2
TRANSWESTERN HOLDINGS LP
FORM 10-K
TABLE OF CONTENTS

Page
----
PART I

ITEM 1 Business.................................................. 3
ITEM 2 Properties ............................................... 10
ITEM 3 Legal Proceedings ........................................ 10
ITEM 4 Submission of Matters to a Vote of Security Holders ...... 10

PART II

ITEM 5 Market for the Registrant's Common Equity and Related
Stockholder Matters ....................................... 11
ITEM 6 Selected Financial Data ................................... 11
ITEM 7 Management's Discussion and Analysis of Financial Condition
and Results of Operations ................................. 14
ITEM 7A Quantitative and Qualitative Disclosure about Market Risk.. 24
ITEM 8 Financial Statements and Supplementary Data ............... 24
ITEM 9 Changes in and Disagreements With Accountants on Accounting
and Financial Disclosure .................................. 24

PART III

ITEM 10 Directors and Executive Officers of Holdings............... 24
ITEM 11 Executive Compensation..................................... 27
ITEM 12 Security Ownership of
Certain Beneficial Owners and Management................... 31
ITEM 13 Certain Relationships and Related Transactions............. 32

PART IV

ITEM 14 Exhibits, Consolidated Financial Statement Schedules and
Reports on Form 8-K........................................ 35
Signatures................................................. 38

3
PART I

This annual report on Form 10-K contains certain forward-looking
statements that involve risks and uncertainties. The actual future results for
TransWestern Publishing Company LLC, which is the wholly-owned operating
subsidiary of TransWestern Holdings L.P., may differ materially from those
discussed herein. Additional information concerning factors that could cause
or contribute to such differences can be found in Part II, Item 7 entitled
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and elsewhere throughout this Annual Report. Unless the context
requires otherwise, "Holdings" refers to TransWestern Holdings L.P.,
"TransWestern" refers to TransWestern Publishing Company LLC and the
"company," "we," "us" and "our" each refers to Holdings and TransWestern and
its wholly-owned subsidiary, Target Directories of Michigan, Inc.,
collectively.

ITEM 1. BUSINESS

We are one of the largest independent yellow pages directory publishers in
the United States. As of the date of this filing we own 238 directories which
serve communities in the 17 states of Alabama, California, Connecticut, Florida,
Georgia, Indiana, Kansas, Kentucky, Louisiana, Massachusetts, Michigan, New
York, Ohio, Oklahoma, Pennsylvania, Tennessee and Texas. Our revenues are
derived from the sale of advertising to a diversified base of over 135,000
accounts as of December 31, 1999, consisting primarily of small to medium-sized
local businesses. In counting our number of accounts, we count a single
customer that advertises in more than one directory as a separate account for
each directory in which it advertises. Yellow pages are an important
advertising medium for local businesses due to their low advertising cost,
widespread distribution, lasting presence, and high consumer usage.

Since 1993, our management team has successfully executed its strategy of
growing revenues from existing directories, improving operating efficiency,
accelerating cash flows and starting and acquiring new directories. Over this
period, we increased average revenue per account from $903 for the year ended
April 30, 1995 to $1,084 for the year ended December 31, 1999 and increased
our number of directories published from 106 for the year ended April 30, 1995
to 191 for the year ended December 31, 1999, driving our net revenues from
$69.8 million for the year ended April 30, 1995 to $146.4 million for the year
ended December 31, 1999 and our EBITDA from $17.0 million for the year ended
April 30, 1995 to $46.7 million for the year ended December 31, 1999.

RECENT ACQUISITIONS

During the year ended December 31, 1999 we acquired 51 directories
in Alabama, California, Georgia, Michigan Ohio and Texas as follows:

United. On January 5, 1999, we purchased 14 directories from United
Directory Services, Inc. for approximately $17.0 million. The purchase price
consisted of $12.3 million in cash, a promissory note for $2.0 million, due in
eighteen months, subject to adjustment based upon the actual collections of
accounts receivable outstanding as of the closing during such period, and
contingent payments paid over a period of three years not to exceed an
additional $2.7 million based upon the contribution margin of a prototype
directory acquired in Austin, Texas. The acquired directories serve the
greater Ft. Worth, San Antonio and Austin, Texas areas. The area sales
managers and approximately 40 account executives associated with the acquired
directories were retained. The 14 directories generated approximately $7.7
million of net revenue in 1998.

Lambert. On January 8, 1999, we purchased eight directories from Lambert
Publishing for approximately $11.0 million. The purchase price consisted of
$9.5 million in cash, a promissory note of $1.0 million due in eighteen
months, subject to adjustment based upon the actual collections of accounts
receivable outstanding as of the consummation of the acquisition, and a $0.5
million contingent payment based upon the performance of the subsequent years
directories exceeding a specific revenue forecast. The acquired directories
serve the central Georgia area and central eastern Alabama. Approximately 25
account executives associated with the acquired directories were retained.
The eight directories generated approximately $4.0 million of net revenue in
1998.

4
Southern. On January 15, 1999, we purchased seven directories from
Southern Directories Publishing, Inc. for approximately $5.2 million in cash.
The acquired directories serve the central Georgia area. One area sales manager
and approximately five account executives associated with the acquired
directories were retained. The seven directories generated approximately $2.0
million of net revenue in 1998.

Orange Line. On February 15, 1999, we purchased four directories
from Call It, Inc. (doing business as, "Orange Line") for approximately $1.3
million in cash. The acquired directories serve the northern Ohio area.
Approximately seven account executives associated with the acquired directories
were retained. The four directories generated approximately $1.1 million of net
revenue in 1998.

YPTexas. On April 1, 1999, we purchased certain tangible and intangible
assets of Yellow Pages of Texas, Inc. (YPTexas) for a total of approximately
$2.2 million. YPTexas published one directory near Ft Worth, Texas.

Golden State. On April 2, 1999, we purchased certain tangible and
intangible assets of Golden State Directory, Corp. (Golden State) for a
total of approximately $5.5 million. Golden State published six directories
in northern California.

Pioneer. On August 30, 1999 we purchased certain tangible and intangible
assets from Pioneer Telephone Directories Corp. (Pioneer) for $2.4 million in
cash. Pioneer published three directories in southeastern Alabama.

Stafford. On August 24, 1999 we purchased certain tangible and
intangible assets from Greenville News, Inc. (Stafford Communications) for
$2.5 million in cash. Stafford Communications published two directories in
western central Michigan.

United Multimedia (American Media). On October 15, 1999 we purchased
certain tangible and intangible assets of United Multimedia (American Media)
for a total of $16.0 million. The purchase price consists of $14.4 million in
cash and a note payable of $1.6 million due in 18 months subject to adjustment
based on actual account receivable collections. We paid a $0.5 million
production fee on January 1, 2000 for completion of certain in-process
directories. American Media published six directories in Riverside County and
northern San Diego County, California.

Medina. On October 29, 1999 we purchased certain tangible and intangible
assets of Great Lakes Telephone Directories (Medina) for approximately $1.6
million in cash. We also paid $0.3 million for a non-compete agreement from the
prior owners in the region. Medina published one directory in Northern Ohio.

Superior. On November 12, 1999 we purchased certain tangible and
intangible assets of Superior Telephone Directories II (Superior) for
approximately $1.1 million in cash. Superior published one directory in
Oklahoma.

Subsequent to the year ended December 31, 1999 we acquired eleven
directories in California, Florida and Georgia as follows:

Desert Pages. On January 14, 2000 we purchased certain tangible and
intangible assets of Desert Pages, Inc. (Desert Pages) for a total of $8.0
million. The purchase price consists of $7.2 million in cash and a promissory
note of $0.8 million due in eighteen months, subject to adjustment based upon
the actual collections of accounts receivable outstanding as of the closing
during such period. Desert Pages published one directory in Palm Springs,
California. Also included in the purchase are the rights to publish a second,
new directory that has not yet been published.

Direct Media Corp. On February 15, 2000 we purchased certain tangible and
intangible assets of Direct Media Corp (Direct Media) for a total of $3.4
million in cash. Direct Media publishes eight directories serving the
southeastern Georgia and northeastern Florida area. Also included in the
purchase are the rights to publish a new directory in Georgia that has not yet
been published.

From the date of the recapitalization, completed in October of 1997,
through December 31, 1998 we acquired 17 directories residing in Michigan,
New York, Ohio, Pennsylvania and Tennessee.

5
INDUSTRY OVERVIEW

The United States yellow pages directory industry generated revenues of
approximately $12.0 billion in 1998, with circulation of approximately 350
million directories. Yellow pages directories are published by both telephone
utilities and, in many markets, independent directory publishers, such as us,
which are not affiliated with the telephone service provider. More than 250
independent directory publishers circulated over 100 million directories and
generated an estimated $852 million in revenues during 1998. Independent
directory publishers have steadily increased their market share from 5.7% in
1992 to 7.1% in 1998. This has occurred because the diverse needs of both
consumers and advertisers are often not satisfied by a single utility
directory.

Yellow pages directories compete with all other forms of media
advertising, including television, radio, newspapers and direct mail. In
general, media advertising may be divided into three categories:

- market development or image advertising such as television, radio and
newspaper advertisements;

- direct response sales promotion such as direct mail; and

- point of purchase or directional advertising such as classified
directories.

Yellow pages directories are primarily directional advertising because they
are used either at home or in the workplace when consumers are contemplating a
purchase or in need of a service.

Yellow pages advertising expenditures tend to be more stable than other
forms of media advertising and do not fluctuate widely with economic cycles.
Yellow pages directory advertising is considered a "must buy" by many small
and medium-sized businesses since it is often their principal means of
soliciting customers. The strength of the yellow pages as compared to other
forms of advertising lies in its consumer reach, lasting presence and cost-
effectiveness. Yellow pages are present in nearly every household and business
in the United States. Once an advertisement is placed in a directory, it
remains within reach of its target audience until the directory is replaced
with the next annual edition or discarded.

The independent publisher segment of the yellow pages industry is highly
fragmented and growing. Successful independent publishers effectively compete
with telephone utilities by differentiating their product based on geographical
market segmentation, pricing strategy and enhanced product features. To maximize
both advertiser value and consumer usage, independent directory publishers
target their directory coverage areas based on consumer shopping patterns. In
contrast, most directories published by telephone utilities coincide with their
telephone service territories, which may incorporate multiple local markets or
only portions of a single market. Also, independent publishers generally offer
yellow pages advertisements at a significant discount to the price that
competing telephone utilities usually charge. As a result, independent yellow
pages directories allow local advertisers to better target their desired
market and are often more useful for consumers.

Independent yellow pages publishers generally compete in suburban and
rural markets more than major urban markets, where the high distribution
quantities for each edition create a barrier to entry. In most markets,
independent directory publishers compete with the telephone utility and with
one or more independent yellow pages publishers. In markets where two or more
directory publishers compete, advertisers frequently purchase advertisements
in multiple directories.

6
MARKETS SERVED

As of the date of this filing we publish 238 yellow pages directories
serving distinct communities in 17 states, including Alabama, California,
Connecticut, Florida, Georgia, Indiana, Kansas, Kentucky, Louisiana,
Massachusetts, Michigan, New York, Ohio, Oklahoma, Pennsylvania, Tennessee and
Texas. Our directories are generally well-established in our local communities
and are clustered in contiguous geographic areas to create a strong local
market presence and to achieve selling efficiencies.

Our net revenues are not materially concentrated in any single directory,
industry, geographic region or customer. For the year ended December 31, 1999,
we served approximately 135,000 active accounts. Approximately 95% of our net
revenues are derived from local accounts with the remainder coming from
national companies advertising locally. Our high level of diversification
reduces exposure to adverse regional economic conditions and provides
additional stability in operating results.

During the year ended December 31, 1999, we published 191 directories. Our
geographic diversity is evidenced in the following table for the periods
indicated:

YEARS ENDED EIGHT MONTHS
----------------------------------- ENDED
DECEMBER 31, APRIL 30, APRIL 30, DECEMBER 31,
--------- ---------------------- ------------
1999 1998 1997 1998
--------- --------- --------- ---------

NUMBER OF DIRECTORIES
PUBLISHED
Northeast............. 51 46 45 27
Central............... 81 48 41 36
Southwest............. 38 26 24 12
West.................. 21 19 18 9
--------- --------- --------- ---------
Total................. 191 139 128 84
--------- --------- --------- ---------
NET REVENUES
Northeast............. $ 46.8 $ 38.9 $ 38.0 $ 23.1
Central............... 48.0 22.6 19.0 19.5
Southwest............. 33.0 25.9 22.7 13.5
West.................. 18.6 12.7 11.7 5.0
--------- --------- --------- ---------
Total................. $146.4 $100.1 $ 91.4 $ 61.1
--------- --------- --------- ---------

PRODUCTS

Our yellow pages directories are designed to meet the informational needs
of consumers and the advertising needs of local businesses. Each directory
consists of:

- a yellow pages section containing display advertisements and a listing
of businesses by various headings;

- a white pages section listing the names, addresses, and phone numbers
of residences and businesses in the area served;

- a community information section providing reference information about
general community services such as listings for government offices,
schools and hospitals; and

- a map of the geographic area covered by the directory.

