and senior term loans and $74.2 million to pay-off the assumed WorldPages debt and accrued interest after consummation of the acquisition of WorldPages.

     As a result of the above factors, net loss increased $42.1 million, from a net loss of ($10.4) million in the nine months ended September 30, 2000 to a net loss of ($52.5) million in the same period in 2001.

17

TRANSWESTERN HOLDINGS L.P.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(ALL DOLLAR AMOUNTS ARE IN THOUSANDS)

LIQUIDITY AND CAPITAL RESOURCES

     Net cash provided (used) by operating activities was ($10.3) million in the nine months ended September 30, 2001 compared to $14.8 million in the same period in 2000. The decrease in cash provided by operations resulted primarily from increased receivables and increased customer deposits primarily related to the increased size of our directory portfolio as a result of acquisitions.

     Customer deposits (advance payments) increased $6.0 million in the nine months ended September 30, 2001 compared to the same period in the prior year. The increase is primarily related to the increased size of our directory portfolio as a result of acquisitions.

     Net cash used for investing activities was $163.5 million in the nine months ended September 30, 2001 as compared to $33.6 million in the same period in 2000. Investing activities consist primarily of cash used to acquire directories. In the nine months ended September 30, 2001, $155.0 million was spent on acquisitions compared to $30.6 million in the same period in the prior year. The prior year’s acquisitions are discussed in note 3 of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2000. Acquisitions made in the nine months ended September 30, 2001 are discussed in note 5 of the financial statements included in this Form 10-Q.

     Net cash provided by financing activities was $200.6 million in the nine months ended September 30, 2001 as compared to $19.4 million in the same period in 2000. These amounts were primarily from borrowings for acquisitions during the quarters, and from the Recapitalization on June 28, 2001.

     In connection with the recapitalization of Holdings in June 2001, TransWestern entered into a new $300.0 million credit facility and drew $35.0 million in Term A and $200.0 million in Term B Loans. In addition, in May 2001, TransWestern issued $75.0 million of Series E 9 5/8% Senior Subordinated Notes due 2007, (excluding unamortized discount of $0.4 million). Also in connection with the Recapitalization and acquisition of WorldPages, TransWestern re-paid $137.5 million under its existing credit facility and $74.2 million of debt assumed as part of the WorldPages acquisition.

     As of September 30, 2001 Holdings had total outstanding long term indebtedness of $496.5 million, including $140.0 million of Series D Senior Subordinated Notes due 2007, $75.0 million of Series E 9 5/8% Senior Subordinated Notes due 2007, (excluding net unamortized premium of discount of $0.8 million), $50.5 million of Holdings 11 7/8% Senior Discount Notes due 2008, (“Discount Notes”), $31.5 million of outstanding borrowings under the senior credit facility Tranche A Term Loan, $197.5 million outstanding under the senior credit facility Tranche B Term Loan, and $0.8 million in acquisition related debt. As of September 30, 2001 TransWestern had no outstanding borrowings under its revolving credit facility, with total borrowing availability of $65.0 million.

     Our principal sources of funds are cash flows from operating activities and available funds under our revolving credit facility. Assuming the successful implementation of management’s business and operating strategy, we believe that these funds will provide us with sufficient liquidity and capital resources to meet our current and future financial obligations for the next twelve months, including the payment of principal and interest on our notes, as well as to provide funds for our working capital, capital expenditures and other operating needs. Our future operating performance will be subject to future economic conditions and to financial, business and other factors, many of which are beyond our control. There can be no assurance that such sources of funds will be adequate and that we will not require additional capital from borrowings or securities offerings to satisfy such requirements. In addition, we may require additional capital to fund future acquisitions and there can be no assurance that such capital will be available.

18

TRANSWESTERN HOLDINGS L.P.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(ALL DOLLAR AMOUNTS ARE IN THOUSANDS)

     The senior credit facility and the indentures governing TransWestern’s notes significantly restrict the distribution of funds by TransWestern and the other subsidiaries of Holdings. We cannot assure that the agreements governing the indebtedness of Holdings’ subsidiaries will permit such subsidiaries to distribute funds to Holdings in amounts sufficient to pay the accreted value or principal or interest on Holdings’ Discount Notes when the same becomes due, whether at maturity, upon acceleration or redemption or otherwise. Holdings’ Discount Notes will be effectively subordinated in right of payment to all existing and future claims of creditors of subsidiaries of Holdings, including the lenders under the senior credit facility, the holders of TransWestern’s notes and trade creditors.

