What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2021-02-26 compared with 2020-02-28 · 527 added, 490 removed, 1033 unchanged (50% of the section changed)

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Report of Independent Registered Public Accounting Firm – Deloitte & Touche LLP

Report of Independent Registered Public Accounting Firm – Ernst & Young LLP

Consolidated Financial Statements

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Consolidated Statements of Operations

Consolidated Statements of Stockholders’ Equity (Deficit )

Consolidated Statements of Stockholders’ Deficit

Consolidated Statements of Cash Flows

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We have audited the accompanying consolidated balance sheets of Camping World Holdings, Inc.

and subsidiaries (the "Company") as of December 31, 2019 and 2018, the related consolidated statements of operations, stockholders' equity (deficit), and cash flows, for each of the two years in the period ended December 31, 2019, and the related notes and the schedules listed in the Index at Item 15(a)(2) (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2019, in conformity with accounting principles generally accepted in the United States of America.

and subsidiaries (the "Company") as of December 31, 2020 and 2019, the related consolidated statements of operations, stockholders' deficit, and cash flows, for each of the three years in the period ended December 31, 2020, and the related notes and the schedules listed in the Index at Item 15(a)(2) (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 26, 2021, expressed an unqualified opinion on the Company's internal control over financial reporting.

Change in Accounting Principle

As discussed in Note 1 to the financial statements, the Company has changed its method of accounting for leasing transactions in 2019 due to the adoption of Accounting Standards Codification Topic 842, Leases, using the modified retrospective approach.

As discussed in Note 1 to the financial statements, the Company changed its method of accounting for leasing transactions in 2019 due to the adoption of Accounting Standards Codification Topic 842, Leases , using the modified retrospective approach.

Basis for Opinion

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Finance and Insurance, Net — Revenue Recognition — Refer to Note 1 to the consolidated financial statements

Critical Audit Matter Description

The Company acts as an agent in selling certain insurance and service contracts with multi-year terms to customers on behalf of third-party insurance providers.

The proceeds the Company receives for selling these contracts are subject to chargebacks of such proceeds if the customer terminates the respective contract earlier than a stated period.

These customer proceeds are recorded as variable consideration, net of estimated chargebacks.

Estimated chargebacks depend on ultimate future cancellation rates, determined by management by product type and year sold using a combination of actuarial methods and leveraging the Company’s historical experience from the past eight years, adjusted for new consumer trends.

As of December 31, 2020, the Company recorded $58.9 million in chargeback liabilities related to these dealership insurance and service contracts.

Given the judgment involved in estimating the ultimate future cancellation rates used to estimate the chargeback liabilities, auditing this assumption required a high degree of auditor judgment, including the use of our actuarial specialists, in performing audit procedures to evaluate the reasonableness of management’s estimate.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the ultimate future cancellation rates included the following, among others:

● We tested the effectiveness of controls over management's review of the ultimate future cancellation rates used to estimate the chargeback liabilities.

● We read standard insurance policies for each policy type, including agreements and amendments between insurance providers and the Company to understand the arrangements in effect.

● With the assistance of our actuarial specialists, we developed a range of the ultimate liability estimates based on independent estimated ultimate future cancellation rates utilizing current economic factors and comparing such range to the liability estimate determined by management.

● We evaluated the reasonableness of the ultimate future cancellation rates used by comparing the recorded liability amounts, determined based on estimated ultimate future cancellation rates, and related refund amounts, reflective of actual chargebacks paid to insurance providers, over historical and current periods.

Long-Lived Asset Impairment — Refer to Notes 1 and 5 to the consolidated financial statements

Critical Audit Matter Description

The Company performs an analysis of the carrying value of long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of the long-lived assets may not be recoverable.

The Company’s long-lived asset groups are comprised of property and equipment, net, and operating lease right-of-use assets (“ROU assets”) that exist predominantly at the individual location level (a ”location”).

For locations identified with carrying values not recoverable by future undiscounted cash flows, impairment charges are measured based on the excess of carrying value over the location’s fair value, subject to certain limitations.

Fair value is determined, as applicable, as the sum of the discounted projected future cash flows from the use of the location’s assets.

The resulting impairment is allocated to the individual long-lived assets within the asset group up to the individual asset’s fair value, if readily determinable.

As a result, the measurement of any impairment loss includes estimation of the fair value of the location’s ROU assets, which requires management to consider estimates of market rental rates based on comparable lease transactions.

As of December 31, 2020, the Company had $367.9 million in property and equipment, net and $769.5 million in ROU assets.

During the year ended December 31, 2020, the Company recognized $12.4 million of long-lived asset impairments.

We identified the impairment of the carrying value of long-lived assets as a critical audit matter.

For locations with indicators of impairment, a high degree of auditor judgment and an increased extent of effort was required when performing audit procedures to evaluate the reasonableness of management’s estimates of projected future cash flows and market rental rates, including the use of valuation specialists in evaluating management’s estimates of market rental rates and in identifying comparable market rental rate assumptions based on the specific geographic areas and characteristics of the respective locations.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the evaluation of projected future cash flows and the market rental rate assumptions for locations with impairment indicators included the following, among others:

● We tested the effectiveness of controls over management’s review of the analysis of carrying value of long-lived assets for impairment, including assumptions of projected future cash flows and current market rental rates for applicable locations.

● We evaluated the reasonableness of management’s projected future cash flows and market rental rate assumptions by performing the following procedures for selected locations:

● We compared the minimum future cash flows required to recover the carrying value of the location to historical chain-wide average cash flows for comparable locations under similar economic circumstances and relevant location characteristics.

● We evaluated the consistency of projected future cash flows with other relevant information obtained in our audit, such as internal budgets and forecasts.

● With the assistance of our valuation specialists:

◾ We compared the lease datapoints (e.g., lease start date, square footage, rent per square foot) used in the Company’s estimate to an independent industry database where such information was publicly available.

◾ We identified additional comparable lease datapoints of similar square footage to the location in the related geographic market, and calculated a range of rent per square foot and average rent per square foot for similar lease types.

◾ We evaluated the reasonableness of the market rental rate assumption by comparing to the respective market data, considering the level of similarity of the location with the age, size and proximity of the comparable lease datapoints.

◾ Where available, we compared the rent per square foot for sublease offers and current negotiations with potential tenants to the market rental rate assumption for the related locations to determine if the market rental rate assumption is reasonably supported by the current offers on the actual property.

/s/ Deloitte & Touche LLP

Los Angeles, CA

February 28, 2020

We have served as the Company's auditor since 2018.

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Camping World Holdings, Inc.

and subsidiaries

Opinion on the Financial Statements

We have audited the accompanying consolidated statements of income, stockholders’ equity (deficit) and cash flows of Camping World Holdings, Inc.

and subsidiaries (the Company) for the year ended December 31, 2017.

Our audit also included the financial statement schedules listed in the Index at Item 15(a)(2) (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the results of operations and cash flows of the Company for the year ended December 31, 2017, in conformity with U.S.

generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

/s/ Ernst & Young LLP

We served as the Company’s auditor from 2013 to 2018.

Los Angeles, California

March 13, 2018,

except for the effects on the consolidated financial statements and schedule of the realignment of segments described in Note 22, as to which the date is

February 26, 2021

We have served as the Company's auditor since 2018.

Camping World Holdings, Inc.

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Intangible assets, net

Liabilities and stockholders' equity (deficit)

Liabilities and stockholders' deficit

Current liabilities:

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Accrued liabilities

Deferred revenues and gains

Current portion of finance lease liabilities

Deferred revenues

Current portion of operating lease liabilities

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Total current liabilities

Right to use liability

Operating lease liabilities, net of current portion

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Long-term debt, net of current portion

Deferred revenues and gains

Deferred revenues

Other long-term liabilities

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Commitments and contingencies

Stockholders' equity (deficit):

Stockholders' deficit:

Preferred stock, par value $ 0.01 per share – 20,000,000 shares authorized;

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Class B common stock, par value $ 0.0001 per share – 75,000,000 shares authorized;

69,066,445 issued;

and 50,706,629 outstanding as of December 31, 2019 and December 31, 2018

69,066,445 issued as of December 31, 2020 and December 31, 2019;

and 45,999,132 and 50,706,629 outstanding as of December 31, 2020 and December 31, 2019

Class C common stock, par value $ 0.0001 per share – one share authorized, issued and outstanding as of December 31, 2020 and December 31, 2019

Additional paid-in capital

Treasury stock, at cost;

572,447 and 0 shares as of December 31, 2020 and December 31, 2019

Retained deficit

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Non-controlling interests

Total stockholders' equity (deficit)

Total liabilities and stockholders' equity (deficit)

Total stockholders' deficit

Total liabilities and stockholders' deficit

See accompanying Notes to Consolidated Financial Statements

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Tax Receivable Agreement liability adjustment

Total other income (expense)

(Loss) income before income taxes

Total other expense

Income (loss) before income taxes

Income tax expense

Net (loss) income

net loss (income) attributable to non-controlling interests

Net (loss) income attributable to Camping World Holdings, Inc.

Income (loss) earnings per share of Class A common stock:

Net income (loss)

net (income) loss attributable to non-controlling interests

Net income (loss) attributable to Camping World Holdings, Inc.