7
Advertising space is sold throughout the directory, including in-column
and display advertising space in the yellow pages, bold listings and business
card listings in the white pages, banner advertising in the community pages,
and image advertisements on the front, back, inside, and outside covers. We
also have the production capacity to include options such as full color
advertisements which generate significantly higher advertising rates. This
diversity of product offerings enables us to create customized advertising
programs that are responsive to specific customer needs and financial
resources.

Our directories are an efficient source of information for consumers.
With over 2,000 headings in our directories and an expansive list of
businesses by heading in each local market, our directories are both
comprehensive and conveniently organized. We believe that the completeness and
accuracy of the data in a directory is essential to consumer acceptance.

Although we remain primarily focused on our printed directories, we market
an Internet directory service to our advertisers. We are in a strategic
alliance with InfoSpace.com to offer electronic directory services in each of
our local markets. Under this strategic alliance, InfoSpace.com is responsible
for the technical aspects of the Internet directory. We are responsible for
selling advertisement space in the electronic directory.

In December 1999, we entered into a revenue share agreement and made an
equity investment of $0.5 million in Eversave.com to offer their proprietary
coupon system in each of our local markets beginning with the Northeast. Under
this strategic alliance, Eversave.com is responsible for the technical aspects
of delivering the service and for billing customers. We are responsible for
promoting and selling Eversave's coupon system in our local markets and
providing advertising for Eversave in our directories. Eversave's business
model is focused on driving consumers back to local businesses through the
delivery of coupons to consumers for use in local "brick and mortar" stores.

These arrangements enable us to avoid technical risks which we are not
presently staffed to manage and permits us to participate in opportunities that
may develop through the Internet. We believe that our experience, reputation
and account relationships within our local markets will help us successfully
market these services. We began to market our Internet directory product in
1998 and since then have made it available in all of our markets. Although the
growing use of the Internet has not had a material impact on us to date, we
have not yet determined how, if at all, the Internet will impact our
performance, prospects or operations. We cross promote our Internet service and
our printed directories. Our website is at http://www.PhoneBookUSA.com. Our
website and the information contained therein or connected thereto shall not be
deemed to be incorporated into this annual report.

SALES AND MARKETING

Yellow pages marketing is a direct sales business which requires both
servicing existing accounts and developing new customers. Repeat customers
comprise our core account base and a number of these customers have advertised
in our directories for many years. For the fiscal years ended April 30, 1998
and December 31, 1999, accounts representing 87.2% and 87.1%, respectively, of
the prior year's net revenues have renewed their advertising program in the
current edition of each directory. Management believes that this high revenue
renewal rate reflects the importance of our directories to our local accounts
for whom yellow pages directory advertising is a principal form of advertising.
In addition, yellow pages advertising often comprises an integral part of the
local advertising strategy for larger national companies operating at the
local level. Advertisers have a strong incentive to increase the size of their
advertisement and to renew their advertising programs because advertisements
are placed within each heading of a directory based first on size then on
seniority. Generally, larger advertisements are more effective than smaller
advertisements and advertisements placed near the beginning of a heading
generate more responses than similarly sized advertisements placed further
back in the heading.

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We also build on our account base by generating new business leads from
multiple sources including a comprehensive compilation of data about
individual company advertising expenditures in competitive yellow page
directories. We have developed a proprietary database of high potential
customers based on each individual customer's yellow page advertising
expenditures and focus our sales resources on those potential customers. In
support of this strategy, we have expanded our sales force from 296 employees
at April 30, 1995 to 643 at December 31, 1999, representing an increase of
approximately 117%. Management has observed a direct correlation between
adding new sales force employees and revenue growth.

We employ five executive vice presidents and 76 regional, district and
area sales managers who, together, are responsible for supervising the
activities of the account executives. Our 643 account executives generate
virtually all of our revenues and are responsible for servicing existing
advertising accounts and developing new accounts within their assigned service
areas.

We have well-established practices and procedures to manage the
productivity and effectiveness of our sales force. All new account executives
complete a formal two-week training program and receive continuous on-the-job
training through the regional sales management structure. Each account
executive has a specified account assignment consisting of both new business
leads and renewal accounts and is accountable for daily, weekly and monthly
sales and advance payment goals. Account executives are compensated in the
form of base salary, commissions and car allowance. Approximately 50% of total
account executive compensation is in the form of commissions, such that sales
force compensation is largely tied to sales performance and account
collection. As of December 31, 1999, we employed approximately 978 people, 778
of whom were engaged in sales and sales support functions.

The sales cycle of a directory varies based on the size of the revenue
base and can extend from a few weeks to as long as nine months. Once the
canvass of customers for a directory is completed, the directory is "closed"
and the advertisements are assembled into directories in the production cycle.

PRODUCTION AND DISTRIBUTION

We develop a production planning guide for each directory, which is a
comprehensive planning tool setting forth production specifications and the
cost structure for that directory. Each production planning guide is
incorporated into our annual production schedule and serves as the foundation
for our annual budgeting process. Although we view our directories as annual
publications, the actual interval between publications may vary from other
than a twelve month cycle. New directory starts can be incorporated into the
production schedule without significant disruption because directory production
is staggered throughout the year. As of December 31, 1999, we had a production
staff of approximately 116 full-time employees.

Prior to 1995, we purchased specialized yellow pages data processing
services from a third-party provider to supplement our own internal
information processing and management functions. In 1995, we began eliminating
a substantial portion of third-party information processing services by
internally generating leads and processing white pages and yellow pages with
our own management information systems.

Our current production process includes post-sales, national sales order
processing, advertisement design and manufacturing, white pages licensing and
production, yellow pages production, community pages production and
pagination. Production operations are primarily managed in-house to minimize
costs and to assure a high level of accuracy.

After the in-house production process is complete, the directories are
then sent to outside vendors to be printed. We do not print any of our
directories but instead contract with a limited number of printers to print
and bind our directories. We contract with several outside vendors to
distribute our directories to each business and residence in our markets.

9
RAW MATERIALS

Our principal raw material is paper. We used approximately 23.6, 18.2, and
17.6 million pounds of directory grade paper for the fiscal years ended
December 31, 1999 and April 30, 1998 and 1997, respectively, resulting in a
total cost of paper during such periods of approximately of $6.6 million, $5.7
million and $5.8 million, respectively. During the eight months ended December
31, 1998 we used 14.2 million pounds at a cost of $3.6 million. We do not
purchase paper directly from the paper mills; instead, our printers purchase
the paper on our behalf at prices negotiated by us.

COMPETITION

The yellow pages directory advertising business is highly competitive.
Independent publishers operate in competition with the regional Bell operating
companies and other telephone utilities. In most markets, we compete not only
with the local utilities, but also with one or more independent yellow pages
publishers. Other media in competition with yellow pages for local business
and professional advertising include newspapers, radio, television, billboards
and direct mail.

INTELLECTUAL PROPERTY

We have registered one trademark and one service mark used in our
business. In addition, each of our publications is protected under Federal
copyright laws. Telephone utilities are required to license directory listings
of names and telephone numbers that we then license for a set fee per name for
use in our white pages listings. Total licensing fees paid by us were $0.9
million, $1.1 million and $1.1 million in the fiscal years ended December 31,
1999, April 30, 1998, and 1997, respectively. During the eight months ended
December 31 1998, total license fees were $0.4 million. In addition, we believe
that the phrase "yellow pages" and the walking fingers logo are in the public
domain in the United States. Otherwise, we believe that we own or license the
intellectual property rights necessary to conduct our business.

EMPLOYEES

As of December 31, 1999, we employed approximately 978 full-time
employees, none of whom are members of a union. We believe that we have good
relations with our employees.

10
ITEM 2. PROPERTIES

We house our corporate, administrative and production staff at our
headquarters located at 8344 Clairemont Mesa Boulevard, San Diego, California.
Information as of December 31, 1999 relating to our leased corporate
headquarters and other leased regional sales offices is set forth in the
following table:

SQUARE TERM DESCRIPTION OF
LOCATION ADDRESS FOOTAGE EXPIRATION USE
-------- ----------------------- ------- ---------- -----------------

San Diego, CA...........8344 Clairemont Mesa 35,824 10/31/03 Corporate/Production
Albany, NY..............441 New Karner Rd., Ste. 100 7,500 11/30/04 Sales Office
Poughkeepsie, NY........4 Jefferson St. #500 6,210 12/31/03 Sales Office
Elmsford, NY............150 Clearbrook Road 8,775 12/31/00 Sales Office
Bedford, TX.............4001 Airport Fwy. Ste. 230 5,697 7/31/00 Sales Office
Newington, CT...........2600 Berlin Turnpike, 2nd Floor 2,000 8/31/00 Sales Office
Milford, CT.............48 Wellington Rd., Ste. 100 6,477 4/30/05 Sales Office
San Antonio, TX.........8930 Four Winds Dr. Ste. 141 2,053 6/30/02 Sales Office
Houston, TX.............11243 Fuqua 9,600 3/31/01 Sales Office
Louisville, KY..........2300 Envoy Circle #2301 6,514 3/31/02 Sales Office
Indianapolis, IN........2601 Fortune Circle E #100 3,943 11/30/02 Sales Office
Manitou Beach, MI.......6155 U.S. 223 3,500 12/31/00 Sales Office
Westlake, OH............24650 Center Ridge Rd. 1,836 9/30/00 Sales Office
Kettering, OH...........3085 Woodman Dr. Ste. 120 3,312 12/31/00 Sales Office
Jackson, MI.............2 Universal Way 10,500 11/30/02 Sales Office
Oklahoma City, OK.......4901 W. Reno Ste. 800 2,931 6/30/02 Sales Office
Nashville, TN...........2525 Perimeter Dr. Ste. 105 3,637 5/31/01 Sales Office
El Dorado Hills, CA.....5160 Robert J. Matthews Bl #4 2,800 7/31/02 Sales Office
San Diego, CA...........7220 Trade St. #200 8,454 1/31/04 Sales Office
Macon, GA...............6578 Hawkinsville Road 3,100 1/07/00 Sales Office
Temecula, CA............41743 Enterprise Cir. N.
#101, 102, 103 5,730 8/31/01 Sales Office

We lease 43 other sales offices in more remote sales areas and
periodically lease facilities for storage of directories.

ITEM 3. LEGAL PROCEEDINGS

We are a party to various litigation matters incidental to the conduct of
our business. Management does not believe that the outcome of any of the
matters in which we are currently involved will have a material adverse effect
on our financial condition or the results of our operations.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS

Not applicable.

11
PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS

There is no established public trading market for Holdings' partnership
units, and it is not expected that such a market will develop in the future.

As of March 23, 2000, Holdings had outstanding an aggregate of
1,270,456 Class A Common Units, and 10,000 Class B Common Units.

Distributions on Holdings' partnership units are governed by Holdings'
Third Amended and Restated Partnership Agreement, as amended. The payments of
distributions by Holdings is restricted by the indenture relating to its Series
B 11 7/8% Senior Discount Notes due 2008 (the "Discount Notes"). In addition,
the ability of Holdings' subsidiaries to distribute funds to Holdings for the
payments of distributions is limited by the terms of certain of such
subsidiaries' indebtedness. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations-Liquidity and Capital Resources."

ITEM 6. SELECTED FINANCIAL DATA

The following table sets forth for the periods indicated selected
historical consolidated financial data for Holdings. The following selected
historical consolidated financial data are qualified by the more detailed
consolidated financial statements of Holdings and the notes thereto
included elsewhere in this annual report and should be read in conjunction
with such consolidated financial statements and notes and the discussion under
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere in this Annual Report.

On May 1, 1998, we changed our fiscal year end from April 30 to December
31. Starting with the quarter ending September 30, 1998, we began reporting on
a calendar year end basis. The annual report on Form 10-K for the eight months
ended December 31, 1998 included financial data for the transition period for
the eight months ended December 31, 1998 and comparative data for the eight
months ended December 31, 1997.

The consolidated statement of operations data for the years ended December
31, 1999, April 30, 1998 and 1997 and the eight months ended December 31, 1998
and balance sheet data as of December 31, 1999 and 1998 have been derived from
our audited consolidated financial statements included elsewhere in this annual
report.

The statement of operations data for the years ended April 30, 1996 and
1995 and the balance sheet data as of April 30, 1998, 1997, 1996 and 1995 have
been derived from our audited consolidated financial statements, which do not
appear in this annual report.