FORWARD LOOKING STATEMENTS

     This Quarterly Report on Form 10-Q contains forward-looking statements which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on the beliefs of our management as well as on assumptions made by and information currently available to us at the time such statements were made. When used in this Quarterly Report on Form 10-Q, the words “anticipate,” “believe,” “estimate,” “expect,” “intends” and similar expressions, as they relate to our Company are intended to identify forward- looking statements. Actual results could differ materially from those projected in the forward-looking statements. Important factors that could affect our results include, but are not limited to, (i) our high level of indebtedness; (ii) risks associated with integrating WorldPages and its subsidiaries with TransWestern; (iii) the restrictions imposed by the terms of our indebtedness; (iv) the turnover rate amongst our account executives; (v) the variation in our quarterly results; (vi) risks related to the fact that a large portion of our sales are to small, local businesses; (vii) our dependence on certain key personnel; (viii) risks related to the acquisition and start-up of directories; (ix) risks related to substantial competition in our markets; (x) risks related to changing technology and new product developments; (xi) the effect of fluctuations in paper costs; and (xii) the sensitivity of our business to general economic conditions. Information with respect to these and other risk factors is available in TransWestern’s most recent Registration Statement on Form S-4 which is files with the Securities and Exchange Commission and is available at www.sec.gov.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     We are exposed to interest rate risk in connection with the term loan and the revolving loans outstanding under our senior credit facility, which bear interest at floating rates based on LIBOR or the prime rate plus an applicable borrowing margin. As of September 30, 2001, there was approximately $34.3 million outstanding under the Term A Loan (under the LIBOR option at an interest rate of 6.1% at such time) and $199.5 million outstanding under the Term B Loan (under the LIBOR option at an average interest rate of 6.4% at such time). Based on such balances, an immediate increase of one percentage point in the applicable interest rate would cause an increase in interest expense of approximately $2.4 million on an annual basis. We do not attempt to mitigate this risk through hedging transactions. All of our sales are denominated in U.S. dollars, thus we are not subject to any foreign currency exchange risks.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

     On October 24, 2001, WorldPages, Inc. was sued in the 44th Judicial District Court in Dallas County, Texas by Ionex Communications, Inc., formerly known as Compass Telecommunications, Inc. (“Ionex”). Ionex is claiming that it should be indemnified by WorldPages for what it alleges are breaches by WorldPages’ of certain of its representations and commitments under that certain Stock Purchase Agreement dated as of

19

TRANSWESTERN HOLDINGS L.P.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(ALL DOLLAR AMOUNTS ARE IN THOUSANDS)

July 14, 1999. Ionex is seeking approximately $6 million plus fees and expenses relating to (i) indemnification for alleged breaches by WorldPages of its representations relating to accounts receivable, software licenses, taxes and litigation and (ii) reimbursement for severance payments that Ionex has made to former employees of WorldPages. WorldPages intends to vigorously defend against these claims. However, at this time, it is not possible to assess with any degree of accuracy WorldPages’ likelihood of prevailing with regard to such claims.

     Holdings and/or its subsidiaries are parties to various other litigation matters incidental to the conduct of their business. Management does not believe that the outcome of any of these matters will have a material adverse effect on Holdings financial condition or the results of its operations.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

(c)  Sale of Unregistered Equity Securities

     In June 2001, Holdings completed a private placement pursuant to which we issued an aggregate of 1,518,779.114 Preferred, Class A Common and Class B Common limited partnership interests of Holdings to our existing limited partners and their affiliates, senior managers of TransWestern and certain other investors in exchange for total value of approximately $182.4 million, including approximately $125.0 million of cash and then outstanding equity securities of Holdings valued at approximately $57.4 million.

     A total of 967,535.583 Preferred interests were issued for an aggregate value of approximately $78.4 million. Consideration for the Preferred interests was paid in the form of approximately $37.8 million in cash, Class A Common interests valued at approximately $33.3 million and Class B Common interests valued at approximately $7.3 million. A total of 541,243.531 Class A Common interests were issued for an aggregate value of approximately $104.0 million. Consideration for the Class A Common interests was paid in the form of approximately $87.3 million in cash and Class B Common interests valued at approximately $16.8 million. A total of 10,000.00 Class B Common interests were issued for $10,000.00 in cash.

     The private placement of the limited partnership interests was completed in reliance upon the exemptions contained in Section 4(2) of the Securities Act and Rule 506 of Regulation D thereunder.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

     None

ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

     Not applicable

ITEM 5. OTHER INFORMATION

     None

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

     (a)  Exhibits

              None

     (b)  Reports on Form 8-K

               None

20

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on November 14, 2001 on its behalf by the undersigned thereunto duly authorized.

TRANSWESTERN HOLDINGS L.P. (Registrant)
BY:	TransWestern Communications Company, Inc. (General Partner)

BY:	/s/ Ricardo Puente
	Name:	Ricardo Puente
	Title:	President, Chief Executive Officer and Director

BY:	/s/ Joan Fiorito
	Name:	Joan Fiorito
	Title:	Vice President, Chief Financial Officer and Assistant Secretary (Principal Financial and Accounting Officer)

21