Earnings (loss) per share of Class A common stock:

Weighted average shares of Class A common stock outstanding:

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and Subsidiaries

Consolidated Statements of Stockholders’ Equity (Deficit)

Consolidated Statements of Stockholders’ Deficit

(In Thousands)

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Class C Common Stock

Treasury Stock

Balance at January 1, 2018

Issuance of Class A common stock sold in a public offering, net of underwriting discounts, commissions and offering costs

Non-controlling interest adjustment for purchase of common units from CWGS, LLC with proceeds from a public offering

Issuance of Class A common stock for an acquisition by a subsidiary

Non-controlling interest adjustment for capital contribution of Class A common stock for an acquisition by a subsidiary

Adoption of ASC 606 accounting standard (see Note 2 — Revenue)

Equity-based compensation

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Repurchases of Class A common stock for withholding taxes on vested RSUs

Disgorgement of short-swing profits by Section 16 officer

Redemption of LLC common units for Class A common stock

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Balance at December 31, 2018

Adoption of ASC 606 accounting standard (see Note 2 — Revenue)

Adoption of ASC 842 accounting standard (see Note 1 — Summary of Significant Accounting Policies)

Equity-based compensation

Exercise of stock options

Non-controlling interest adjustment for capital contribution of proceeds from the exercise of stock options

Vesting of restricted stock units

Repurchases of Class A common stock for withholding taxes on vested RSUs

Disgorgement of short-swing profits by Section 16 officer

Redemption of LLC common units for Class A common stock

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Class C Common Stock

Adoption of ASC 842 accounting standard (see Note 1 — Summary of Significant Accounting Policies)

Treasury Stock

Equity-based compensation

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Repurchases of Class A common stock for withholding taxes on vested RSUs

Repurchases of Class A common stock to treasury stock

Redemption of LLC common units for Class A common stock

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Operating activities

Net (loss) income

Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:

Net income (loss)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization

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Loss on debt restructure

Gain on lease termination

Loss (gain) on lease termination

Goodwill impairment

Long-lived asset impairment

Loss (gain) on disposal of assets

Provision for (gains) losses on accounts receivable

Loss on disposal of assets

Provision for losses on accounts receivable

Non-cash lease expense

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Prepaid expenses and other assets

Checks in excess of bank balance

Accounts payable and other accrued expenses

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Accrued rent for cease-use locations

Deferred revenue and gains

Deferred revenue

Operating lease liabilities

Net cash provided by (used in) operating activities

CARES Act deferral of payroll taxes

Net cash provided by operating activities

Investing activities

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Purchases of businesses, net of cash acquired

Purchase of equity securities

Proceeds from sale of property and equipment

Purchase of intangible assets

Purchases of intangible assets

Net cash used in investing activities

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Financing activities

Proceeds from long-term debt

Payments on long-term debt

Net payments on notes payable – floor plan, net

Proceeds from credit facilities

Borrowings on revolving line of credit

Payments on revolving line of credit

Payments of principal on finance lease obligations

Payments of principal on long-term debt

Payments of principal on right-to-use liability

Payment of debt issuance costs

Proceeds from issuance of Class A common stock sold in a public offering net of underwriter discounts, commissions and offering expenses

Dividends on Class A common stock

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RSU shares withheld for tax

Repurchases of Class A common stock to treasury stock

Disgorgement of short-swing profits by Section 16 officer

Members' distributions

Distributions to holders of LLC common units

Net cash (used in) provided by financing activities

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The Company does not have any components of other comprehensive income recorded within its consolidated financial statements and, therefore, does not separately present a statement of comprehensive income in its consolidated financial statements.

A novel strain of coronavirus was declared a pandemic by the World Health Organization in March 2020.

To date, COVID-19 has surfaced in nearly all regions of the world and resulted in travel restrictions and business slowdowns or shutdowns in affected areas.

Many affected areas have begun the process of easing restrictions and reopening certain businesses often under new operating guidelines, although new waves of infection may lead to an increase in such restrictions or closures.

In conjunction with the stay-at-home and shelter-in-place restrictions enacted in many areas, the Company saw significant sequential declines in its overall customer traffic levels and its overall revenues from the mid-March to mid-to-late April 2020 timeframe.

In the latter part of April, the Company began to see a significant improvement in its online web traffic levels and number of electronic leads, and in early May, the Company began to see improvements in its overall revenue levels.

As the stay-at-home restrictions began to ease across certain areas of the country, the Company experienced significant acceleration in its in-store and online traffic, lead generation, and revenue trends in May continuing throughout the remainder of 2020 and early indications appear to show favorable trends continuing into 2021.

In order to offset the initially expected adverse impact of COVID-19 and better align expenses with reduced sales in the middle of March 2020 and early April 2020, the Company temporarily reduced salaries and hours throughout the business, including for its executive officers, and implemented headcount and other cost reductions.

Most of these temporary salary reductions ended in May 2020 as the adverse impacts of the pandemic began to decline and the Company increased hours for certain employees and reinstated many positions from the initial headcount reductions as the demand for the Company’s products increased.

The Company also negotiated lease payment deferrals with numerous landlords amounting to approximately $ 14.0 million from 2020 into 2021.

As demand for all products accelerated and the Company’s cash position improved, the Company repaid these rent deferrals in full prior to June 30, 2020.

The Company has also taken steps to add new private label lines, expand its relationships with smaller recreational vehicle (“RV”) manufacturers, and acquire used inventory from distressed sellers to help manage risks in its supply chain.

Throughout the pandemic, the majority of the Company’s retail locations have continued to operate as essential businesses and the Company has continued to operate its e-commerce business.

As a consequence of COVID-19, the Company had held fewer consumer shows and events during 2020 than in 2019.

Since March 2020, the Company has implemented preparedness plans to keep its employees and customers safe, which include social distancing, providing employees with face coverings and/or other protective clothing as required, implementing additional cleaning and sanitization routines, and work-from-home directives for a significant portion of the Company’s workforce.

Description of the Business

CWGS, LLC is a holding company and operates through its subsidiaries.

The Company realigned the structure of its internal organization during the three months ended March 31, 2019.

The Company previously had three reportable segments:

(i) Consumer Services and Plans;

(ii) Dealership, and (iii) Retail.

Following the realignment, the Company now has the following two reportable segments:

Camping World Holdings, Inc., together with its subsidiaries, is America’s largest retailer of RVs and related products and services.

As noted above, CWGS, LLC is a holding company and operates through its subsidiaries.

The Company has the following two reportable segments:

(i) Good Sam Services and Plans and (ii) RV and Outdoor Retail.

In conjunction with the first quarter 2019 realignment of the Company’s reporting structure, the Company combined its prior Dealership and Retail segments into the RV and Outdoor Retail segment and reclassified the Good Sam Club and co-branded credit card operations to the RV and Outdoor Retail segment from the Consumer Services and Plans segment to reflect the alignment and synergies of these businesses.

The remaining portion of the former Consumer Services and Plans segment is now called the Good Sam Services and Plans segment.

The Company’s reportable segment financial information has been recast to reflect the updated reportable segment structure for all periods presented.

See Note 22 – Segment Information to the Consolidated Financial Statements for further information about the Company’s segments.

The Company primarily provides Good Sam Services and Plans offerings under its Good Sam brand and provides RV and Outdoor Retail offerings primarily under its Camping World and Gander RV brands.

Within the Good Sam Services and Plans segment, the Company primarily derives revenue from the sale of the following offerings:

emergency roadside assistance;

emergency roadside assistance plans;

property and casualty insurance programs;

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extended vehicle service contracts;

vehicle financing and refinancing;

shows and events;

and publications and directories.

Within the RV and Outdoor Retail segment, the Company primarily derives revenue from the sale of new and used recreational vehicles (“RVs”);

the sale of RV products and services, including the sale of parts, accessories, supplies and services for RVs;

equipment, gear and supplies for camping, hunting, fishing, skiing, snowboarding, bicycling, skateboarding, marine and watersport and other outdoor activities;

vehicle financing and refinancing assistance;

consumer shows and events;

and consumer publications and directories.

Within the RV and Outdoor Retail segment, the Company primarily derives revenue from the sale of new and used RVs;

commissions on the finance and insurance contracts related to the sale of RVs;

and Good Sam Club memberships and co-branded credit cards.

primarily operates in various regions throughout the United States and markets its products and services to RV owners and outdoor enthusiasts.

In connection with the Company’s previously announced plan to strategically shift its business away from locations where the Company does not have the ability or where it is not feasible to sell and/or service RVs (see Note 5 – Restructuring and Long-lived Asset Impairment), the Company has reduced its number of retail locations to 175 as of December 31, 2019 from 227 as of December 31, 2018.

From December 31, 2018 to December 31, 2019, the Company opened 11 locations, closed 50 locations, divested 13 specialty outdoor retail locations, and converted 10 locations to RV dealerships.

The table below summarizes the Company’s store locations from December 31, 2018 to December 31, 2019:

RV Services &

the sale of RV services and maintenance work;

the sale of RV parts, accessories, and supplies;

the sale of outdoor products, equipment, gear and supplies;

business to business distribution of RV furniture, and the sale of Good Sam Club memberships and co-branded credit cards.

The Company operates a national network of RV dealerships and service centers as well as a comprehensive e-commerce platform, primarily under the Camping World and Gander RV & Outdoors brands, and markets its products and services primarily to RV and outdoor enthusiasts.

In 2019, the Company made a strategic decision to refocus its business around its core RV competencies, and on September 3, 2019, the board of directors approved a strategic plan to shift the business away from locations that did not have the ability or where it was not feasible to sell and/or service RVs (the “2019 Strategic Shift”) (see Note 5 – Restructuring and Long-lived Asset Impairment).

This resulted in the sale, closure or divestiture of 34 non-RV retail stores and the liquidation of approximately $ 108 million of non-RV related inventory in 2019.

The table below summarizes the Company’s retail store openings, closings, divestitures, conversions and number of locations from December 31, 2019 to December 31, 2020:

Retail Centers

Retail Stores

Store locations as of December 31, 2018

Number of store locations as of December 31, 2019

Closed / divested

Store locations as of December 31, 2019

Reclassifications of Prior Period Amounts

Certain prior-period amounts have been reclassified to conform to the current period presentation.

Specifically, as discussed in Note 22 — Segment Information, the Company has made changes to its operating segments and transferred certain assets relating to the Good Sam Club and co-branded credit card from its Good Sam Services and Plans segment to its RV and Outdoor Retail segment.