EIGHT MONTHS
YEARS ENDED ENDED
-------------------------------------------------------- ------------
DECEMBER 31, APRIL 30, APRIL 30, APRIL 30, APRIL 30, DECEMBER 31,
1999 1998 1997 1996 1995 1998
-------- -------- -------- -------- -------- ------------

STATEMENT OF OPERATIONS DATA:
Net revenues.................. $ 146,399 $ 100,143 $ 91,414 $ 77,731 $ 69,845 $ 61,071
Cost of revenues.............. 26,345 20,233 19,500 18,202 16,956 12,694
--------- --------- -------- -------- -------- ---------
Gross profit.................. 120,054 79,910 71,914 59,529 52,889 48,377
Operating expenses:
Sales and marketing......... 59,370 40,290 36,640 29,919 27,671 27,530
General and
administrative............ 14,541 9,508 10,422 9,585 8,686 7,650
Depreciation and
amortization.............. 19,934 7,086 6,399 4,691 4,593 4,526
Contribution to Equity
Compensation Plan......... -- 5,543 -- 796 525 --
--------- --------- -------- -------- -------- ---------
Total operating expenses...... 93,845 62,427 53,461 44,991 41,475 39,706
--------- --------- -------- -------- -------- ---------
Income from operations........ 26,209 17,483 18,453 14,538 11,414 8,671
Other income (expense), net... 413 82 48 375 470 242
Interest expense.............. (27,440) (15,246) (7,816) (6,630) (4,345) (14,511)
--------- --------- -------- -------- -------- ---------
Income (loss) before
extraordinary item.......... (818) 2,319 10,685 8,283 7,539 (5,598)
Extraordinary item(a)......... -- (4,791) -- (1,368) (392) --
--------- --------- -------- -------- -------- ---------
Net income (loss):............ $ (818) $ (2,472) $ 10,685 $ 6,915 $ 7,147 $ (5,598)
========= ========= ======== ======== ======== =========
OTHER DATA:
Capital expenditures.......... $ 1,521 $ 996 $ 1,034 $ 484 $ 496 $ 824
Cash flows provided by (used
for):
Operating activities........ 10,356 15,681 15,302 13,091 14,608 4,474
Investing activities........ (58,181) (9,200) (3,592) (5,713) (2,838) (22,156)
Financing activities........ 34,925 (6,223) (11,776) (6,992) (11,550) 30,237
EBITDA(b)..................... 46,680 30,194 24,900 20,400 17,002 13,500
EBITDA margin(c).............. 31.9% 30.2% 27.2% 26.2% 24.3% 22.1%
Gross profit margin........... 82.0% 79.8% 78.7% 76.6% 75.7% 79.2%
Bookings(d)................... $ 133,581 $ 99,492 $ 86,859 $ 75,709 $ 70,013 $ 70,281
Advance payments as a % of net
revenue(e).................. 45.3% 46.0% 45.1% 41.0% 36.9% 47.4%
Number of accounts(f)......... 135,097 97,479 93,157 84,117 77,371 61,697
Average net revenues per
account(g).................. $ 1,084 $ 1,027 $ 981 $ 924 $ 903 $ 990
Number of directories.
published................... 191 139 128 118 106 84
Ratio of earnings to fixed
charges(h):................. 1.0x 1.5x 2.3x 2.3x 2.7x 0.6x
BALANCE SHEET DATA
(AT END OF PERIOD):
Working capital............... $ 8,421 $ 5,438 $ 24 $ 2,088 $ 3,496 $ 15,297
Total assets.................. 147,346 61,997 48,231 47,423 41,831 91,797
Total debt.................... 294,344 214,038 78,435 84,410 47,961 249,216
Partnership (deficit)(i)...... (185,426) (179,027) (50,722) (55,606) (22,721) (184,797)

See accompanying notes to Selected Financial Data.

13
NOTES TO SELECTED FINANCIAL DATA
(DOLLARS IN THOUSANDS)

(a) "Extraordinary item" represents the write-off of unamortized debt
issuance costs related to the repayment of debt prior to maturity. See
Note 4 of the Notes to the Consolidated Financial Statements contained
elsewhere in the annual report.

(b) "EBITDA" is defined as income (loss) before extraordinary item plus
interest expense, discretionary contributions to the company's Equity
Compensation Plan, which represent special distributions to the company's
Equity Compensation Plan in connection with refinancing transactions, and
depreciation and amortization and is consistent with the definition of
EBITDA in the indentures relating to the company's notes and in the
company's senior credit facility. Contributions to the Equity Compensation
Plan were $525 for the year ended April 30, 1995, $796 for the year ended
April 30, 1996 and $5,543 for the year ended April 30, 1998. EBITDA is not
a measure of performance under generally accepted accounting principles.
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 generally accepted accounting
principles, 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. The company's definition of EBITDA may not be comparable to that of
other companies.

(c) "EBITDA margin" is defined as EBITDA as a percentage of net revenues.
Management believes that EBITDA margin provides a valuable indication of
the company's ability to generate cash flows available for debt service.

(d) "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 when the directory's selling period is
substantially complete as of the purchase date.

(e) "Advance payments as a percentage of net revenues" is defined as, for a
given period, all cash deposits received on advertising orders prior to
revenue recognition as a percentage of net revenues recognized upon
directory distribution.

(f) "Number of accounts" is defined as the total number of advertising
accounts for all directories published during a given period. Customers
are counted as multiple accounts if advertising in more than one
directory.

(g) "Average net revenues per account" is defined as net revenues divided by
the number of accounts.

(h) "Ratio of earnings to fixed charges" is calculated by dividing earnings
by fixed charges. Earnings consist of income (loss) before extraordinary
item plus contributions to the Equity Compensation Plan plus fixed
charges. Fixed charges consist of interest, whether expensed or
capitalized, amortization of debt issuance costs, whether expensed or
capitalized, and an allocation of one-fourth of the rental expense from
operating leases which management considers to be a reasonable
approximation of the interest factor of rental expense.

(i) Partnership (deficit) is the value of equity contributions to Holdings
by its partners plus net income of Holdings less distributions for income
taxes and distributions related to recapitalization transactions completed
during fiscal 1996 and 1998. Member distributions for income taxes
during the years ended April 30, 1996, 1997 and 1998 totaled $3,400,
$5,801 and $2,100, respectively. Member distributions related to
recapitalization transactions completed in the years ended April 30, 1996
and 1998 totaled $36,400 and $174,381, respectively. Also, in connection
with the November 1995 refinancing of Holdings' predecessor, $36 million
was distributed to the limited and general partners of Holdings'
predecessor. Furthermore, in connection with the October 1997 refinancing
of Holdings' predecessor, $174.4 million was distributed to the limited
and general partners of Holdings' predecessor.

14
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (AMOUNTS IN THOUSANDS)

TransWestern Publishing Company, L.P. (the "Partnership") was formed in
1993 to acquire the TransWestern Publishing Division of US West Marketing
Resources Group, Inc., a subsidiary of US WEST INC. In October 1997, the
Partnership completed a $312.7 million recapitalization (the
"Recapitalization"). In November 1997, the Partnership formed and contributed
substantially all of its assets to TransWestern and TransWestern assumed or
guaranteed all of the liabilities of the Partnership and the Partnership
changed its name to TransWestern Holdings L.P. As a result of this
transaction, Holdings' only assets are all of the membership interests of
TransWestern. All of the operations that were previously being conducted by
the Partnership are being conducted by TransWestern.

On May 1, 1998, the Board of Directors of TransWestern Communications
Company, Inc. ("TCC"), the general partner of Holdings, authorized the change
of our fiscal year from a fiscal year Ending April 30 to a fiscal year
ending December 31. Starting with the quarter ending September 30, 1998, we
began reporting on a calendar year end basis.

We believe that comparisons between the year ended December 31, 1999 and
the unaudited twelve month period ended December 31, 1998 are meaningful;
therefore, these comparisons are discussed below.

OVERVIEW

Revenue Recognition. 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 other
operating costs are recognized during the period when incurred. As the number
of directories increases, the publication schedule is periodically adjusted
to accommodate new books. In addition, changes in distribution dates are
affected 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
recognized based on actual distribution dates of individual directories, our
bookings and cash collection activities generally occur at a steady pace
throughout the year. The table below demonstrates that quarterly bookings,
collection of advance payments and total cash receipts, which includes both
advance payments and collections of accounts receivable, vary less than net
revenues or EBITDA:

TWELVE MONTHS ENDING DECEMBER 31,
------------------------------------------------------
1999 1998
-------------------------- --------------------------
Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1
----- ----- ----- ----- ----- ----- ----- -----

Net revenues........ $42.6 $38.2 $34.1 $31.5 $24.3 $29.0 $28.8 $26.8
EBITDA.............. 15.5 12.0 11.0 8.2 5.5 8.5 9.6 8.9
Bookings............ 35.1 37.8 32.1 28.6 28.6 26.8 22.8 25.0
Advance payments.... 18.7 17.6 15.7 14.4 13.9 13.3 11.5 11.5
Total cash receipts. 34.6 32.6 28.3 25.4 26.1 25.9 25.7 21.7

For definitions of "EBITDA," "Bookings," and "advance payments" see the
notes to Item 6 "Selected Financial Data."

15
Revenue Growth. A key factor in our company's revenue growth has been
the increase in the number of directories published. Compared to 1995, the
number of directories published has increased by 85, from 106 to 191 as of
December 31, 1999, and we increased our total number of accounts from nearly
62,000 to more than 135,000 over the same period. The growth in directories was
primarily due to acquiring directories that expanded our presence in
California, Ohio, Oklahoma, Texas, Georgia, Alabama, and Michigan. Excluding
acquired directories, our net revenues grew 6.7%, and 7.1% for the years ended
April 30, 1997 and 1998 and 7.6% in the year ended December 31, 1999. Our
average revenue per account increased from $981 in the year ended April 30,
1997 to $1,084 in the year ended December 31, 1999. Our revenue renewal grew
from 85.0% in the year ended April 30, 1998 to 87.1% in the year ended December
31, 1999 and account renewal rate grew from 72.9% in the year ended April 30,
1998 to 74.9% in the year ended December 31, 1999.

Bookings. The length of the measurement periods for revenues and
bookings are the same; however, the measurement period for bookings for each
month is the thirty-day period ending on the twentieth of that month.
Consequently, the measurement period for bookings lags the measurement period
for revenue and other items by 10 days. Growth in bookings, which is closely
correlated with the number of account executives, was 30.7% for the year
ended December 31, 1999 versus the year ended December 31, 1998. Growth was
14.5% for the year ended April 30, 1998 versus the year ended April 30, 1997.
To facilitate future growth, we increased the size of our sales force by
approximately 33.8% from an average of 456 in the year ended December 31,
1998, to an average of 610 during the year ended December 31, 1999. The
average number of account executives employed was 389 in the year ended April
30, 1997 and 438 in 1998. We employed an average of 482 account executives over
the eight month period ended December 31, 1998.

Cost of Revenues. Our costs of revenue are: production, paper, printing
distribution and licensing. Cost of revenues represented 18.0% of net
revenues for the year ended December 31, 1999 compared to 19.2% for the year
ended December 31, 1998. Total costs of revenue represented 20.2% of net
revenues for the year ended April 30, 1998 compared to 21.3% for the year
ended April 30, 1997, and 20.8% for the eight months ended December 31, 1998
compared to 22.9% for the same period in 1997. At the individual directory
level, production, printing, distribution and licensing costs are largely fixed
for an established circulation, resulting in high marginal profit contribution
from incremental advertising sales into an existing directory. Since 1995, our
constant focus on process improvement and increased productivity has enabled us
to minimize additional production and administrative costs while increasing the
number of directories.

Our principal raw material is paper. We used approximately 18.5 million
and 23.6 million pounds of directory grade paper for the years ended December
31, 1998 and 1999, respectively, resulting in a total cost of paper during such
periods of approximately $5.7 million and $6.6 million, respectively. We used
approximately 17.6 million and 18.2 million pounds of paper for the years ended
April 30, 1997 and 1998, respectively, resulting in a total cost of paper for
such periods of approximately $5.8 million and $5.7 million, respectively. We
used 10.9 million pounds of paper during the eight months ended December 31,
1998 for a total cost of approximately $4.3 million.

White pages listings are licensed from telephone utilities for a set fee
per name and the number of listings correspond directly to planned
circulation and does not fluctuate. Total licensing fees incurred by us were
$0.9 million for the year ended December 31, 1999, $1.1 million for the year
ended April 30, 1998, $1.0 million for the year ended April 30, 1997 and $0.4
million for the eight months ended December 31, 1998. Distribution is provided
by several third-party vendors at a fixed delivery cost per directory as
established by individual market.

16
Selling and Marketing Expenses. Direct sales expense correlates closely
with the size of our sales force. As we continue to increase the number of
directories and to expand our total customer base, the number of account
executives required to complete the annual selling cycle grows accordingly.
Our ability to complete selling each directory within a prescribed time frame
depends on account executive staffing levels and productivity. Historically,
we have experienced a high turnover rate among our account executives,
particularly among new hires, and therefore continue to invest in recruiting
and training account executives to build the size of our sales force and to
continue to grow revenue. The number of account executives has grown from an
average of 456 in the in the year ended December 31, 1998, to an average of 610
during the year ended December 31, 1999.