Additionally, as a result of these changes, the Company has updated its disaggregated revenue categories to the following:

Good Sam Services and Plans – includes extended vehicle service contracts, emergency roadside assistance, property and casualty insurance programs, vehicle financing and refinancing, travel protection, consumer shows, directories, consumer magazines, and the Coast to Coast Club;

New Vehicles – represents the sale of new RVs;

Used Vehicles – represents the sale of used RVs;

Products, Service and Other – includes repair and maintenance, installation of parts and accessories, collision repair, sales of RV equipment and accessories, sales of outdoor lifestyle products and apparel, and other;

Finance and Insurance, net – includes vehicle financing and protection plans typically sold in conjunction with the sale of new and used vehicles;

Good Sam Club – includes the Good Sam Club and co-branded credit card.

Temporarily closed (1)

Number of store locations as of December 31, 2020

(1) These locations are temporarily closed in response to the COVID-19 pandemic.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.

The preparation of these financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.

Actual results may differ from those estimates.

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The Company bases its estimates and judgments on historical experience and other assumptions that management believes are reasonable.

However, application of these accounting policies involves the exercise of judgment and use of assumptions as to future uncertainties and, as a result, actual results could differ materially from these estimates.

However, application of these accounting policies involves the exercise of judgment and use of assumptions as to future uncertainties, including those uncertainties arising from COVID-19, and, as a result, actual results could differ materially from these estimates.

The Company periodically evaluates estimates and assumptions used in the preparation of the financial statements and makes changes on a prospective basis when adjustments are necessary.

estimates made in the accompanying Consolidated Financial Statements include certain assumptions related to accounts receivable, inventory, goodwill, intangible assets, long-lived assets, long-lived asset impairments, program cancellation reserves, chargebacks, and accruals related to estimated tax liabilities, product return reserves, and other liabilities.

Significant estimates made in the accompanying consolidated financial statements include certain assumptions related to accounts receivable, inventory, goodwill, intangible assets, long-lived assets, long-lived asset impairments, program cancellation reserves, chargebacks, and accruals related to estimated tax liabilities, product return reserves, and other liabilities.

Cash and Cash Equivalents

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Outstanding checks that are in excess of the cash balances at certain banks are included in accrued liabilities in the consolidated balance sheets, and changes in the amounts are reflected in operating cash flows in the accompanying consolidated statement of cash flows.

Contracts in Transit

Contracts in Transit, Accounts Receivable and Current Expected Credit Losses

Contracts in transit consist of amounts due from non-affiliated financing institutions on retail finance contracts from vehicle sales for the portion of the vehicle sales price financed by the Company’s customers.

These retail installment sales contracts are typically funded within ten days of the initial approval of the retail installment sales contract by the third-party lender.

Accounts receivable are stated at realizable value, net of an allowance for doubtful accounts, which includes a reserve for expected credit losses.

Accounts receivable balances due in excess of one year was $ 8.2 million at December 31, 2020 and $ 8.6 million at December 31, 2019, which are included in other assets in the consolidated balance sheets.

The allowance for doubtful accounts is based on management’s assessment of the collectability of its customer accounts.

The Company regularly reviews the composition of the accounts receivable aging, historical bad debts, changes in payment patterns, customer creditworthiness, current economic trends, and reasonable and supportable forecasts about the future.

Relevant risk characteristics include customer size and historical loss patterns.

Management has evaluated the expected credit losses related to contracts in transit and determined that no allowance for doubtful accounts was required at December 31, 2020.

No allowance for doubtful accounts related to contracts in transit was required at December 31, 2019.

Management additionally has evaluated the expected credit losses related to accounts receivable and determined that allowances of approximately $ 3.4 million as of December 31, 2020 and $ 3.5 million as of December 31, 2019 for uncollectible accounts were required.

The following table details the changes in the allowance for doubtful accounts (in thousands):

Allowance for doubtful accounts:

Balance, beginning of period

Charged to bad debt expense

Deductions (1)

Balance, end of period

(1) These amounts primarily relate to the write off of uncollectable accounts after collection efforts have been exhausted.

Concentration of Credit Risk

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Products, parts, accessories, and other inventories primarily consist of retail travel and leisure specialty merchandise and are stated at lower of cost or net realizable value.

The cost of RV and Outdoor Retail inventories consists of the direct cost of the merchandise including freight.

The cost of RV and Outdoor Retail inventories primarily consists of the direct cost of the merchandise including freight.

A portion of the products, parts, accessories and other inventory includes capitalized labor relating to assembly.

Property and Equipment, net

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Leasehold improvements are amortized over the useful lives of the assets or the remaining term of the respective lease, whichever is shorter.

After the adoption of Accounting Standards Codification (“ASC”) 842, Leases (“ASC 842”) on January 1, 2019 (see “Recently Adopted Accounting Pronouncements” elsewhere in this Note 1) the Company recognizes a right-of-use (“ROU”) asset and a lease liability on the balance sheet for operating leases (with the exception of short-term leases based on the practical expedient elected by the Company) at the commencement date, in addition to finance leases that were previously also required to be recognized on the balance sheet, and recognizes expenses on the income statement in a similar manner to the previous guidance in ASC 840, Leases (“ASC 840”) (see Note 10 — Lease Obligations).

After the adoption of Accounting Standards Codification (“ASC”) 842, Leases (“ASC 842”) on January 1, 2019 the Company recognizes a right-of-use (“ROU”) asset and a lease liability on the balance sheet for operating leases (with the exception of short-term leases based on the practical expedient elected by the Company) at the commencement date, in addition to finance leases that were previously also required to be recognized on the balance sheet, and recognizes expenses on the income statement in a similar manner to the previous guidance in ASC 840, Leases (“ASC 840”) (see Note 10 — Lease Obligations).

Goodwill and Other Intangible Assets

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Long-Lived Assets

Long-lived assets included in property and equipment, net, including capitalized software costs to be held and used and ROU assets relating to leases are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Impairment is recognized to the extent the sum of the discounted estimated future cash flows from the use of the asset is less than the carrying value.

For the Company’s major software systems, such as its accounting and membership systems, the Company’s capitalized costs may include some internal or external costs to configure, install and test the software during the application development stage.

Long lived assets are included in property and equipment, which also includes capitalized software costs to be held and used.

For the Company’s major software systems, such as its accounting and membership systems, its capitalized costs may include some internal or external costs to configure, install and test the software during the application development stage.

The Company does not capitalize preliminary project costs, nor does it capitalize training, data conversion costs, maintenance or post development stage costs.

The Company’s long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

The Company’s long-lived asset groups exist predominantly at the individual location level and the associated impairment analysis involves the comparison of an asset group’s estimated future undiscounted cash flows over its remaining useful life to its respective carrying value, which primarily includes furniture, equipment, leasehold improvements, and operating lease assets.

For long-lived asset groups identified with carrying values not recoverable by future undiscounted cash flows, impairment charges are recognized to the extent the sum of the discounted future cash flows from the use of the asset group is less than the carrying value.

The impairment charge is allocated to the individual long-lived assets within an asset group;

however, an individual long-lived asset is not impaired below its individual fair value, if readily determinable.

The measurement of any impairment loss includes estimation of the fair value of the asset group’s respective operating lease assets, which includes estimates of market rental rates based on comparable lease transactions.

Long-Term Debt

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Revenue Recognition

For periods after the adoption of ASC 606 on January 1, 2018 (see Note 2 — Revenue):

Revenues are recognized by the Company when control of the promised goods or services is transferred to its customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.

Sales and other taxes collected from the customer concurrent with revenue-producing activities are excluded from revenue.

Incidental items that are immaterial in the

context of the contract are recognized as expense.

Incidental items that are immaterial in the context of the contract are recognized as expense.

The Company’s contracts with customers may include multiple performance obligations.

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RA claim expenses are recognized when incurred.

Marketing fees for finance, insurance, extended service and other similar products are recognized as variable consideration, net of estimated cancellations, if applicable, when a product contract payment has been received or financing has been arranged.

or financing has been arranged.

These marketing fees are recorded net as the Company acts as an agent in the transaction.

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The proceeds the Company receives for arranging financing contracts, selling extended service contracts, and selling other products, are subject to chargebacks if the customer terminates the respective contract earlier than a stated period.

A reserve for chargebacks is recorded as a reduction of revenue in the period in which the related revenue is recognized.

The remaining RV and Outdoor retail revenue consists of sales of products, service and other products, including RV accessories and supplies, and camping, hunting, fishing, skiing, snowboarding, bicycling, skateboarding, marine and watersport equipment and supplies.

In the case of insurance and service contracts, the stated period typically extends from one to five years with the refundable commission balance declining over the contract term.

These proceeds are recorded as variable consideration, net of estimated chargebacks.

Chargebacks are estimated based on ultimate future cancellation rates by product type and year sold using a combination of actuarial methods and leveraging the Company’s historical experience from the past eight years , adjusted for new consumer trends.

The chargeback liabilities included in the estimate of variable consideration totaled $ 58.9 million and $ 48.3 million as of December 31, 2020 and December 31, 2019, respectively.

The remaining RV and Outdoor retail revenue consists of sales of products, service and other products, including RV accessories and supplies, RV furniture, camping, hunting, fishing, skiing, snowboarding, bicycling, skateboarding, marine and watersport equipment and supplies.

Revenue from products, service and other is recognized over time as work is completed, and when parts or other products are delivered to the Company’s customers.

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For lifetime memberships, an 18-year period is used, which is the actuarially determined estimated fulfillment period.

Royalty revenue is earned under the terms of an arrangement with a third-party credit card provider based on a percentage of the Company’s co-branded

credit card portfolio retail spending with such third-party credit card provider and for acquiring new cardholders.

The Company does not adjust the promised amount of consideration for the effects of a significant financing component if the Company expects, at contract inception, that the period of time between payment and transfer of the promised goods or services will be one year or less.