Cash Flow Management. We have instituted several policies to accelerate
customer payments including:

- requiring customers to make minimum deposits on their annual purchase
at the time of contract signing;

- requiring customers with small advertising purchases to pay 100% at
the time of contract signing;

- offering a cash discount to customers who pay 100% at the time of
contract signing;

- providing commission incentives to account executives to collect
higher customer deposits earlier in the sales process;

- shortening customer payment terms from 12 months to eight months or
less; and

- requiring new customers to begin payments immediately after contract
signing rather than waiting for the directory to be distributed.

As a result of these initiatives which began in 1994, advance payments
received prior to directory publication as a percentage of net revenues has
increased from 42.7% for the year ended December 31, 1995 to 45.3% for the year
ended December 31, 1999. Advance payments as a percentage of net revenues
decreased from 46.3% for the year ended December 31, 1998 to 45.3% in the same
period in 1999 due to a lower advanced payment collection rate on acquired
books compared to existing directories.

Although we collect an advance payment from most advertisers, credit is
extended based upon the size of the advertising program and customer
collection history. While our accounts receivable are not subject to any
concentrated credit risk, credit losses represent a cost of doing business
due to the nature of our customer base, largely local businesses, and the use
of extended credit terms. Generally, for larger and established accounts,
credit may be extended under eight to twelve month installment payment terms.
In addition, customers are given credits for the current year when errors occur
in their advertisements. A reserve for bad debt and errors is established
when revenue is recognized for individual directories. The estimated bad debt
expense is determined on a market by market basis taking into account prior
years' collection history.

Actual write-offs are taken against the reserve when management
determines that an account is uncollectible, which typically will be
determined after completion of the next annual selling cycle. Therefore,
actual account write-offs may not occur until 18 to 24 months after a
directory has been published. The estimated provision for bad debt equaled
9.3% and 8.7% of net revenues for the years ended December 31, 1998
and 1999, respectively, and 9.8% and 9.1% of net revenues for the
years ended April 30, 1997 and 1998, respectively. For the year ended December
31, 1998 management estimates that approximately $10.2 million will be written
off, or 9.3% of the period's net revenue. Management regularly reviews actual
write-offs of accounts receivable as compared to the reserve estimates made at
the time individual directories are published.

17
RESULTS OF OPERATIONS

The following table summarizes the company's results of operations as a
percentage of revenue for the periods indicated:

TWELVE MONTHS ENDED EIGHT MONTHS ENDED
DECEMBER 31, APRIL 30, DECEMBER 31,
-------------- -------------- --------------
1999 1998 1998 1997 1998 1997
----- ----- ----- ----- ----- -----
(Unaudited)

Net revenues.......................... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of revenues...................... 18.0 19.2 20.2 21.3 20.8 22.9
----- ----- ----- ----- ----- -----
Gross profit.......................... 82.0 80.8 79.8 78.7 79.2 77.1

Sales and marketing................... 40.6 41.3 40.2 40.1 45.1 43.7
General and administrative............ 9.9 10.0 9.5 11.4 12.4 11.8
Depreciaiton and amortization......... 13.6 6.6 7.1 7.0 7.4 8.4
Contribution to Equity
Compensation Plan -- -- 5.5 -- -- 10.6
----- ----- ----- ----- ----- -----
Income from operations................ 17.9% 22.9% 17.5% 20.2% 14.3% 2.6%
===== ===== ===== ===== ===== =====
EBITDA................................ 31.9% 29.8% 30.2% 27.2% 22.1% 10.9%
===== ===== ===== ===== ===== =====

For the definition of "EBITDA," see the notes to Item 6, "Selected
Financial Data."

Year Ended December 31, 1999 Compared to the Year Ended December 31, 1998
(Unaudited)

Net revenues increased $37.5 million, or 34.4%, from $108.9 million in the
year ended December 31, 1998 to $146.4 million in the same period in 1999. We
published 191 directories in the year ended December 31, 1999 compared to 147
in the same period in 1998. The net revenue growth was due to year to year
growth in the same 136 directories published during both periods of $7.8
million, $28.5 million from 43 new directories and $7.3 million from twelve
directories for which the publication date moved into the period; offset by $6.1
million of net revenues associated with eleven directories published in the
year ended December 31, 1998 but not in the same period in 1999.

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 colorization of ads, additional
ad sizes and additional headings, same book revenue growth for the 136
directories published in both periods was 7.6%.

Cost of revenues increased $5.4 million, or 25.9%, from $20.9 million in
the year ended December 31, 1998 to $26.3 million in the same period
in 1999. The increase was the result of $5.7 million of costs associated with
43 new directories published in the year ended December 31, 1999 and $1.0
million in costs associated with twelve books published in the year ended
December 31, 1999, but not in the same period in 1998; offset by $1.6 million
of costs associated with eleven directories published during the year ended
December 31, 1998, but not in the same period in 1999. A decrease in direct
costs of publishing the same 136 books in the years ended December 31, 1998 and
1999 of $0.6 million was substantially offset by increased indirect production
costs of $0.9 million.

As a result of the above factors, gross profit increased $32.1 million, or
36.5%, from $88.0 million in the year ended December 31, 1998 to $120.1 million
in the same period in 1999. Gross margin increased from 80.8% in the year ended
December 31, 1998 to 82.0% in the same period in 1999 as a result of increased
sales on a same directory basis without a corresponding increase in direct or
indirect production costs.

18
Selling and marketing expenses increased $14.4 million, or 32.0%, from
$45.0 million in the year ended December 31, 1998 to $59.4 million in the same
period in 1999. The increase in direct sales costs was attributable to $6.7
million of costs associated with 43 new directories, $1.5 million of additional
sales costs for the same 136 directories published during both periods, $1.4
million of costs associated with twelve directories that published in the year
ended December 31, 1999 but not in the same period in 1998 offset by $1.6
million of costs associated with eleven books that published in the year ended
December 31, 1998 but not in the same period in 1999. Indirect sales management
costs increased $4.1 million due to the acquisition of sales offices and higher
training costs and a $2.3 million increase in the provision for bad debt for
write-offs due primarily to an increase in net revenue. Selling and marketing
expense as a percentage of net revenues decreased from 41.3% in the year ended
December 31, 1998 to 40.6% in the same period in 1999 primarily as a result
increased net revenues from acquired directories.

General and administrative expense excluding depreciation and amortization
increased $3.7 million, or 33.9%, from $10.9 million for the year ended December
31, 1998 to $14.5 million for the same period in 1999 primarily as a result of
higher incentive compensation and professional service costs in 1999 compared
to 1998. Depreciation and amortization increased $12.7 million or 175.2% from
$7.2 million in the year ended December 31, 1998 to $19.9 million for the same
period in 1999 due to the amortization of acquired intangibles attributed to
recently acquired directories.

As a result of the above factors, income from operations increased $1.3
million, or 5.3%, from $24.9 million in the year ended December 31, 1998 to
$26.2 million in the same period in 1999. Income from operations as a
percentage of net revenues decreased from 22.9% in the year ended December 31,
1998 to 17.9% in the same period in 1999.

Interest expense increased $5.5 million, or 25.1%, from $21.9 million in
the year ended December 31, 1998 to $27.4 million in the same period in 1999.

Income (loss) before extraordinary item decreased $4.1 million, or 124.7%,
from $3.3 million in the year ended December 31, 1998 to a loss of ($0.8)
million in the same period in 1999.

Year Ended April 30, 1998 Compared to Year Ended April 30, 1997.

Net revenues increased $8.7 million, or 9.5%, from $91.4 million in the
year ended April 30, 1997 to $100.1 million in the same period in
1998. We published 139 directories in the year ended April 30, 1998
as compared to 128 in the year ended April 30, 1997. The net revenue
growth was due to growth in the same 123 directories of $6.0 million, $0.7
million of revenue from five new directories and $5.7 million of revenue from
11 directories that moved into the period; partially offset by $3.7 million
of net revenues associated with five directories that published in the twelve
months ended April 30, 1997 but not in the same period in 1998.

Cost of revenues increased $0.7 million, or 3.8%, from $19.5 million in
the year ended April 30, 1997 to $20.2 million in the same period in
1998. The increase was the result of $0.3 million of costs associated with 5
new directories published during the year ended April 30, 1998, $1.5
million of costs associated with 11 books that published in the year
ended April 30, 1998, but not in the same period in 1997 and $137,000 of
additional production and distribution overhead costs; offset by $0.5 million
of lower costs for the same 123 directories published in both periods and
$0.7 million of costs associated with 5 directories published during the
year ended April 30, 1997, but not in the same period in 1998. For
the same 123 directories that were published in both periods, cost of
revenues as a percentage of net revenues decreased from 21.3% in 1997 to
19.7% in 1998, primarily due to a decrease in printing and production costs
and license fees.
19
As a result of the above factors, gross profit increased $8.0 million,
or 11.1%, from $71.9 million in the year ended April 30, 1997 to
$79.9 million in the same period in 1998. Gross margin increased from 78.7%
in the year ended April 30, 1997 to 79.8% in the year ended
April 30, 1998 as a result of reduced printing and production costs and
license fees and increased sales on a same directory basis.

Selling and marketing expense increased $3.7 million, or 10.0%, from
$36.6 million in the year ended April 30, 1997 to $40.3 million in
the same period in 1998. The increase was attributable to $0.3 million of
costs associated with 5 new directories, $1.9 million of additional sales
costs on the same 128 directories, $1.4 million of costs associated with 11
books that published in the year ended April 30, 1998 but not in the
same period in 1997, $468,000 of higher sales management costs, and a
$368,000 increase in the provision for bad debt for write-offs due to the
change in the mix of directories published in the year ended April
30, 1998 as compared to the same period in 1997.

These increases were partially offset by $0.7 million of reduced selling
and marketing expenses associated with the five directories that published in
the year ended April 30, 1997 but not in the same period in 1998.
Selling and marketing expense as a percentage of net revenues increased
slightly from 40.1% in the year ended April 30, 1997 to 40.2% in the
same period in 1998.

General and administrative expense excluding amortization and depreciation
decreased $0.9 million, or 8.8%, from $10.4 million in the year ended April 30,
1997 to $9.5 million in the same period in 1998 as a result of cost containment
programs. Amortization and depreciation increased $0.7 million from $6.4
million in the year ended April 30, 1997 to $7.1 million in the same period in
1998 due to the amortization of acquired intangibles attributed to acquired
directories. General and administrative expense as a percentage of net revenues
decreased from 11.4% in the year ended April 30, 1997 to 9.5% in the same
period in 1998.

As a result of the above factors, income from operations decreased $1.0
million, or 5.2%, from $18.5 million in the year ended April 30,
1997 to $17.5 million in the same period in 1998. Income from operations as a
percentage of net revenues decreased from 20.2% in the year ended
April 30, 1997 to 17.5% in the same period in 1998.

Interest expense increased $7.4 million, or 95.1%, from $7.8 million in
the year ended April 30, 1997 to $15.2 million in the same period in 1998.

Income before extraordinary item decreased $8.4 million, or 78.3%, from
$10.7 million in the year ended April 30, 1997 to $2.3 million in
the same period in 1998.

Eight Months Ended December 31, 1998 Compared to Eight Months Ended
December 31, 1997

Net revenues increased $8.8 million, or 16.7%, from $52.3 million in the
eight months ended December 31, 1997 to $61.1 million in the same period in
1998. We published 84 directories in the eight months ended December 31, 1998
compared to 76 in the same period in 1997. The net revenue growth was due to
year to year growth in the same 68 directories published during both periods
of $3.3 million, $6.6 million from nine new directories and $3.9 million from
seven directories for which the publication date moved into the period;
offset by $5.1 million of net revenues associated with eight directories
published in the eight months ended December 31, 1997 but not in the same
period in 1998.

20
Cost of revenues increased $0.7 million, or 5.8%, from $12.0 million in
the eight months ended December 31, 1997 to $12.7 million in the same period
in 1998. The increase was the result of $1.2 million of costs associated with
nine new directories published in the eight months ended December 31, 1998
and $0.7 million in costs associated with seven books published in the eight
months ended December 31, 1998, but not in the same period in 1997; offset by
$1.2 million of costs associated with eight directories published during the
eight months ended December 31, 1997, but not in the same period in 1998. A
decrease in direct costs of publishing the same 68 books in the eight months
ended December 31, 1998 and 1997 of $0.3 million was substantially offset by
increased indirect production costs of $0.2 million.

As a result of the above factors, gross profit increased $8.0 million, or
20.0%, from $40.3 million in the eight months ended December 31, 1997 to $48.4
million in the same period in 1998. Gross margin increased from 77.1% in the
eight months ended December 31, 1997 to 79.2% in the same period in 1998 as a
result of reduced production costs and license fees and increased sales on a
same directory basis.