Royalty revenue is earned under the terms of an arrangement with a third-party credit card provider based on a percentage of the Company’s co-branded credit card portfolio retail spending with such third-party credit card provider and for acquiring new cardholders.

and transfer of the promised goods or services will be one year or less.

The Company expenses sales commissions when incurred in cases where the amortization period of those otherwise capitalized sales commissions would have been one year or less.

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The Company accounts for shipping and handling as activities to fulfill the promise to transfer the good to the customer and does not evaluate whether shipping and handling is a separate performance obligation.

For periods prior to the adoption of ASC 606 on January 1, 2018 (see Note 2 — Revenue):

Revenue is recognized when persuasive evidence of an arrangement exists, services or products have been provided to the customers, fees are fixed or determinable, and collectability is reasonably assured.

Sales and other taxes collected from the customer concurrent with revenue-producing activities are excluded from revenue.

Good Sam Services and Plans revenue consists revenue from publications, consumer shows, and marketing and royalty fees from various consumer services and plans.

Certain Good Sam Services and Plans revenue is generated from annual, multiyear and lifetime memberships.

The revenue and expenses associated with these memberships are deferred and amortized over the membership period.

Unearned revenue and profit are subject to revisions as the membership progresses to completion.

Revisions to membership period estimates would change the amount of income and expense amortized in future accounting periods.

For lifetime memberships, an 18-year period is used, which is the actuarially determined estimated fulfillment period.

RA revenues are deferred and recognized over the life of the membership.

RA claim expenses are recognized when incurred.

Certain Good Sam Club memberships and Good Sam Services and Plans may be sold bundled with a merchandise certificate to a Camping World retail location.

The selling price of the membership is typically determined based on vendor specific objective evidence (“VSOE”) or, in the absence of VSOE, the selling price is determined by management's best estimate of selling price, which considers market and economic conditions, internal costs, pricing, and discounting practices.

The selling price of the merchandise certificate is determined based management’s best estimated selling price, which considers the face value of the discount provided by the merchandise certificate and adjusts for the likelihood that the merchandise certificate will be redeemed.

The bundled price is then allocated between the membership and merchandise certificate based on their relative selling prices.

Royalty revenue is earned under the terms of an arrangement with a third party credit card provider based on a percentage of our co-branded credit card portfolio retail spend with such third party credit card provider.

Marketing fees for finance, insurance, extended service and other similar products are recognized, net of a reserve for estimated cancellations, if applicable, when a product contract payment has been received or financing has been arranged.

These marketing fees are recorded net as the Company acts as an agent in the transaction.

The related estimate for cancellations on the marketing fees for multi-year finance and insurance products utilize actuarial analysis to estimate the exposure.

Promotional expenses, consisting primarily of direct mail advertising, are deferred and expensed over the period of expected future benefit, typically three months based on historical actual response rates.

Renewal expenses are expensed at the time related materials are mailed.

Newsstand sales of publications and related expenses are recorded at the time of delivery, net of an estimated provision for returns.

Subscription sales of publications are reflected in income over the lives of the

subscriptions.

The related selling expenses are expensed as incurred.

Advertising revenues and related expenses are recorded at the time of delivery.

Subscription and newsstand revenues and expenses related to annual publications are deferred until the publications are distributed.

Revenue and related expenses for consumer shows are recognized when the show occurs.

Retail revenue consists of sales of new and used vehicles, commissions on related finance and insurance contracts, and sales of products, service other products.

Revenue from the sale of vehicles is recognized upon completion of the sale to the customer.

Conditions to completing a sale include having an agreement with the customer, including pricing and the sales price must be reasonably expected to be collected and delivery has occurred.

Revenue from parts, services and other products sales is recognized when products are sold in the retail stores, shipped for mail and internet orders, or upon completion of the service.

Finance and insurance revenue is recognized when a finance and insurance product contract payment has been received or financing has been arranged.

The proceeds we receive for arranging financing contracts, and selling insurance and service contracts, are subject to chargebacks if the customer terminates the respective contract earlier than a stated period.

A reserve for chargebacks is recorded as a reduction of revenues in the period in which the related revenue is recognized.

Parts and Service Internal Profit

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Advertising Expense

As of January 1, 2018, the Company implemented ASC 606, which removed the guidance for capitalization of direct response advertising that is now expensed as incurred.

Other advertising expenses were expensed as incurred.

Advertising expenses are expensed as incurred.

Advertising expenses for the years ended December 31, 2020, 2019 and 2018 were $ 96.3 million, $ 117.8 million and $ 112.4 million, respectively.

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The Company classifies interest and penalties relating to income taxes as income tax expense.

See Note 11 — Income Taxes.

See Note 11 — Income Taxes for additional information.

Recently Adopted Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No.

2016-02, Leases (Topic 842) (“ASU 2016-02” or “ASC 842”).

The FASB has subsequently issued several related ASUs that clarified the implementation guidance for certain aspects of ASU 2016-02, which were effective upon the adoption of ASU 2016-02.

The amendments in this ASU related to the accounting for leasing transactions.

ASC 842 requires lessees to recognize a right-of-use asset and a lease liability on the balance sheet for all operating and finance leases (with the exception of short-term leases based on the practical expedient elected by the Company) at the lease commencement date, whereas only finance leases were required to be recognized on the balance sheet under the previous guidance in ASC 840, and recognize expenses on the income statement in a similar manner to the previous guidance in ASC 840.

The lease liability is measured as the present value of the unpaid lease payments and the right-of-use asset is derived from the calculation of the lease liability adjusted for initial direct costs, prepaid lease payments, and lease incentives.

Lease payments include fixed and in-substance fixed payments, variable payments based on an index or rate at lease commencement, reasonably certain purchase options, termination penalties where the lease term reflects the election of a termination option, fees paid by the lessee to the owners of a special-purpose entity for restructuring the transaction, and probable amounts the lessee will owe under a residual value guarantee.

Lease payments do not include variable lease payments other than those that depend on an index or rate measured at lease commencement, any guarantee by the lessee of the lessor’s debt, or any amount allocated to non-lease components.

The discount rate used to derive the present value of unpaid lease payments is based on the rates implicit in the lease, or if not available, the incremental borrowing rate.

The most significant impact of ASC 842 on the Company’s accounting was the balance sheet impact of its real estate operating leases, which significantly increased assets and liabilities.

In addition, ASC 842 eliminated the previous build-to-suit lease accounting guidance and resulted in derecognition of build-to-suit assets and liabilities that remained on the balance sheet after the end of the construction period, including any related deferred taxes.

Also, ASC 842 made changes to sale-leaseback accounting to result in the recognition of the gain on the transaction at the time of the sale instead of recognizing over the leaseback period, when the transaction is deemed to be a sale instead of a financing arrangement.

ASC 842 further changes the assessment of sale accounting from a transfer of risk and rewards assessment to a transfer of control assessment.

The Company elected the package of practical expedients available under the transition provisions of ASC 842, including (i) not reassessing whether expired or existing contracts contain leases, (ii) lease classification, and (iii) not revaluing initial direct costs for existing leases.

Also, the Company elected the practical expedient which allows aggregation of non-lease components with the related lease components when evaluating accounting treatment for property, equipment, and billboard leases.

Lastly, the Company applied the modified retrospective adoption method, utilizing the simplified transition option available in ASC 842, which allows entities to continue to apply the legacy guidance in ASC 840, including its disclosure requirements, in the comparative periods presented in the year of adoption.

The Company adopted ASC 842 on January 1, 2019.

The impact of applying ASC 842 effective as of January 1, 2019, to the Company’s consolidated statements of operations and cash flows was not significant.

The major impacts to the balance sheet were 1) the addition of $ 809.7 million in operating lease assets, 2) the addition of $ 867.5 million of operating lease liabilities, 3) the removal of approximately $ 4.9 million, $ 10.6 million, $ 7.6 million, and $ 54.5 million of property and equipment, net;

deferred revenues and gains;

accrued liabilities;

and other liabilities, respectively, and 4) a cumulative-effect adjustment for the adoption of ASC 842 of $ 3.7 million and $ 6.3 million was recorded to retained earnings and non-controlling interests, respectively.

The adoption of ASC 842 did not impact any of its existing debt covenants.

In June 2018, the FASB issued ASU No.

2018-07, Compensation–Stock Compensation (Topic 718):

Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”).

This standard simplifies the accounting for share-based payments to nonemployees by aligning it with the accounting for share-based payments to employees, with certain exceptions.

The Company adopted the amendments of this ASU on January 1, 2019 and the adoption did not materially impact its consolidated financial statements, results of operations, or statements of cash flows.

Recently Issued Accounting Pronouncements

In June 2016, the FASB issued ASU No.

In June 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No.

2016-13, Financial Instruments - Credit Losses (Topic 326) (“ASU 2016-13”).

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This standard also requires impairments and recoveries for available-for-sale debt securities to be recorded through an allowance account and revises certain disclosure requirements.

In April 2019, the FASB issued ASU 2019-04, Codification Improvements, which provides guidance on accounting for credit losses on accrued interest receivable balances and guidance on including recoveries when estimating the allowance.

In May 2019, the FASB issued ASU 2019-05, Targeted Transition Relief, which allows entities with an option to elect fair value for certain instruments upon adoption of Topic 326.

The standard is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019.

The Company will adopt ASU 2016-13 on January 1, 2020.

The Company is currently evaluating the impact that the adoption of the provisions of this ASU will have on its consolidated financial statements.

The Company adopted ASU 2016-13 on January 1, 2020 and the adoption did not materially impact its condensed consolidated financial statements.

In August 2018, the FASB issued ASU No.

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The ASU permits either a prospective or retrospective transition approach.

The standard will be effective for fiscal years beginning after December 15, 2019.

The Company will adopt ASU 2018-15 on January 1, 2020.

The Company is currently evaluating the impact that the adoption of the provisions of this ASU will have on its consolidated financial statements

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740):

The standard will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019.

The Company adopted ASU 2018-15 on January 1, 2020 using the prospective transition approach and the adoption did not materially impact its condensed consolidated financial statements.

In March 2020, the FASB issued ASU No.

2020-04, Reference Rate Reform (Topic 848) (“ASU 2020-04”).

This standard, effective for reporting periods through December 31, 2022, provides accounting relief for contract modifications that replace an interest rate impacted by reference rate reform (e.g., London Interbank Offered Rate (“LIBOR”)) with a new alternative reference rate.

The guidance is applicable to investment securities, receivables, loans, debt, leases, derivatives and hedge accounting elections and other contractual arrangements.

The Company adopted ASU 2020-04 as of January 1, 2020 and the adoption did not materially impact its condensed consolidated financial statements.

Recently Issued Accounting Pronouncements

In December 2019, the FASB issued ASU No.

2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes (“ASU 2019-12”).

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The ASU permits either a retrospective basis or a modified retrospective transition approach.

The Company is currently evaluating the impact that the adoption of the provisions of this ASU will have on its consolidated financial statements.

Adoption of ASC 606, Revenue from Contracts with Customers

On January 1, 2018, the Company adopted ASC 606 using the modified retrospective method applied to those contracts that were not completed as of January 1, 2018.

Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance with the Company’s historical accounting under ASC 605.

The Company does not expect that the adoption of the provisions of this ASU will have a material impact on its consolidated financial statements.

Contract Assets

As of December 31, 2019 and 2018, a contract asset relating to RV service revenues of $ 6.1 million and $ 6.3 million, respectively, was included in accounts receivable in the accompanying consolidated balance sheet.

As of December 31, 2019 and 2018, the Company had capitalized costs to acquire a contract consisting of $ 6.6 million and $ 6.0 million, respectively, from the deferral of sales commissions expenses relating to multiyear consumer services and plans and the recording of such expenses over the same period as the recognition of the related revenues.

As of December 31, 2020 and 2019, a contract asset of $ 8.1 million and $ 6.1 million, respectively, relating to RV service revenues was included in accounts receivable in the accompanying consolidated balance sheet.

As of December 31, 2020 and 2019, the Company had capitalized costs to acquire a contract consisting of $ 7.1 million and $ 6.6 million, respectively, from the deferral of sales commissions expenses relating to multi-year consumer services and plans and the recording of such expenses over the same period as the recognition of the related revenues.

Deferred Revenues

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For the year ended December 31, 2020, $ 87.1 million of revenues recognized were included in the deferred revenue balance at the beginning of the period.

As of December 31, 2019, the Company has unsatisfied performance obligations relating to multi-year plans for its Good Sam Club memberships, roadside assistance, Coast to Coast club memberships, and magazine publication revenue streams.

As of December 31, 2020, the Company has unsatisfied performance obligations primarily relating to multi-year plans for its roadside assistance, Good Sam Club memberships, Coast to Coast memberships, the annual campground guide, and magazine publication revenue streams.

The total unsatisfied performance obligation for these revenue streams at December 31, 2020 and the periods during which the Company expects to recognize the amounts as revenue are presented as follows (in thousands):

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Products, parts, accessories and other

New and used RV inventory included in the RV and Outdoor Retail segment are primarily financed by floor plan arrangements through a syndication of banks.

The arrangements are collateralized by substantially all of the assets of FreedomRoads, LLC (“FR”), a wholly-owned subsidiary of FreedomRoads, which operates the RV dealerships, and bear interest at one-month London Interbank Offered Rate (“LIBOR”) plus 2.15 % for each year ended December 31, 2019, 2018 and 2017, respectively.

New RV inventory included in the RV and Outdoor Retail segment is primarily financed by a floor plan credit agreement with a syndication of banks.

The borrowings under the floor plan credit agreement are collateralized by substantially all of the assets of FreedomRoads, LLC (“FR”), a wholly-owned subsidiary of FreedomRoads, which operates the RV dealerships, and bear interest at one-month LIBOR plus 2.05 % as of December 31, 2020 and at one-month LIBOR plus 2.15 % for the years ended December 31, 2019 and December 31, 2018.

LIBOR was 0.15 %, 1.71 % and 2.35 % as of December 31, 2020, 2019, and 2018, respectively.

Borrowings are tied to specific vehicles and principal is due upon the sale of the related vehicle or upon reaching certain aging criteria.

The floor plan borrowings are tied to specific vehicles and principal is due upon the sale of the related vehicle or upon reaching certain aging criteria.

As of December 31, 2020 and 2019, FR maintained floor plan financing through the Seventh Amended and Restated Credit Agreement (“Floor Plan Facility”).

On October 8, 2019, FR entered into a Second Amendment to the Seventh Amended and Restated Credit Agreement (the “Amendment”).

The Amendment reduces the total commitment under the Floor Plan Facility to $ 1.38 billion and extends the maturity date of the Floor Plan Facility from December 12, 2020 to March 15, 2023, among other immaterial changes.

On October 8, 2019, FR entered into a Second Amendment to the Seventh Amended and Restated Credit Agreement (the “Second Amendment”).

The applicable borrowing rate margin on LIBOR and base rate loans ranges from 2.05 % to 2.50 % and 0.55 % and 1.00 %, respectively, based on the consolidated current ratio at FR.

The Floor Plan Facility at December 31, 2019 allowed FR to borrow (a) up to $ 1.38 billion under a floor plan facility, (b) up to $ 15.0 million under a letter of credit facility and (c) up to a maximum amount outstanding of $ 60.0 million under the revolving line of credit, which maximum amount outstanding will decrease by $ 3.0 million on the last day of each fiscal quarter, commencing with the fiscal quarter ending March 31, 2020.

The Floor Plan Facility at December 31, 2020 allowed FR to borrow (a) up to $ 1.38 billion under a floor plan facility, (b) up to $ 15.0 million under a letter of credit facility and (c) up to a maximum amount outstanding of $ 48.0 million under the revolving line of credit, which maximum amount outstanding further decreases by $ 3.0 million on the last day of each fiscal quarter.

The maturity date of the Floor Plan Facility is March 15, 2023.

On May 12, 2020, FR entered into a Third Amendment to the Seventh Amended and Restated Credit Agreement (“Third Amendment”) that provides FR with a one-time option to request a temporary four-month reduction (“Current Ratio Reduction Period”) of the minimum consolidated current ratio at any time during 2020 and the first seven days of 2021.

FR did not exercise that option.

During the Current Ratio Reduction Period, the applicable borrowing rate margin on LIBOR and base rate loans ranges from 2.05 % to 3.00 % and 0.55 % and 1.50 % , respectively, based on the consolidated current ratio at FR.

Effective May 12, 2020 through July 31, 2020, FR was not allowed to draw further Revolving Credit Loans (as defined in the Floor Plan Facility).

The Floor Plan Facility includes a flooring line aggregate interest reduction (“FLAIR”) offset account that allows the Company to transfer cash as an offset to the payable under the Floor Plan Facility.

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As a result of using the FLAIR offset account, the Company experiences a reduction in floor plan interest expense in its consolidated statements of operations.

The credit agreement governing the Floor Plan Facility contains certain financial covenants.

FR was in compliance with all debt covenants at December 31, 2019.

The following table details the outstanding amounts and available borrowings under the Floor Plan Facility as of (in thousands):

As of December 31, 2020 and December 31, 2019, FR had $ 133.6 million and $ 87.0 million, respectively, in the FLAIR offset account.

The Third Amendment raised the maximum FLAIR percentage of outstanding floor plan borrowings from 20 % to 30 % for the period of May 12, 2020 through August 31, 2020 before returning to 20 %.

Management has determined that the credit agreement governing the Floor Plan Facility includes subjective acceleration clauses, which could impact debt classification.

Management has determined that no events have occurred at December 31, 2020 that would trigger a subjective acceleration clause.

Additionally, the credit agreement governing the Floor Plan Facility contains certain financial covenants.

FR was in compliance with all debt covenants at December 31, 2020 and December 31, 2019.

On June 29, 2020, FR made a voluntary $ 20.0 million principal payment on the revolving line of credit.

The following table details the outstanding amounts and available borrowings under the Floor Plan Facility as of December 31, 2020 and December 31, 2019 (in thousands):

Floor Plan Facility:

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Revolving line of credit

Less borrowings

Additional borrowing capacity

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Restructuring

On September 3, 2019, the Board of Directors of CWH approved a plan to strategically shift its business away from locations where the Company does not have the ability or where it is not feasible to sell and/or service RVs (the “2019 Strategic Shift”).

As of September 3, 2019, the Company operated 37 locations that do not sell and/or service RVs but sell an assortment of outdoor lifestyle products (the “Outdoor Lifestyle Locations”), and had an additional five Outdoor Lifestyle Locations that were previously closed or had not opened as of that date.

In addition, the Company operated seven specialty retail locations operated by TheHouse.com, an indirect wholly-owned subsidiary of the Company.

Of the Outdoor Lifestyle Locations in the RV and Outdoor Retail segment operating at September 3, 2019, the Company closed three locations during September 2019, and closed 31 locations during the fourth quarter.

In addition, the Company closed one of the seven specialty retail locations operated by TheHouse.com.

As of December 31, 2019, two Outdoor Lifestyle locations and six specialty retail locations remained open.

The Company was able to, or is in the process of, acquiring and/or obtaining the developmental consents, approvals and permits necessary for the sale and/or service of RVs at the other Outdoor Lifestyle Locations.

As part of the 2019 Strategic Shift, the Company had evaluated the impact on the Company’s supporting infrastructure and operations, which included rationalizing inventory levels and

composition, closing one of its distribution centers, identifying two additional distribution centers for closure in the first half of 2020, and realigning other resources.

The majority of the store closures and/or divestitures related to the 2019 Strategic Shift were completed by February 12, 2020.

The Company had a reduction of headcount and labor costs for those locations that were sold, divested or closed and the Company incurred material charges associated with the activities contemplated under the 2019 Strategic Shift.