Selling and marketing expenses increased $4.7 million, or 20.5%, from
$22.9 million in the eight months ended December 31, 1997 to $27.6 million in
the same period in 1998. The increase was attributable to $1.2 million of
costs associated with nine new directories, $0.6 million of additional sales
costs for the same 68 directories published during both periods, $1.0 million
of costs associated with seven directories that published in the eight months
ended December 31, 1998 but not in the same period in 1997, $2.0 million of
higher sales management costs and a $1.0 million increase in the provision for
bad debt for write-offs due primarily to an increase in net revenue. These
increases were partially offset by $1.0 million of reduced selling and
marketing expenses associated with the eight directories published in the
eight months ended December 31, 1997 but not in the same period in 1998.
Selling and marketing expense as a percentage of net revenues increased from
43.7% in the eight months ended December 31, 1997 to 45.1% in the same period
in 1998 primarily as a result of the reorganization of the company's sales
management and the addition of account executives.

General and administrative expense excluding depreciation and amortization
increased $1.5 million, or 23.5%, from $6.2 million for the eight months ended
December 31, 1997 to $7.7 million for the same period in 1998 primarily due to
additional professional fees incurred related to the recapitalization,
increased recruiting and temporary employee costs, internet service related
costs, and higher incentive based compensation. In the eight months ended
December 31, 1997 a contribution of $5.5 million was made to our Equity
Contribution Plan that was made in connection with the recapitalization of our
company that was completed in October 1997. There were no such contributions
in the eight months ended December 31, 1998. Depreciation and amortization
increased $0.1 million or 3.3% from $4.4 million to $4.5 million due to
amortization of acquired intangibles associated with acquisitions.

As a result of the above factors, income from operations increased $7.4
million, or 548.5%, from $1.3 million in the eight months ended December 31,
1997 to $8.7 million in the same period in 1998. Income from operations as a
percentage of net revenues increased from 2.6% in the eight months ended
December 31, 1997 to 14.2% in the same period in 1998.

Interest expense increased $6.6 million, or 84.2%, from $7.9 million in
the eight months ended December 31, 1997 to $14.5 million in the same period
In 1998.

Loss before extraordinary item decreased $(1.0) million, or 14.7%, from
a loss of $(6.6) million in the eight months ended December 31, 1997 to a
loss of $(5.6) million in the same period in 1998.

LIQUIDITY AND CAPITAL RESOURCES

Capital expenditures were $1.5 million for the year ended December 31,
1999, $0.8 million for the eight months ended December 31, 1998 and $1.0
million and $1.0 million for the years ended April 30, 1998 and 1997,
respectively. Capital spending is used largely for computer hardware and
software upgrades for the maintenance of production and operating systems. As
of December 31, 1999, we did not have any material commitments for capital
expenditures.

21
Working capital decreased $6.6 million from $15.0 million at December 31,
1998 to $8.4 million at December 31, 1999. Net accounts receivable, which
represents the largest component of working capital, increased to $36.2
million as of December 31, 1999 compared to $20.9 million as of December 31,
1998 due to an increase in net revenues. Cash decreased to $1.2 million as of
December 31, 1999 from $14.1 million as of December 31, 1998 due to cash drawn
from existing credit facilities in late 1998 in preparation for the acquisition
of United Directory Services, Inc. in January 1999. Current liabilities
increased to $40.2 million as of December 31, 1999 from $29.6 million as of
December 31, 1998 due to acquisitions. Advance payments as a percentage of net
revenues decreased from 46.3% for the year ended December 31, 1998 to 45.3% in
the same period in 1999 due to a lower advanced payment collection rate on
acquired books compared to existing directories.

Net cash provided by operating activities was $10.4 million in the year
ended December 31, 1999, $4.5 million in the eight months ended December 31,
1998, and $15.7 million and $15.3 million in the years ended April 30, 1998 and
1997, respectively. The decrease from the year ending April 30, 1998 to the
year ending December 31, 1999 of $5.2 million was due to: a higher level of
trade receivables attributed to higher net revenue, higher write-offs of
doubtful accounts due to an increase in the rate of account write-offs, and
a lower level of accrued payables, interest and other accrued liabilities in
December 1999 compared to April 1998. These items more than offset an
increase in net income over the same period.

Net cash used for investing activities was approximately $(58.2) million
in the year ended December 31, 1999, ($22.2) million for the eight months ended
December 31, 1998, and $(9.2) million and $(3.6) million in the years ended
April 30, 1998 and 1997, respectively. The increase from 1997 to 1998 was
caused by higher directory asset purchases compared to the year ended April 30,
1997. The increase in the year ended December 31, 1999 was due to the
substantial directory acquisition related payments compared to the year ended
April 30, 1998.

Net cash provided (used) for financing activities was approximately
$34.9 million in the year ended December 31, 1999, $30.2 million in the eight
months ended December 31, 1998, and ($6.2) million and ($11.8) million in the
years ended April 30, 1998 and 1997, respectively. The cash used by financing
activities in the year ended April 30, 1998 was due to the net use of cash
relating to the recapitalization in October of 1997. The increase in funds in
the year ended December 31, 1999 is due to the net increase in the revolving
credit facility of $40.1 million for the purposes of acquiring new directories.
Funds were drawn in late 1998 in the anticipation of the United Directory
Services, Inc. acquisition in January 1999. In the eight months ended
December 31, 1998 an additional $40.0 million of 9 5/8% Senior Subordinated
Notes was issued by TransWestern.

In connection with the Recapitalization of our company in October 1997,
we incurred significant debt. As of December 31, 1999 Holdings had total
outstanding long term indebtedness of $293 million, including: $140 million of
TransWestern's Series D 9 5/8% Senior Subordinated Notes due 2007 (excluding
unamortized premium), $66 million of outstanding borrowings under the senior
credit facility, $40 million of outstanding borrowings under the revolving loan
facility, $5 million in acquisition related debt, all of which rank senior to
the Series D notes and $42 million of Holdings' 11 7/8% Discount Notes due
2008.

As of December 31, 1999 we had $48.7 million of additional borrowing
availability under the Senior Credit Facility, none of which was outstanding.
Our principal sources of funds are cash flows from operating activities
and $29.9 million of available funds under our revolving credit facility.
Based upon 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 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.

22
In connection with our strategy of growing revenues from existing
directories, we have increased our sales force from 296 employees at April
30, 1995 to 978 at December 31, 1999 and from 456 in the year ended December
31, 1998. We seek to continue to increase the absolute size of our sales force,
however, exclusive of the effect of the increase in the sales force due to
acquisitions, we currently do not believe that our sales force will increase at
a rate equal to the percentage increase from 1995 to 1999. We do not believe
that increases in the number of sales personnel will materially impact our
liquidity.

The senior credit facility and the indentures governing TransWestern's
notes significantly restrict the distribution of funds by TransWestern and the
other indirect subsidiaries of Holdings. We cannot assure you 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.

YEAR 2000

Our Year 2000 ("Y2K") project team focused on four key readiness areas:

- business computer systems -- addressed hardware and software used in
our core operations;

- computing infrastructure -- addressed network servers, operating
software, voice networks, and phones;

- end user computing -- addressed hardware and software used in our
ancillary operations; and

- vendors/ suppliers -- addressed the preparedness of our key
suppliers.

For each readiness area, we performed risk assessment, conducted
testing, and remediation, either retirement, replacement or conversion,
developed contingency plans to mitigate known risk, and communicated with
employees, suppliers, and other third parties to raise awareness of the Y2K
problem.

Our total Y2K costs were approximately $0.7 million. Although
management believes Y2K costs related to the readiness areas described herein
to be substantially complete, there can be no assurance that there will not be
unforeseen additional costs.

Although we have not experienced any Y2K problems to date, we cannot
assure that unforeseen complications will not arise or that third parties on
which the Company relies in its day to day operations will have adequately
remedied against potential Y2K complications. If computer systems used by us
or our suppliers, the performance of products provided to us by our suppliers,
or the software applications we use to produce our products fail or experience
significant difficulties related to Y2K, our results of operations and
financial condition could be materially adversely affected.

23
FORWARD LOOKING STATEMENTS

This Annual Report on Form 10K 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 Annual Report on Form 10K, 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) the restrictions imposed by the terms of our
indebtedness; (iii) the turnover rate amongst our account executives; (iv) the
variation in our quarterly results; (v) risks related to the fact that a large
portion of our sales are to small, local businesses; (vi) our dependence on
certain key personnel; (vii) risks related to the acquisition
and start-up of directories; (viii) risks related to substantial competition in
our markets; (ix) risks related to changing technology and new product
developments; (x) the effect of fluctuations in paper costs; and
(xi) the sensitivity of our business to general economic conditions.

24
ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURE 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 December 31, 1999, there was approximately
$64.4 million outstanding under the term loan (at an interest rate of 7.8% at
such time) and $40.1 million outstanding under the revolving loans (at the
LIBOR rate of 7.5% 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 $0.9 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.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Refer to the Index on Page F-1 of the Financial Report included
herein.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

The following table sets forth certain information with respect to the
persons who are members of the Board of Directors (the "Board") of TCC, the
general partner of Holdings and the manager of TransWestern, or executive
officers of our company. TCC controls the policies and operations of our
company. The ages listed below are as of January 31, 2000.

NAME AGE POSITION AND OFFICES
---- --- --------------------

Laurence H. Bloch.......... 46 Chairman of the Board, Secretary and Director
Ricardo Puente............. 46 President, Chief Executive Officer and Director
Joan M. Fiorito............ 45 Vice President, Chief Financial Officer and Assistant
Secretary
Marybeth Brennan........... 43 Vice President -- Operations
Cynthia M. Hardesty........ 44 Vice President -- Human Resources
Joseph L. Wazny............ 54 Vice President -- Information Services
Richard Larkin............. 36 Vice President -- Internet Business Development
Richard E. Beck............ 54 Executive Vice President -- Sales
Michael Bynum.............. 44 Executive Vice President -- Sales
Ita Shea-Oglesby........... 42 Executive Vice President -- Sales
Dennis Reimert............. 51 Executive Vice President -- Sales
Jim Durance................ 37 Executive Vice President -- Sales
C. Hunter Boll............. 44 Director
Christopher J. Perry....... 44 Director
Scott A. Schoen............ 41 Director
Marcus D. Wedner........... 37 Director

Laurence H. Bloch is Chairman and Secretary of TransWestern and Holdings
and has been a Director of TCC since 1993. Prior to October 1997, Mr. Bloch
served as Vice Chairman and Chief Financial Officer of the company. Before
joining the company, Mr. Bloch was Senior Vice President and Chief Financial
Officer of Lanxide Corporation, a materials technology company. Mr. Bloch was
a Vice President, then Managing Director of Smith Barney from 1985 to 1990,
prior to which he was Vice President, Corporate Finance with Thomson McKinnon
Securities, Inc. Mr. Bloch received a BA from the University of Rochester and
an MBA from Wharton Business School.

25
Ricardo Puente has been President of TransWestern and Holdings and a
Director of TCC since 1993 and became Chief Executive Officer in October
1997. Previously, he held the positions of Vice President of Sales and
Controller of TransWestern's predecessor which he joined in 1988. Before
joining TransWestern's predecessor, Mr. Puente held various financial
positions with the Pillsbury Company for nine years. After receiving his MS
in Accounting from the University of Miami, Mr. Puente was a senior auditor
with Touche Ross & Co. Mr. Puente earned a BS in Accounting from Florida
State University.

Joan M. Fiorito is the Vice President, Chief Financial Officer and
Assistant Secretary of TransWestern and Holdings and prior to October 1997
was Vice President and Controller. Ms. Fiorito joined TransWestern's
predecessor in 1989 as Manager, Financial Planning & Analysis and
subsequently was promoted to Controller. Prior to joining TransWestern's
predecessor, Ms. Fiorito was Controller of Coastal Office Products. Ms.
Fiorito received a BS in Management from Dominican College and an MBA in
Finance from Fordham University.

Marybeth Brennan has been TransWestern's Vice President of Operations
since its formation in 1993. Ms. Brennan joined TransWestern's predecessor in
1987 as Production Manager, prior to which Ms. Brennan was Director of
Publications for Maynard-Thomas Publishing. Ms. Brennan received a BA in
English from Stonehill College.

Cynthia M. Hardesty was promoted to Vice President, Human Resources of
TransWestern effective January 1, 1999. Ms. Hardesty is responsible for all
human resource activities within TransWestern. Ms. Hardesty had served as
Director, Human Resources for the prior five years. She joined TransWestern's
predecessor in March, 1991 as a Senior Human Resources Associate. Prior to
joining TransWestern's predecessor, she was Manager of Employment and
Training with Emerald Systems. Ms. Hardesty has a BS in Business
Administration from National University.

Joseph L. Wazny has been the Vice President, Management Information
Systems of TransWestern since its formation in 1993. Before joining the
company, Mr. Wazny was Director of Systems Development and Director,
Information Systems with R.H. Donnelley Corp. Mr. Wazny graduated with a
degree in Business Administration and Computer Sciences from Roosevelt
University.