In connection with the 2019 Strategic Shift, the Company expects to incur costs relating to one-time employee termination benefits of $ 1.0 million to $ 1.5 million, lease termination costs of between $ 15.0 million and $ 20.0 million, incremental inventory reserve charges of $ 41.9 million, and other associated costs of between $ 20.0 million and $ 25.0 million.

On September 3, 2019, the board of directors of CWH approved a plan to strategically shift its business away from locations where the Company does not have the ability or where it is not feasible to sell and/or service RVs at a sufficient capacity (the “Outdoor Lifestyle Locations”).

Of the Outdoor Lifestyle Locations in the RV and Outdoor Retail segment operating at September 3, 2019, the Company has closed or divested 39 Outdoor Lifestyle Locations, three distribution centers, and 20 specialty retail locations through December 31, 2020.

One of the aforementioned closed distribution centers was reopened during the three months ended June 2020 and repurposed for online order fulfillment.

As of December 31, 2020, the Company has completed the store closures and divestitures relating to the 2019 Strategic Shift.

As part of the 2019 Strategic Shift, the Company evaluated the impact on its supporting infrastructure and operations, which included rationalizing inventory levels and composition, closing certain distribution centers, and realigning other resources.

The Company had a reduction of headcount and labor costs for those locations that were closed or divested and the Company incurred material charges associated with the activities contemplated under the 2019 Strategic Shift.

The Company currently estimates the total restructuring costs associated with the 2019 Strategic Shift to be in the range of $ 89.6 million to $ 110.6 million.

The breakdown of the estimated restructuring costs are as follows:

● one-time employee termination benefits relating to retail store or distribution center closures/divestitures of $ 1.2 million, all of which has been incurred through December 31, 2020;

● lease termination costs of $ 18.0 million to $ 32.0 million, of which $ 11.9 million has been incurred through December 31, 2020;

● incremental inventory reserve charges of $ 42.4 million, all of which has been incurred through December 31, 2020;

● other associated costs of $ 28.0 million to $ 35.0 million, of which $ 21.2 million has been incurred through December 31, 2020.

Through December 31, 2020, the Company has incurred $ 21.2 million of such other associated costs primarily representing labor, lease, and other operating expenses incurred during the post-close wind-down period for the locations related to the 2019 Strategic Shift.

The additional amount of $ 15.7 million to $ 20.7 million represents similar costs that may be incurred in the year ending December 31, 2020 for locations that continue in a wind-down period, primarily comprised of lease costs accounted for under ASC 842 prior to lease termination.

The additional amount of $ 6.8 million to $ 13.8 million represents similar costs that may be incurred in the year ending December 31, 2021 for locations that continue in a wind-down period, primarily comprised of lease costs accounted for under ASC 842, Leases, prior to lease termination.

The Company intends to negotiate terminations of these leases where prudent and pursue sublease arrangements for the remaining leases.

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The following table details the costs incurred associated with the 2019 Strategic Shift (in thousands):

December 31, 2020

December 31, 2019

Restructuring costs:

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Total restructuring costs

lease termination costs

Total restructuring costs excluding lease termination costs

(1) These costs were included in selling, general, and administrative expenses in the consolidated statements of operations.

(2) These costs were included in lease termination charges in the consolidated statements of operations and excludes a gain of $ 0.7 million relating to lease terminations of closed locations that were not related to the 2019 Strategic Shift.

(1) These costs incurred in 2020 were primarily included in costs applicable to revenues – products, service and other in the consolidated statements of operations.

These costs incurred in 2019 were primarily included in selling, general and administrative expenses in the consolidated statements of operations.

(2) These costs were included in lease termination charges in the consolidated statements of operations.

This reflects termination fees paid, net of any gain from derecognition of the related operating lease assets and liabilities.

(3) These costs were included in costs applicable to revenue – products, service and other in the consolidated statements of operations.

(4) Other associated costs primarily represent labor, lease, and other operating expenses incurred during the post-close wind-down period for the locations related to the 2019 Strategic Shift.

For the year ended December 31, 2019, costs of approximately $ 0.6 million were included in costs applicable to revenue – products, service and other, and $ 3.7 million were included in selling, general, and administrative expenses in the consolidated statements of operations.

For the years ended December 31, 2020 and 2019, costs of approximately $ 0.4 million and $ 0.6 million, respectively, were included in costs applicable to revenue – products, service and other, and $ 16.4 million and $ 3.7 million, respectively, were included in selling, general, and administrative expenses in the consolidated statements of operations.

The following table details changes in the restructuring accrual associated with the 2019 Strategic Shift (in thousands):

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Paid or otherwise settled

Reversals of prior accruals

Balance at December 31, 2019

(1) Lease termination costs excludes the $ 1.3 million gain from the derecognition of the operating lease assets and liabilities relating to the terminated leases as part of the 2019 Strategic Shift.

Charged to expense

Paid or otherwise settled

Balance at December 31, 2020

(1) Lease termination costs excludes the $ 1.3 million and the $ 6.1 million of gains from the derecognition of the operating lease assets and liabilities relating to the terminated leases as part of the 2019 Strategic Shift for the six months ended December 31, 2019 and for the year ended December 31, 2020, respectively.

The Company evaluated the requirements of ASC No.

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Long-lived Asset Impairment

During the year ended December 31, 2019, the Company had indicators of impairment of the long-lived assets for certain of its locations, primarily those locations related to the 2019 Strategic Shift.

During the year ended December 31, 2020, the Company had indicators of impairment of the long-lived assets for certain of its locations.

For locations that failed the recoverability test based on an analysis of undiscounted cash flows, the Company estimated the fair value of the locations based on a discounted cash flow analysis.

After performing the long-lived asset impairment test for these locations, the Company determined that 53 locations within the RV and Outdoor Retail segment had long-lived assets that were impaired.

After performing the long-lived asset impairment test for these locations, the Company determined that certain locations within the RV and Outdoor Retail segment had long-lived assets that were impaired.

The long-lived asset impairment charge, subject to limitations described below, was calculated as the amount that the carrying value of the locations exceeded the estimated fair value.

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For most of these locations, the operating lease right-of-use assets and furniture and equipment were written down to their individual fair values and the remaining impairment charge was allocated to the remaining long-lived assets up to the fair value estimated on these assets based on liquidation value estimates.

During the year ended December 31, 2019, the Company recorded long-lived asset impairment charges relating to leasehold improvements, furniture and equipment, and operating lease right-of-use assets of $ 20.8 million, $ 28.6 million, and $ 16.9 million, respectively.

During the year ended December 31, 2020, the Company identified indicators of impairment at previously closed stores in certain markets.

After performing the long-lived asset impairment test using updated assumptions for these locations, the Company determined that 19 locations within the RV and Outdoor Retail segment had long-lived assets that were impaired.

The Company recorded the following long-lived asset impairment charges:

$ 2.4 million related to leasehold improvements, $ 2.6 million related to furniture and equipment, $ 1.5 million related to buildings, and $ 5.9 million operating lease right-of-use assets.

Of the $ 12.4 million long-lived asset impairment charge during the year ended December 31, 2020, $ 12.3 million related to the 2019 Strategic Shift discussed above.

For the year ended December 31, 2019, the Company recorded the following long-lived asset impairment charges:

$ 20.8 million related to leasehold improvements, $ 28.6 million related to furniture and equipment, and $ 16.9 million operating lease right-of-use assets.

Of the $ 66.3 million long-lived asset impairment charge during the year ended December 31, 2019, $ 57.4 million was related to the 2019 Strategic Shift discussed above.

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(1) At December 31, 2020 inclusive of right-to-use assets

In 2018, unrelated landlords reimbursed the Company for tenant improvements constructed by the Company at various locations.

In accordance with ASC 840, Leases, the Company capitalized the tenant improvements as leasehold improvements and recorded a lease incentive in a like amount.

The leasehold improvements are depreciated over the shorter of the life of the lease or the estimated life of the leasehold improvement and the lease incentives are amortized, as an offset to rent expense, over the life of the lease.

Depreciation expense for the years ended December 31, 2020, 2019, and 2018 was $ 47.4 million, $ 54.7 million and $ 44.8 million, respectively .

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Balance as of January 1, 2019

Impairment charge

Balance as of December 31, 2018

Acquisitions (1)

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Balance as of December 31, 2019

(1) See Note 15 — Acquisitions.

Acquisitions (1)(3)

Balance as of December 31, 2020

Represents measurement period adjustments relating to prior period acquisitions (see Note 15 — Acquisitions).

Goodwill was allocated to 13 specialty retail locations within the RV and Outdoor Retail segment based on relative fair value.

These 13 specialty retail locations were divested in 2019.

(3) Represents current period acquisitions (see Note 15 — Acquisitions).

The Company evaluates goodwill for impairment on an annual basis as of the beginning of the fourth quarter, or more frequently if events or changes in circumstances indicate that the Company’s goodwill or indefinite-lived intangible assets might be impaired.

The Company assesses qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

If the Company determines it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then it is required to perform the first step of a two-step impairment test by calculating the fair value of the reporting unit and comparing the fair value with the carrying amount of the reporting unit.

If the Company determines it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then it is required to perform a quantitative impairment test by calculating the fair value of the reporting unit and comparing the fair value with the carrying amount of the reporting unit.

If the carrying amount of a reporting unit exceeds its fair value, then the Company records an impairment of goodwill equal to the amount that the carrying amount of a reporting unit exceeds its fair value.

As of January 1, 2019, the Company transferred certain assets related to the Good Sam Club and co-branded credit card from GSS Enterprises, LLC (“GSS”) within the Good Sam Services and Plans segment to CWI, Inc.

(“CWI”) within the RV and Outdoor Retail segment.

This resulted in a transfer of $ 26.5 million of goodwill from the Good Sam Services and Plans segment to the RV and Outdoor Retail segment based on relative fair value as of January 1, 2019 of the portion of the reporting unit transferred.