Richard L. Larkin was hired in 1999 as Vice President, Internet Business
Development. Prior to joining TransWestern, he was Vice President of
Professional Sales for RSI Home Products. Mr. Larkin held the position of Vice
President of Sales and Marketing for GTE Interactive Media, and was the National
Sales Manager and later Vice President of Hudson Soft USA. He was employed at
Deloitte and Touche and Touche Ross & Co. Mr. Larkin holds a BBA in Finance from
the University of Notre Dame and is a licensed CPA.

Richard E. Beck was promoted to Executive Vice President of TransWestern
effective November 1, 1998. Mr. Beck is responsible for negotiating with
companies regarding potential mergers and acquisitions as well as integrating
completed acquisitions into TransWestern. Mr. Beck has served as a District
Sales Manager for both Louisville and Houston. Most recently, Mr. Beck has
been serving as the Regional Vice President for the Cleveland Ohio/Alabama/
Georgia/Connecticut/New York (Midstate and Downstate) Region. Mr. Beck
joined TransWestern's predecessor as District Sales Manager when it acquired
Metro Publishing in 1986.

Michael Bynum was promoted to Executive Vice President of TransWestern
effective May 1, 1998. His responsibilities include the management of the
Oklahoma/Kansas Region, North Texas Region, Tennessee Region, and
Ohio/Kentucky/Indiana/Michigan Region. Since 1993, Mr. Bynum was Regional
Vice President overseeing the Kentucky/Indiana/Tennessee/Oklahoma/Kansas/
North Texas Region. Mr. Bynum joined TransWestern's predecessor in 1985
as a sales associate and holds a BA in Management from Cameron University.

26
Ita Shea-Oglesby was promoted to Executive Vice President of
TransWestern effective May 1, 1998. Her responsibilities include the
management of the South Texas, Louisiana Region and the Northern and Southern
California Regions. Since 1993, Ms. Shea-Oglesby was Regional Vice President
overseeing the South Texas, Louisiana Region and the Northern California
Region. Ms. Shea-Oglesby joined TransWestern's predecessor in 1983 and
previously held the positions of Area Sales Manager, Sales Trainer and
District Sales Manager. Ms. Shea-Oglesby earned a BA from Louisiana State
University.

Dennis Reimert rejoined the company as Executive Vice President with
TransWestern's acquisition of American Media in October, 1999. Mr. Reimert
began his yellow pages career with the telephone company in 1975. In 1980 he
co-founded TransWestern Publishing and served as Vice President until 1989 when
he left to co-found American Media. His management responsibilities include
certain newly acquired directories in the Western region.

Jim Durance was promoted to Executive Vice President of TransWestern
Publishing in August 1999. His responsibilities include the management of the
Michigan, Ohio and Upstate New York Region. Mr. Durance has been in the
directory publishing business since 1987. Mr. Durance held the positions of
Account Executive with Southwestern Bell, General Manager with Consumer Yellow
Pages, and Division Sales Manager with Mast Advertising (prior to TransWestern's
acquisition of Mast). He also held the positions of Area Sales Manager and
District Sales Manager with TransWestern. Mr. Durance holds an Associates degree
in Business with Macomb College.

C. Hunter Boll became a Director of TCC upon the consummation of the
recapitalization completed in October 1997. Mr. Boll is a Managing Director
of Thomas H. Lee Company where he has been employed since 1986. From 1984
through 1986, Mr. Boll was with the Boston Consulting Group. From 1977 through
1982, he served as an Assistant Vice President, Energy and Minerals Division of
Chemical Bank. Mr. Boll is a director of Big V Supermarkets, Inc., Cott Corp.,
Freedom Securities Corporation, Metris Companies, Inc., The Smith & Wollensky
Restaurant Group, Inc., and United Industries Corporation. Mr. Boll received
a B.A. in Economics from Middlebury College and an M.B.A. from the Stanford
Graduate School of Business.

Christopher J. Perry has been a Director of TCC since 1994. Mr. Perry is
currently Managing Director and President of Continental Illinois Venture
Corporation, a position he has held since 1994, and is also a Managing
Partner of CIVC Partners III. Mr. Perry has been at Bank of America or, prior
to its merger with Bank of America, Continental Bank, since 1985. Prior
positions with Bank of America or Continental Bank include Managing Director
and head of the Mezzanine Investments Group and Managing Director and head of
the Chicago Structured Finance Group. Prior to joining Continental Bank, Mr.
Perry was in the Corporate Finance Department of Northern Trust. In addition
to being a Director of TCC, Mr. Perry is a Director of General Roofing
Services, The Brickman Group, Ltd and RAM Reinsurance Company, Ltd. Mr. Perry
received a BS from the University of Illinois and an MBA from Pepperdine
University and is a certified public accountant.

Scott A. Schoen became a Director of TCC upon consummation of the
recapitalization completed in October 1997. Mr. Schoen is a Managing Director
of the Thomas H. Lee company where he has been employed since 1986. Prior to
joining the Firm, Mr. Schoen was in the Private Finance Department of Goldman,
Sachs & Co. Mr. Schoen is a director of ARC Holdings, LLC, Rayovac
Corporation, Syratech Corp., United Industries Corporation, and Wyndham
International Inc. Mr. Schoen received a B.A. in History of Yale University, a
J.D. from Harvard Law School and an M.B.A. from the Harvard Graduate School of
Business Administration. Mr. Schoen is a member of the New York Bar..

27
Marcus D. Wedner has been a Director of TCC since its formation in 1993.
Mr. Wedner is currently Managing Director of Continental Illinois Venture
Corporation, a position he has held since 1992, and is also a Managing
Partner of CIVC Partners III. Mr. Wedner joined Continental Illinois Venture
Corporation in 1988. Previously, Mr. Wedner held marketing and sales
management positions at Pacific Telesis Group and as an associate with
Goldman, Sachs & Co. In addition to being a Director of TCC, Mr. Wedner is a
Director of Teletouch Communications, Advanced Quick Circuits, L.P.,
Grapevine Communications, Inc., General Roofing Services and Precision Tube
Technology, Inc. Mr. Wedner holds a BA from the University of California at
Los Angeles and received an MBA from the Harvard Graduate School of Business
Administration.

Terrence M. Mullen resigned as director on March 30, 2000 in connection
with his leaving Thomas H. Lee Company.

At present, all Directors are elected and serve until a successor is
duly elected and qualified or until his or her earlier death, resignation or
removal. All members of the Board of Directors set forth herein were elected
pursuant to an investors agreement that was entered into in connection with
the Recapitalization. See "Certain Relationships and Related Transactions --
Investors Agreement." There are no family relationships between any of the
Directors of TCC or executive officers of the company. Executive officers of
the company are elected by and serve at the discretion of the Board of
Directors of TCC.

TCC's Board of directors has two committees, an audit committee and a
compensation committee. Messrs. Boll, and Perry serve on the audit
committee and Messrs. Boll, Schoen and Wedner serve on the compensation
committee.

The audit committee is responsible for making recommendations to TCC's
Board regarding the selection of independent auditors, reviewing the results
and scope of the audit and other services provided by the company's independent
auditors accountants and reviewing and evaluating the company's audit and
control functions. The compensation committee is responsible for determining
salaries and incentive compensation for executive officers and key employees of
the company.

TCC's Board may establish other committees from time to time to facilitate
the management of the company.

ITEM 11. EXECUTIVE COMPENSATION

The compensation of executive officers of TransWestern is determined by
the Compensation Committee of the Board of TCC. The following Summary
Compensation Table includes individual compensation information for the
Chairman, the President and Chief Executive Officer and each of the four
other most highly compensated executive officers of the company (collectively,
the "Named Executive Officers") for services rendered in all capacities to the
company during the periods set forth below. There were no stock options
exercised during our last fiscal year nor were there any options outstanding at
the end of our last fiscal year.

28
SUMMARY COMPENSATION TABLE

ANNUAL COMPENSATION
-------------------------------------------------------------------------------
OTHER ANNUAL LTIP ALL OTHER
PERIOD(a) SALARY BONUS COMPENSATION(b) PAYMENTS(c) COMPENSATION(d)
--------- ------- ------- --------------- ----------- ---------------

Ricardo Puente.................... 1 283,133 73,320 -- -- 21,006
President, Chief Executive 2 162,692 -- -- -- 15,330
Officer 3 199,519 191,396 -- -- 134,734
4 199,519 171,822 -- -- 11,380
Laurence H. Bloch................. 1 233,009 4,599 -- -- 16,279
Chairman of the Board 2 159,072 67,040 -- -- 7,110
and Secretary 3 222,167 56,497 -- -- 90,496
4 222,167 222,167 -- -- 4,798
Joan M. Fiorito................... 1 139,314 2,700 -- -- 10,562
Vice President, Chief 2 93,222 99,678 -- -- 10,239
Financial Officer and 3 119,461 118,374 -- 50,743 29,686
Assistant Secretary 4 119,460 105,649 -- 9,322 14,449
Marybeth Brennan.................. 1 139,173 2,747 -- -- 10,683
Vice President -- Operations 2 95,011 100,425 -- -- 9,981
3 132,698 130,460 -- 50,797 28,922
4 132,698 120,030 -- 9,322 13,805
Mike Bynum........................ 1 121,600 2,400 -- -- 9,790
Executive Vice 2 82,667 95,368 -- -- 10,539
President -- Sales 3 92,815 94,575 -- 50,797 4,797
4 104,405 95,568 -- 9,322 12,030

- - --------------------------
(a) 1 -- refers to the fiscal year ended December 31, 1999
2 -- On May 1, 1998, we changed our fiscal year from a fiscal year ending
April 30 to a fiscal year ending December 31. Accordingly, this
refers to the eight month period beginning May 1, 1998 and ending
December 31, 1998.
3 -- refers to the fiscal year ended April 30, 1998
4 -- refers to the fiscal year ended April 30, 1997

(b) None of the prerequisites and other benefits paid to each named executive
officer exceeded the lesser of $50,000 or 10% of the annual salary and
bonus received by each Named Executive Officer.

(c) Represents distributions made pursuant to the company's Equity
Compensation Plan. See "Equity Compensation Arrangements."

29
(d) All Other Compensation for twelve month period ended December 31, 1999
includes: (1) payments of $1,500 for tax preparation for each of the Named
Executive Officers; (2) contributions to the 401(k) Profit Sharing Plan of:
Puente ($7,968), Bloch ($7,087), Fiorito ($6,947), Brennan ($7,068) and,
Bynum ($6,175) and (3) management fees paid in connection with the
Recapitalization: Puente ($11,538), Bloch ($7,692), Fiorito ($2,115),
Brennan ($2,115) and, Bynum ($2,115).

The salaries for Messrs. Puente and Bloch are established pursuant to
their employment agreements and their bonuses are based on the achievement of
certain EBITDA targets set forth in their employment agreements. See
"-employment agreements." The compensation committee sets the salaries for
the other executive officers in order to maintain such salaries at a level
competitive with those paid by the Company's independent competitors, Bonuses
for executive officers are paid based on the performance of the company,
including the achievement of certain internal targets.

COMPENSATION OF DIRECTORS

TransWestern is a limited liability company and Holdings is a limited
partnership, both of which are controlled by TCC. The Directors of TCC are
not paid for their services, although Directors are reimbursed for out-of-
pocket expenses incurred in connection with attending Board meetings.

EQUITY COMPENSATION ARRANGEMENTS

Holdings' Class B Units are designed to encourage performance by
providing the members of management the opportunity to participate in the
equity growth of TransWestern. There are 10,000 Class B Units authorized,
7,827.65 of which have been issued to the company's senior managers and
2,172.35 of which have been issued to the Equity Compensation Plan as discussed
below. See "Certain Relationships and Related Transactions."

In fiscal 1994, the company established the TransWestern Publishing
Company, L.P. Equity Compensation Plan (the "Equity Compensation Plan") to
provide approximately 60 of the company's managers, other than certain senior
executives, including Messrs. Bloch and Puente, the opportunity to
participate in the equity growth of the company without having direct
ownership of the company's securities. In connection with the
Recapitalization, the company reserved $5.5 million for distributions to
participants in the Equity Compensation Plan, one half of which was
distributed in October 1997 and one half of which was distributed in October
1998. Special distributions made pursuant to the Equity Compensation Plan
were recorded as an expense in the company's financial statements when
declared by the Board of Directors. Employees participating in the Equity
Compensation Plan were eligible to receive a ratable per unit share of cash
distributions made pursuant to the Equity Compensation Plan, if and when,
declared. Distributions totaled $2.6 million, $2.8 million and $0.0 million in
the years ended December 31, 1997, 1998 and 1999. As of December 31, 1999, there
were no undistributed proceeds under the Equity Compensation Plan.

As a result of the Recapitalization, the existing Equity Compensation
Plan was terminated. However, the company adopted a new Equity Compensation
Plan which functions similarly to the old plan. As of December 31, 1999, no
assets had been contributed to the new plan.

EMPLOYMENT AGREEMENTS

Messrs. Bloch and Puente have each entered into an Employment Agreement
(each, an "Employment Agreement") with the company. The Employment Agreements
provide for the employment of Mr. Bloch as the Chairman of the Board of
Directors of TCC and Chairman of Holdings and Mr. Puente as the
President and Chief Executive Officer of Holdings and TCC until
October 1, 2002 unless terminated earlier as provided in the respective
Employment Agreement. The Employment Agreements of Messrs. Bloch and Puente
provide for an annual base salary of $222,167 and $235,500, respectively,
subject to annual increases based on the consumer price index, and annual
bonuses based on the achievement of certain EBITDA targets of up to 100% of
their base salary.

30
Each executive's employment may be terminated by the company at any time
with cause or without cause. If such executive is terminated by the company
with cause or resigns other than for good reason, the executive will be
entitled to his base salary and fringe benefits until the date of
termination, but will not be entitled to any unpaid bonus. Messrs. Bloch and
Puente will be entitled to their base salary and fringe benefits and any
accrued bonus for a period of 12 months following their termination in the
event such executive is terminated without cause or resigns with good reason.
The Employment Agreements also provide each executive with customary fringe
benefits and vacation periods. "Cause" is defined in the Employment
Agreements to mean:

- the commission of a felony or a crime involving moral turpitude or the
commission of any other act or omission involving dishonesty,
disloyalty or fraud;

- conduct tending to bring the company or any of its subsidiaries into
substantial public disgrace or disrepute;

- the substantial and repeated failure to perform duties as reasonably
directed by TCC or the company;

- gross negligence or willful misconduct with respect to the company or
any subsidiary; or

- any other material breach of the Employment Agreement or company
policy established by the Board, which breach, if curable, is not cured
within 15 days after written notice thereof to the executive.

"Good Reason" is defined to mean the occurrence, without such executive's
consent, of:

- a reduction by the company of the executive's annual base salary by
more than 20%;

- any reduction in the executive's annual base salary, in effect
immediately prior to such reduction, if in the fiscal year prior to
such reduction the EBITDA for such prior fiscal year was equal to or
greater than 80% of the target EBITDA for such prior year;

- any willful action by the company that is intentionally inconsistent
with the terms of the Employment Agreement or the executive's Executive
Agreement (as defined herein); or

- any material reduction in the powers, duties or responsibilities which
the executive was entitled to exercise as of the date of the
Employment Agreement.

Messrs. Bloch and Puente have also entered into Executive Agreements
with the company pursuant to which they purchased Class B Units of Holdings.
See "Certain Relationships and Related Transactions -- Executive
Agreements."

401(K) AND PROFIT SHARING PLAN

The company has a 401(k) and profit-sharing retirement plan for the
benefit of substantially all of its employees, which was qualified for tax
exempt status by the Internal Revenue Service.

Employees can make contributions to the plan up to the maximum amount
allowed by federal tax code regulations. The company may match the employee
contributions, up to 83% of the first 6% of annual earnings per participant.
The company may also make annual discretionary profit sharing contributions.
The company's contributions to the 401(k) and profit-sharing plan for the
years ended April 30, 1997 and 1998 and December 31, and 1999 were
approximately $0.8 million, $1.1 million, and $0.8 million, respectively.
On May 12, 1998, the company elected to change its fiscal year from April 30
to December 31 as reported on Form 8-K. The company amended the plan year of
the TransWestern Publishing 401(k) and Profit Sharing Plan from April 30 to
December 31 on December 31, 1997.

31
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

All of the membership interests in TransWestern are owned by Holdings. The
following table sets forth certain information regarding the beneficial
ownership of the equity securities of Holdings by:

- each of the directors of TCC and the executive officers of the
company;

- all directors of TCC and executive officers of the company as a group;
and

- each owner of more than 5% of any class of equity securities of
Holdings.

Unless otherwise noted, the address for each executive officer of the
company and the directors of TCC is c/o TransWestern, 8344 Clairemont Mesa
Boulevard, San Diego, California 92111.

CLASS A
COMMON PERCENT OF PREFERRED PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER UNITS(a) CLASS UNITS CLASS
- - ------------------------------------ --------- ---------- --------- --------

DIRECTORS AND EXECUTIVE OFFICERS:
Laurence H. Bloch(b).................... 19,809 1.56% 10,119 1.53%
Ricardo Puente(c)....................... 29,413 2.32% 15,025 2.28%
Joan M. Fiorito(d)...................... 5,882 * 3,005 *
C. Hunter Boll(e)....................... 739,545 58.21% 377,766 57.27%
Christopher J. Perry(f)................. 288,134 22.68% 147,181 22.31%
Scott A. Schoen(e)...................... 739,545 58.21% 377,766 57.27%
Marcus D. Wedner(f)..................... 288,134 22.68% 147,181 22.31%
All Directors and executive officers as
a group (8 persons)................... 1,082,784 85.23% 553,095 83.85%
5% OWNERS:
Thomas H. Lee Equity Fund III,
L.P.(g)............................... 739,545 58.21% 377,766 57.27%
TW Interest Holding Corp.(h)............ 739,545 58.21% 377,766 57.27%
THL-CCI Limited Partnership(i).......... 739,545 58.21% 377,766 57.27%
Continental Illinois Venture
Corporation(j)........................ 288,134 22.68% 147,181 22.31%
CIVC Partners III (k)................... 288,134 22.68% 147,181 22.31%

- - ------------------------------------
* Represents less than one percent.

(a) Holders of Class A Units are entitled to share in any distribution on a
pro rata basis, but only if the holders of the Preferred Units have
received a certain preference amount set forth in Holdings' Third Amended
and Restated Agreement of Limited Partnership, as amended. Holdings has
also issued Class B Units to the members of the company's senior
management. The Class B Units will be entitled to share in any such
distributions only if the holders of the Preferred Units and Class A
Units have achieved an internal rate of return on their total investment
of 12%. The percentage of such distributions that the Class B Units will
be entitled to receive will range from 10% to 20%, based on the internal
rate of return achieved by the holders of the Preferred and Class A
Units. All Common Units listed in the table represent Class A Units
unless otherwise noted.

(b) Does not include 842 Class B Units which are subject to vesting in equal
installments over a five year period.

(d) Does not include 394 Class B Units which are subject to vesting in equal
installments over a five year period.

32
(e) Includes 739,545 Class A Units and 377,766 Preferred Units beneficially
owned by Thomas H. Lee Equity Fund III, L.P. Such persons disclaim
beneficial ownership of all such interests. Such person's address is c/o
Thomas H. Lee Company, 75 State Street, Suite 2600, Boston,
Massachusetts 02109.

(f) Includes 244,914 Class A Units and 125,104 Preferred Units owned by
Continental Illinois Venture Corporation 43,220 Class A Units and 22,077
Preferred Units owned by CIVC Partners III. Such persons disclaim
beneficial ownership of all such interests. Such person's address is c/o
Continental Illinois Venture Corporation, 231 South LaSalle Street,
Chicago, Illinois 60697.

(g) Includes 39,259 Class A Units and 20,054 Preferred Units owned by TW
Interest Holdings Corp. and 65,815 Class A Units and 33,618
Preferred Units owned by THL-CCI Limited Partnership. Such person
disclaims beneficial ownership of all such interests. Such person's
address is c/o Thomas H. Lee Company, 75 State Street, Suite 2600,
Boston, Massachusetts 02109.

(h) Includes 634,470 Class A Units and 324,093 Preferred Units owned by
Thomas H. Lee Equity Fund III, L.P. and 65,815 Class A Units and 33,618
Preferred Units owned by THL-CCI Limited Partnership. Such person
disclaims beneficial ownership of all such interests. Such person's
address is c/o Thomas H. Lee Company, 75 State Street, Suite 2600,
Boston, Massachusetts 02109.

(i) Includes 634,470 Class A Units and 324,093 Preferred Units owned by
Thomas H. Lee Equity Fund III, L.P. and 39,259 Class A Units and 20,054
Preferred Units owned by TW Interest Holdings Corp. Such person Disclaims
beneficial ownership of all such interests. Such person's address is c/o
Thomas H. Lee Company, 75 State Street, Suite 2600, Boston, Massachusetts
02109.

(j) Includes 43,220 Class A Units and 22,077 Preferred Units owned by CIVC
Partners III. Such person disclaims beneficial ownership of such
Interests Such person's address is c/o Continental Illinois Venture
Corporation, 231 South LaSalle Street, Chicago, Illinois 60697.

(k) Includes 244,914 Class A Units and 125,104 Preferred Units owned by
Continental Illinois Venture Corporation. Such person disclaims
Beneficial ownership of all such interests. Such person's address is c/o
Continental Illinois Venture Corporation, 231 South LaSalle Street,
Chicago, IL 60697.

ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Partnership completed a $312 million Recapitalization in October
1997 (the "Recapitalization"). In the Recapitalization, new investors led by
Thomas H. Lee Equity Fund III, L.P. ("THL") and its affiliates (together, the
"THL Parties"), along with other investors, the Partnership's existing
limited partners (the "Existing Limited Partners"), and the company's 25 most
senior managers (the "Management Investors"), invested new and continuing
capital of $130.0 million in the Partnership and TCC (the "Equity
Investment"). The proceeds from the Equity Investment, together with
borrowings of approximately $107.7 million under the senior credit facility
and $75.0 million under a senior subordinated financing facility were used to
consummate the Recapitalization.

The senior subordinated financing facility was subsequently repaid with
a portion of the net proceeds from the company's issuance of its 9 5/8% Series
A Senior Subordinated Notes due 2007.

Pursuant to the Recapitalization Agreement, each Existing Limited
Partner that reinvested in Holdings has agreed that for a period ending on
the later of the second anniversary of the Recapitalization closing date and
the one year anniversary of the termination of such reinvesting Manager's
employment with us not to own, control, participate or engage in any yellow
pages directory publishing directory business or any business competing for
the same customers as our businesses as such businesses exist or are in
process during such period in any markets, or markets contiguous thereto, in
which we engage or plan to engage during such period.

33
James D. Dunning, Jr., the Partnership's and TCC's former Chairman and
Chief Executive Officer, has agreed that for the three-year period commencing
on the Recapitalization closing date not to participate, directly or
indirectly, in any yellow pages directory publishing business in the United
States or any business competing for the same customers as us in the
geographic areas in which we engaged in the local or national yellow pages
directory publishing business as of August 27, 1997; provided that Mr.
Dunning may participate in any industry specific yellow pages business or any
trade or industry publications.

MANAGEMENT AGREEMENT

Effective upon the Recapitalization, we entered into a Management
Agreement with Thomas H. Lee Company ("THL Co.") pursuant to which THL Co.
agreed to provide:

- general executive and management services;

- identification, negotiation and analysis of financial and strategic
alternatives; and

- other services agreed upon by us and THL Co.

THL and all other equity investors receive a pro rata portion of the
$500,000 annual management fee (the "Management Fee"), plus THL will be
reimbursed for all reasonable out-of-pocket expenses, payable monthly in
arrears. The Management Agreement had an initial term of one year, subject to
automatic one-year extensions, unless we or THL Co. provide written notice of
termination no later than 30 days prior to the end of the initial or any
successive period.

INVESTORS AGREEMENT

Pursuant to the Recapitalization, Holdings, TCC, the THL Parties, CIBC
Argosy Merchant Fund 2, L.L.C. ("CIBC Merchant Fund"), CIVC Partners III
("CIVC III" and, together with the THL Parties and CIBC Merchant Fund, the "New
Investors") and the reinvesting Existing Limited Partners (together with the
New Investors, the "New Partners") entered into an Investors Agreement (the
"Investors Agreement"). The Investors Agreement requires that each of the
parties thereto vote all of his or its voting securities and take all other
necessary or desirable actions to cause the size of the Board of Directors of
TCC to be established at nine members and to cause the election to the Board
of five representatives designated by THL (the "THL Designees"), each of the
then current chairman and president of the Partnership (the "Executive
Directors") and two representatives designated by Continental Illinois
Venture Corporation ("CIVC" and, together with CIVC III, the "CIVC Parties"),
and CIVC III (the "CIVC Designees"), of which one CIVC Designee will at all
times serve on the Board's compensation committee, audit committee and
executive committee. Currently, however, only three of the THL Designees have
been appointed to TCC's Board of Directors. The respective rights of THL and
the CIVC Parties to designate representatives to the Board terminates at such
time when such party owns less than 30% of the Common Units held by such
party as of the Recapitalization closing date. If at any time THL and its
permitted transferees own less partnership interests in Holdings or less
equity securities in TCC than the amount of such partnership interests or
such equity securities, as the case may be, owned by the CIVC Parties and the
Management Investors, taken as a group, then the number of THL Designees will
be reduced automatically from five to three and the number of CIVC Designees
will be increased automatically from two to three. The Investors Agreement
provides that certain significant actions may not be taken without the
express approval of the at least one of the CIVC Designees and at least one
of the Executive Directors.