In the fourth quarter of 2019, the Company performed its annual goodwill impairment test of the RV and Outdoor Retail reporting unit, which resulted in the determination that the estimated fair value of the RV and Outdoor Retail reporting unit, which was comprised of the entire RV and Outdoor Retail segment exceeded its carrying value.

Therefore, no impairment charge was recorded for the RV and Outdoor Retail reporting unit during the year ended December 31, 2019.

The Company estimated the fair value of the RV and Outdoor Retail reporting unit using a combination of the guideline public company method under the market approach and the discounted cash flow analysis method under the income approach.

In the fourth quarter of 2019, the Company performed its annual goodwill impairment test of the Good Sam Show and GSS Enterprise reporting units, which resulted in the determination that the estimated fair value of the Good Sam Show and GSS Enterprise reporting units, which comprise of a portion of the Good Sam Services and Plans segment exceeded its carrying value.

Therefore, no impairment charge was recorded for the RV Show and GSS Enterprise reporting units during the year ended December 31, 2019.

The Company estimated the fair value of the RV Show reporting unit using a combination of the guideline public company method under the market approach and the discounted cash flow analysis method under the income approach.

In the fourth quarter of 2018, the Company performed its annual goodwill impairment test, which resulted in the determination that the carrying value of the former Retail reporting unit, which was comprised of the entire Retail segment as previously reported (see Note 22 – Segment Information for discussion of the change in segment reporting during the year ended December 31, 2019), exceeded its estimated fair value by an amount that exceeded the reporting unit’s goodwill balance.

During the three months ended March 31, 2020, the Company determined that a triggering event for an interim goodwill impairment test of its RV and Outdoor Retail reporting unit had occurred as a result of the decline in the market price of the Company’s Class A common stock and the potential impact of COVID-19 on the Company’s business.

As a result of the interim goodwill impairment test, the Company determined that the fair value of the RV and Outdoor Retail reporting unit was substantially above its respective carrying amount, therefore, no goodwill impairment was recorded.

In the fourth quarter of 2020 and 2019, the Company performed its annual goodwill impairment test of the RV and Outdoor Retail, the Good Sam Show, and GSS Enterprise reporting units.

The RV and Outdoor Retail reporting unit is comprised of the entire RV and Outdoor Retail segment.

The Good Sam Show and GSS Enterprise reporting units are comprised of a portion of the Good Sam Services and Plans Segment.

These annual goodwill impairment tests resulted in the determination that the estimated fair value of these reporting units exceeded their carrying value.

Therefore, no impairment charge was recorded during the years ended December 31, 2020 and 2019.

The Company estimated the fair value of these reporting units using a combination of the guideline public company method under the market approach and the discounted cash flow analysis method under the income approach.

In the fourth quarter of 2018, the Company performed its annual goodwill impairment test, which resulted in the determination that the carrying value of the former Retail reporting unit, which was comprised of the entire Retail segment as previously reported, exceeded its estimated fair value by an amount that exceeded the reporting unit’s goodwill balance.

The excess of the carrying value over the estimated fair value of this reporting unit was primarily due to a decline in segment income leading to lower expected future cash flows for this reporting unit.

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The former Retail reporting unit goodwill was reduced to zero .

Additionally in the fourth quarter of 2018, the Company performed its annual goodwill impairment test of the Dealership reporting unit, which was comprised of the entire Dealership segment as previously reported and the GSS Enterprise and RV show reporting units, which was comprised a portion of the Good Sam Services and Plans segment as previously reported (see Note 22 – Segment Information for discussion of the change in segment reporting during the year ended December 31, 2019.

The Company did not record any impairment of goodwill for the Dealership, GSS Enterprise and RV Show reporting units during the year ended December 31, 2018.

The Company did not record any impairments of goodwill during the years ended December 31, 2019 and 2017.

Additionally in the fourth quarter of 2018, the Company performed its annual goodwill impairment test of the Dealership reporting unit, which was comprised of the entire former Dealership segment as previously reported and the Good Sam Show and GSS Enterprise reporting units, which was comprised a portion of the Good Sam Services and Plans segment as previously reported.

The Company did not record any impairment of goodwill for the Dealership, Good Sam Show and GSS Enterprise reporting units during the year ended December 31, 2018.

Intangible Assets

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Customer lists and domain names

Supplier lists

Trademarks and trade names

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The approximate weighted average useful lives of our RV and Outdoor Retail finite-lived intangible assets are as follows:

customer lists and domain names – 6.1 years, trademarks and trade names – 15.0 years, and websites – 8.4 years.

customer lists and domain names – 5.3 years, suppliers lists – 5.0 years, trademarks and trade names – 15.0 years, and websites – 8.3 years.

The weighted-average useful life of all our finite-lived intangible assets is approximately 12.8 years.

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Other accruals

(1) At December 31, 2020, this amount includes a deferral of payroll taxes under the CARES act of $ 14.6 million.

Long-Term Debt

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Term Loan Facility (1)

Finance Lease Liabilities (2)

Real Estate Facility (3)

current portion

(1) Net of $ 4.3 million and $ 5.4 million original issue discount at December 31, 2019 and 2018, respectively, and $ 10.7 million and $ 13.4 million of finance costs at December 31, 2019 and 2018, respectively.

(2) Net of $ 0.2 million and $ 0.2 million of finance costs at December 31, 2019 and 2018.

(1) Net of $ 3.2 million and $ 4.3 million of original issue discount at December 31, 2020 and 2019, respectively, and $ 7.9 million and $ 10.7 million of finance costs at December 31, 2020 and 2019, respectively.

(2) Consists of three real estate parcels with long-term leases and IT equipment contracts, which contain lease components that extend through the majority of the useful life of the asset.

Certain IT equipment contracts also contain purchase options at the end of the term, which are likely to be exercised (see Note 10 – Lease Obligations).

(3) Net of $ 0.2 million of finance costs at December 31, 2019.

Finance costs at December 31, 2020 were not significant.

The aggregate future maturities of long-term debt at December 31, 2020, were as follows (in thousands):

Long-term debt instruments

Finance Leases (1)

(1) Current portion of finance leases was $ 2.2 million at December 31, 2020.

See Note 10 - Lease Obligation.

Senior Secured Credit Facilities

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The Term Loan Facility requires mandatory principal payments in equal quarterly installments of $ 3.0 million.

Additionally, the Company is required to prepay the term loan borrowings in an aggregate amount equal to 50 % of excess cash flow, as defined in the Credit Agreement, for such fiscal year depending on the Total Leverage Ratio.

Additionally, the Company is required to prepay the term loan borrowings in an aggregate amount up to 50 % of excess cash flow, as defined in the Credit Agreement, for such fiscal year depending on the Total Leverage Ratio.

On June 30, 2020, the Borrower made a $ 9.6 million voluntary principal payment on the Term Loan Facility.

As of December 31, 2020, the Company is not required to make an additional excess cash flow payment.

As of December 31, 2020, the average interest rate on the Term Loan Facility was 3.50 %.

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As of December 31, 2020, the Company was not subject to this covenant as borrowings under the Revolving Credit Facility did not exceed the 30 % threshold.

At December 31, 2019, the Company would not have met this covenant if the Company had exceeded the 30 % threshold.

As such, the Company’s borrowing capacity under the Revolving Credit Facility at December 31, 2019 was limited to $ 9.3 million of borrowings.

The Company was in compliance with all applicable debt covenants at December 31, 2020 and 2019.

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As of December 31, 2020 and December 31, 2019, Camping World Property, Inc.

(the ‘‘Real Estate Borrower’’), an indirect wholly-owned subsidiary of CWGS, LLC, and CIBC Bank USA (“Lender”), were party to a loan and security agreement for a real estate credit facility with an aggregate maximum principal amount of $ 21.5 million (“Real Estate Facility”).

(the ‘‘Real Estate Borrower’’), an indirect wholly-owned subsidiary of CWGS, LLC, and CIBC Bank USA (“Lender”), were party to a loan and security agreement for a real estate credit facility with an aggregate maximum principal capacity of $ 21.5 million (“Real Estate Facility”).

Borrowings under the Real Estate Facility are guaranteed by CWGS Group, LLC, a wholly-owned subsidiary of CWGS, LLC.

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The Real Estate Facility matures on October 31, 2023.

As of December 31, 2019, the average interest rate on the Real Estate Facility was 4.92 % with a commitment fee of 0.50 % of the aggregate unused principal amount of the Real Estate Facility.

As of December 31, 2019, the Company had no available capacity under the Real Estate Facility.

As of December 31, 2019, a principal balance of $ 19.7 million was outstanding under the Real Estate Facility.

The Real Estate Facility is subject to certain cross default provisions, a debt service coverage ratio, and other customary covenants.

As of December 31, 2020, a principal balance of $ 4.5 million was outstanding under the Real Estate Facility, and the interest rate was 3.00 % with a commitment fee of 0.50 % of the aggregate unused principal amount of the Real Estate Facility.

As of December 31, 2020 and December 31, 2019, the Company had no available capacity under the Real Estate Facility.

In August 2020, the Company entered into an agreement to lease an owned property for a former distribution center in Greenville, North Carolina to a third party.

By entering into this lease, the Company was required to pay down $ 10.3 million of the Real Estate Facility, which was paid in August 2020.

Additionally, in September 2020, the Company sold an owned property relating to the other former distribution center in Greenville, North Carolina to a third party.

By selling this property, the Company was required to pay down $ 3.4 million of the Real Estate Facility in September 2020.

Management has determined that the credit agreement governing the Real Estate Facility includes subjective acceleration clauses, which could impact debt classification.

Management has determined that no events have occurred at December 31, 2020 that would trigger a subjective acceleration clause.

Additionally, the Real Estate Facility is subject to certain cross default provisions, a debt service coverage ratio, and other customary covenants.