In addition to the foregoing, the Investors Agreement:

- requires the holders of interests in Holdings and common stock of TCC,
other than THL and CIVC, to obtain the prior written consent of THL
prior to transferring any interests in Holdings or TCC stock, other
than interests or securities held by the Management Investors pursuant
to Executive Agreements;

- grants in connection with the sale of interests in Holdings or TCC
stock by the Management Investors certain preemptive rights with
respect to such sale first to Holdings, then to the limited partners;

34
- grants the New Partners certain participation rights in connection
with certain transfers made by THL;

- grants the New Partners certain preemptive rights in connection with
certain issuances, sales or other transfers for consideration of any
securities by Holdings or TCC;

- requires the holders of shares of TCC's common stock to consent to a
sale of TCC to an independent third party if such sale is approved by
the Board and the holders of a majority of the shares of TCC's common
stock; and

- requires the holders of interests in Holdings to consent to the sale
of Holdings in the event TCC and the holders of a majority of Class A
Units approve a sale of Holdings.

The foregoing agreements terminate on the earlier of October 1, 2001 and the
date on which Holdings consummates a public offering of $40 million or
more of its equity securities (a "Qualified Public Offering"). The agreements
with respect to the participation rights and preemptive rights described
above continue with respect to each security until the earlier of:

- October 1, 2007;
- a Qualified Public Offering;
- the transfer in a public sale of such security;
- with respect to equity securities of Holdings, upon the sale of the
Holdings; and
- with respect to equity securities of TCC, upon the sale of TCC.

REGISTRATION AGREEMENT

Pursuant to the Recapitalization, Holdings, TCC, and the New Partners
entered into a registration agreement (the "Registration Agreement"). Under
the Registration Agreement, the holders of a majority of registrable
securities owned by the THL Parties and the CIVC Parties have the right at
any time, subject to certain conditions, to require Holdings to register any
or all of their interests in Holdings' under the Securities Act of 1933, as
amended (the "Securities Act") on Form S-1 (a "Long-Form Registration") on
three occasions at Holdings' expense and on Form S-2 or Form S-3 (a "Short-
Form Registration") on three occasions at Holdings' expense. Holdings is not
required, however, to effect any such Long-Form Registration or Short-Form
Registration within six months after the effective date of a prior demand
registration. In addition, all holders of registrable securities are entitled
to request the inclusion of such securities in any registration statement at
Holdings' expense whenever Holdings proposes to register any of its
securities under the Securities Act, other than pursuant to a demand
registration. In connection with such registrations, Holdings has agreed to
indemnify all holders of registrable securities against certain liabilities
including liabilities under the Securities Act. In addition, Holdings has the
one-time right to preempt a demand registration with a piggyback
registration.

EXECUTIVE AGREEMENTS

Each Management Investor has entered into an Executive Agreement with
Holdings and TCC (each, an "Executive Agreement"), pursuant to which such
Management Investor purchased Class B Units which are subject to a five-year
vesting period, which vesting schedule accelerates upon a sale of Holdings.
The Class B Units were issued in connection with the Recapitalization to
members of management as incentive units at fair market value. Under each
Management Investor's Executive Agreement, in the event that such Management
Investor's employment with the Company is terminated for any reason, Holdings
has the option to repurchase all of such Management Investor's vested Class B
Units in accordance with the provisions outlined in the Partnership Agreement
and all other of such Management Investor's interests in Holdings and TCC at
a price per unit derived as specified in the Partnership Agreement. In
addition, in the event of a termination of the Management Investor's
employment by Holdings without "cause" or by such Management Investor for
"good reason" or such Management Investor's death or disability, such
Management Investor may require Holdings or TCC to repurchase his or her
vested Class B Units in accordance with the provisions outlined in the
Partnership Agreement and all other interests of such Management Investor in
Holdings and TCC at a price per unit derived as specified in the Partnership
Agreement.

35
ITEM 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

(a) (1) Index to Financial Statements

The financial statements required by this item are submitted in a separate
section beginning on page F-1 of this Annual Report on Form 10-K.

PAGE
NUMBER
------

Report of Ernst & Young LLP, Independent Auditors........... F-2
Consolidated Balance Sheets as of December 31, 1999
and 1998.................................................. F-3
Consolidated Statements of Operations for each of the three
years ended December 31, 1999, April 30, 1998, 1997 and
the eight months ended December 31, 1998.................. F-4
Consolidated Statements of Changes in Member Deficit for
the year ended December 31, 1999, eight months ended
December 31, 1998 and the years ended April 30, 1998
and 1997.................................................. F-5
Consolidated Statements of Cash Flows for each of the three
years ended December 31, 1999, April 30, 1998, 1997 and
the eight months ended December 31, 1998.................. F-6
Notes to Consolidated Financial Statements.................. F-7

(a) (2) Index to Financial Statement Schedules

All schedules have been omitted since they are either not required, not
applicable or because the information required is included in the financial
statements or the notes thereto.

(a) (3) Index to Exhibits

The following exhibits are filed as part of, or incorporated by reference into,
this report;

EXHIBIT
NUMBER EXHIBIT
- - - ------- -------

2.1 Securities Purchase and Redemption Agreement, dated August 27, 1997,
as amended, by and among Holdings, TCC, TWP Recapitalization Corp.,
THL and certain limited partners of Holdings. (1)
2.2 Contribution and Assumption Agreement, dated November 6,
1997, by and among Holdings and TransWestern.(1)
2.3 Assignment and Assumption Agreement, dated November 6, 1997,
by and among Holdings and TransWestern.(1)
2.4 Bill of Sale, dated November 6, 1997 by and among Holdings
and TransWestern.(1)
3.1 Certificate of Limited Partnership of Holdings.(1)
3.2 Certificate of Incorporation of Capital.(1)
3.3 By-Laws of Capital.(1)
3.4 Third Amended and Restated Agreement of Limited Partnership of
Holdings.(1)
3.5 Certificate of Incorporation of TCC.(1)
3.6 By-Laws of TCC.(1)
4.1 Indenture, dated as of November 12, 1997 by and between Holdings,
TWP Capital Corp. and Wilmington Trust Company, as Trustee for the
Discount Notes.(2)
4.2 Form of Series B 11 7/8% Senior Discount Notes due 2008.(1)
4.3 Securities Purchase Agreement, dated as of November 6, 1997,
by and among TransWestern, Holdings, TWP Capital Corp, TCC and the
Initial Purchasers of the Discount Notes.(1)
4.4 Registration Rights Agreement, dated as of November 12,
1997, by and among Holdings, TWP Capital Corp and the Initial
Purchasers of the Discount Notes.(1)
10.1 Management Agreement, dated as of October 1, 1997, by and
among Holdings and Thomas H. Lee Company.(1)
10.2 Investors Agreement, dated as of October 1, 1997, by and
among Holdings, TCC and the limited partners of Holdings.(1)
10.3 Registration Agreement, dated as of October 1, 1997, by and among
Holdings, TCC and the limited partners of Holdings.(1)
10.4 Form of Executive Agreement between Holdings, TCC and each
Management Investor.(2)
10.5 Employment Agreement, dated as of October 1, 1997, by and
between Laurence H. Bloch and TransWestern.(2)
10.6 Employment Agreement, dated as of October 1, 1997, by and
between Ricardo Puente and TransWestern.(2)
10.7 Assumption Agreement and Amended and Restated Credit
Agreement, dated as of November 6, 1997, among the Company,
the lenders listed therein and Canadian Imperial bank of
Commerce, as administrative agent, and First Union National
Bank, as documentation agent.(2)
10.8 Indenture, dated as of December 2, 1998, by and among
TransWestern, Target Directories of Michigan, Inc. and Wilmington
Trust Company, as Trustee, for the Series C/D notes (including
the form of the Series C/D notes and the related Guarantees).(3)
10.9 Securities Purchase Agreement, dated as of December 2, 1998,
by and among TransWestern, Target Directories of Michigan,
Inc., Holdings, TCC and the Initial Purchasers of the Series C
notes.(3)
10.10 Registration Rights Agreement, dated as of December 2, 1998,
by and among TransWestern, Target Directories of Michigan,
Inc. and the Initial Purchasers of the Series C notes.(3)
10.11 Form of Equity Compensation Plan.(1)
10.12 Fifth Amendment, dated as of June 29, 1999, to the Assumption
Agreement and Amended Restated Credit Agreement, dated as of November
6, 1997, among TransWestern, the lenders listed therein and Canadian
Imperial bank of Commerce, as administrative agent, and First Union
National Bank, as documentation agent.(4)
10.13 Sixth Amendment, dated as of October 1, 1999, to the Assumption
Agreement and Amended and Restated Credit Agreement, dated as of
November 6, 1997, among TransWestern, the lenders listed therein and
Canadian Imperial bank of Commerce, as administrative agent, and
First Union National Bank, as documentation agent.(4)
12.1 Statement regarding computation of ratio of earnings to
fixed charges.
37
21.1 Subsidiaries of Holdings, incorporated by reference to
Exhibit 21.1 to Holdings' Annual Report on Form 10-K for
the fiscal year ended April 30, 1998.
27.1 Financial Data Schedule.
- - --------------------------

(1) Incorporated herein by reference to the same numbered exhibit to Holdings'
Registration Statement on Form S-4 (Registration No. 333-42085),
originally filed with the SEC on December 12, 1997.

(2) Filed as an Exhibit to the Registration Statement on Form S-4
(Registration No. 333-42085) originally filed by TransWestern Publishing
Company LLC and TWP Capital Corp. II with the SEC on December 12, 1997 and
incorporated by reference herein.

(3) Filed as an Exhibit to the Registration Statement on Form S-4
(Registration No. 333-73099) originally filed by TransWestern Publishing
Company LLC, TWP Capital Corp. II and Target Directories of Michigan, Inc.
with the SEC on March 1, 1999 and incorporated by reference herein.

(4) Filed as an Exhibit to TransWestern's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1999, filed with the SEC on November 15, 1999
and incorporated by reference herein.

(b) Reports on Form 8-K.

(1) On January 14, 1999, Holdings filed a report on Form 8-K reporting
pursuant to Item 2 thereof that on January 5,1999, TransWestern
acquired 14 directories from United Directory Services, Inc.

(2) On February 16, 1999, Holdings filed a report on Form 8-K/A filing
pursuant to Item 7 thereof the required financial statements and pro
forma financial statements relating to TransWestern's acquisition of
4 telephone directories in Michigan from Universal Phone Books, Inc.
and Universal Phone Books of Jackson, Inc. on November 30, 1998.

(3) On March 9, 1999, Holdings filed a report on Form 8-K/A
filing pursuant to Item 7 thereof the required financial
statements and pro forma financial statements relating to
TransWestern's acquisition of 14 directories from United Directory
Services, Inc. on January 5, 1999.

(4) On November 8, 1999, Holdings filed a report on Form 8-K reporting
pursuant to Item 2 thereof that on October 15,1999, TransWestern
acquired certain tangible and intangible assets from United
Multimedia.

Supplemental Information to be Furnished With Reports Filed Pursuant
to Section 15(d) of the Act by Registrants Which Have Not Registered
Securities Pursuant to Section 12 of the Act

No annual report relating to Holdings' last fiscal year or proxy materials
relating to a meeting of Holdings' securityholders has been or will be sent by
Holdings' to its securityholders.

38
SIGNATURES

Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

TRANSWESTERN HOLDINGS L.P.
(Registrant)

BY: TransWestern Communications Company, Inc.
(General Partner)

BY: /s/ JOAN M. FIORITO March 30, 2000
-------------------------------------------------
Name: Joan M. Fiorito
Title: Vice President, Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.

SIGNATURE CAPACITY DATE
--------- -------- ----

/s/ RICARDO PUENTE President, Chief Executive Officer March 30, 2000
- - -------------------------------------------- and Director (Principal Executive ------------------
Ricardo Puente Officer)

/s/ LAURENCE H. BLOCH Chairman, Secretary and Director March 30, 2000
- - -------------------------------------------- ------------------
Laurence H. Bloch

/s/ JOAN M. FIORITO Vice President, Chief Financial March 30, 2000
- - -------------------------------------------- Officer and Assistant Secretary ------------------
Joan M. Fiorito (Principal Financial and
Accounting Officer)

/s/ C. HUNTER BOLL Director March 30, 2000
- - -------------------------------------------- ------------------
C. Hunter Boll

/s/ CHRISTOPHER J. PERRY Director March 30, 2000
- - -------------------------------------------- ------------------
Christopher J. Perry

/s/ SCOTT A. SCHOEN Director March 30, 2000
- - -------------------------------------------- ------------------
Scott A. Schoen

/s/ MARCUS D. WEDNER Director March 30, 2000
- - -------------------------------------------- ------------------
Marcus D. Wedner