The Company was in compliance with all debt covenants at December 31, 2020 and 2019.

Finance Lease Liabilities

The Company’s finance lease liabilities consist of three real estate parcels with long-term leases and IT equipment contracts, which contain lease components that extend through the majority of the useful life of the asset.

Certain IT equipment contracts also contain purchase options at the end of the term, which are likely to be exercised (see Note 10 — Lease Obligations).

Lease Obligations

The Company leases property and equipment throughout the United States primarily under operating leases.

The Company’s finance lease is not material.

The Company leases property and equipment throughout the United States primarily under finance and operating leases.

For leases with initial lease terms at commencement that are greater than 12 months, the Company records the related asset and obligation at the present value of lease payments over the term.

Many of the Company’s leases include rental escalation clauses, renewal options and/or termination options that are factored into the determination of lease payments when appropriate.

The Company aggregates non-lease components with the related lease components when evaluating the accounting treatment for property, equipment, and billboard leases.

The Company aggregates non-

lease components with the related lease components when evaluating the accounting treatment for property, equipment, and billboard leases.

Many of the Company’s lease agreements include fixed rental payments.

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The exercise of lease renewal options is at the Company’s sole discretion.

If it is reasonably certain that the Company will exercise such options, the periods covered by such options are included in the lease term and are recognized as part of the operating lease

assets and operating lease liabilities.

If it is reasonably certain that the Company will exercise such options, the periods covered by such options are included in the lease term and are recognized as part of the operating lease assets and operating lease liabilities.

The depreciable life of assets and leasehold improvements are limited to the shorter of the lease term or useful life if there is a transfer of title or purchase option reasonably certain of exercise.

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The Company estimates its incremental borrowing rate using a yield curve based on the credit rating of its collateralized debt and maturities that are commensurate with the lease term at the applicable commencement or remeasurement date.

The Company leases most of the properties for its RV and Outdoor Retail locations through 266 operating leases.

The Company leases most of the properties for its retail locations through 254 operating leases.

The Company also leases billboards and certain of its equipment primarily through operating leases.

The related operating lease assets for these operating leases are included in operating lease assets.

The Company’s finance lease is not material.

As of December 31, 2019, the weighted-average remaining lease term and weighted-average discount rate of operating leases was 13.1 years and 7.4 % , respectively.

The following presents certain information related to the costs for operating leases during 2019 (in thousands):

The Company has three properties classified as finance leases.

The following presents components of lease assets and lease liabilities, and the associated financial statement line items ($ in thousands):

Year Ended December 31,

Operating Leases

Lease Assets and Liabilities

Financial Statement Line Items

Operating lease assets

Finance lease assets

Property and equipment, net

Total lease assets, net

Operating lease liabilities - current

Current portion of operating lease liabilities

Finance lease liabilities - current

Current portion of long-term debt

Operating lease liabilities - non-current

Operating lease liabilities, net of current portion

Finance lease liabilities - non-current

Long-term debt, net of current portion

Total lease liabilities

The following presents certain information related to the costs for leases (in thousands):

Year Ended December 31,

Operating lease cost

Finance lease cost:

Amortization of finance lease assets

Interest on finance lease liabilities

Short-term lease cost

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Net lease costs

The following presents supplemental cash flow information related to leases during 2019 (in thousands):

The following presents supplemental cash flow information related to leases (in thousands):

Year Ended December 31,

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows for operating leases

Operating cash flows for finance leases

Financing cash flows for finance leases

Lease assets obtained in exchange for lease liabilities:

New, remeasured, and terminated operating leases

New finance leases

The following presents other information related to leases:

December 31, 2020

Weighted average remaining lease term:

Operating leases

Cash paid for amounts included in the measurement of lease liability:

Operating cash flows for leases

Operating lease assets obtained in exchange for lease liabilities:

New, remeasured, and terminated leases

The following reconciles the undiscounted cash flows for each of the first five years and total of the remaining years to the operating lease liabilities on the balance sheet as of December 31, 2019 (in thousands):

Financing leases

Weighted average discount rate:

Operating leases

Financing leases

The following reconciles the undiscounted cash flows for each of the first five years and total of the remaining years to the lease liabilities on the balance sheet as of December 31, 2020 (in thousands):

Total lease payments

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Noncurrent lease obligations

Disclosures related to periods prior to the adoption of ASC 842

Prior to January 1, 2019, the Company analyzed all leases in accordance with ASC 840.

The Company holds certain property and equipment under rental agreements and operating leases that have varying expiration dates.

A majority of its operating facilities are leased from unrelated parties throughout the United States.

Future minimum annual fixed rentals under operating leases having an original term of more than one year as of December 31, 2018, were as follows (in thousands):

For the years ended December 31, 2018 and 2017, $ 110.8 million and $ 86.5 million, of rent expense, respectively, was charged to costs and expenses.

In 2018 and 2017, a subsidiary of FreedomRoads entered into sale leaseback arrangements resulting in gains of less than $ 0.1 million in 2018 and a loss of less than $ 0.1 million in 2017.

The real properties were originally purchased by FreedomRoads from third parties.

In 2018, the Company sold real property of $ 45.8 million that were originally purchased in 2018 and 2017 for $ 46.1 million.

In 2017, the Company sold real property of $ 6.0 million that were originally purchased in 2017 for $ 6.0 million.

Under the sale-leaseback arrangements, the real properties were leased back under operating leases for a period of 20 years .

The properties are being used as part of the Company’s ongoing operations.

In the fourth quarter of 2018, one lease was derecognized and accounted for as an operating lease after a reduction in the lease deposit to less than two months ’ rent as it qualifies for asset derecognition.

The derecognition in 2018 resulted in the removal of $ 4.6 million of right-to-use assets, $ 4.9 million of right-to-use

liabilities, and $ 0.2 million of deferred rent resulting in a $ 0.5 million deferred gain which was to be recognized ratably as an offset to rent expense over the term of the lease.

The Company had included the right-to-use assets in property and equipment, net, as follows (in thousands):

Right-to-use assets

Accumulated depreciation

The following is a schedule by year of the future changes in the right-to-use liabilities as of December 31, 2018 (in thousands):

Total minimum lease payments

Amounts representing interest

Present value of net minimum right-to-use liability payments

The Company leased various fixed assets under capital lease arrangements requiring payments through May 2019.

For the year ended December 31, the depreciation of the capital lease assets is included in depreciation.

The capital leases were repaid in 2019.

The Company included these leases in property and equipment, net at December 31, as follows (in thousands):

Furniture and equipment

Accumulated depreciation

The components of the Company’s income tax expense from operations for the year ended December 31, consisted of (in thousands):

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Increase in valuation allowance

Impact of 2017 Tax Act (4)

Impact of other state tax rate changes

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Income tax expense

(1) Federal and state income tax for 2019, 2018 and 2017 include the tax effect of $ 2.5 million of income tax benefit, $ 0.3 million of income tax expense and $ 38.8 million of income tax benefit, respectively, relating to the revaluation in the Tax Receivable Agreement liability.

(2) The related income is taxable to the noncontrolling interest.

(1) Federal and state income tax for 2019 and 2018 include the tax effect of $ 2.5 million of income tax benefit and $ 0.3 million of income tax expense, respectively, relating to the revaluation in the Tax Receivable Agreement liability.

The amount related to 2020 was insignificant.

(2) The related income is taxable to the non-controlling interest.

(3) These amounts represent the net income tax expense of $ 12.2 million (composed of an increase in the valuation allowance against the Company’s overall deferred tax assets of $ 26.4 million, offset by the income tax benefit associated with the transferred assets of $ 14.2 million) related to the transfer of certain assets, including the Good Sam Club and co-branded credit cards as discussed below.

(4) Excludes the tax effect of $ 2.5 million of income tax benefit, $ 0.3 million of income tax expense and $ 38.8 million of income tax benefit for 2019, 2018 and 2017, respectively, relating to the revaluation in the Tax Receivable Agreement liability, which is included in federal and state tax.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax

purposes and operating loss and tax credit carryforwards.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes and operating loss and tax credit carryforwards.

Significant items comprising the net deferred tax assets at December 31, were (in thousands):

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Stock option expense

Investment in partnership

Investment in partnership ("Outside Basis Deferred Tax Asset") (1)

Tax Receivable Agreement liability

Net operating loss carryforward

Claims reserves

Intangible assets

Deferred book gain

Accelerated depreciation

Deferred depreciation

Operating lease liabilities

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Net deferred tax assets

CWH is organized as a Subchapter C corporation and, at December 31, 2019, CWH owned 42.0 % of CWGS, LLC (see Note 18 — Stockholders’ Equity).

CWGS, LLC is organized as a limited liability company and treated as a partnership for federal tax purposes, with the exception of Americas Road and Travel Club, Inc., CWI, and FreedomRoads RV, Inc.

and their wholly-owned subsidiaries, which are Subchapter C corporations.

At December 31, 2019, the Subchapter C corporations had federal and state net operating loss carryforwards of approximately $ 427.4 million and $ 390.7 million, respectively, which will be able to offset future taxable income.

(1) This amount is the deferred tax asset the Company recognizes for its book to tax basis difference in its investment in CWGS, LLC.

At December 31, 2020, certain subsidiaries of CWH had federal and state net operating loss carryforwards of approximately $ 462.7 million and $ 422.0 million, respectively, which will be able to offset future taxable income.

If not used, $ 55.5 million of federal and $ 422.0 million of state net operating losses will expire between 2021 and 2040, and $ 407.2 million will be carried forward indefinitely.

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The reduction in future expected tax amortization reduced the Tax Receivable Agreement liability by $ 7.5 million.

On December 22, 2017, the U.S.

enacted comprehensive tax legislation commonly referred to as the 2017 Tax Act.

The 2017 Tax Act significantly revised the U.S.

corporate income tax by, among other things, lowering the statutory corporate tax rate from 35 % to 21 % and eliminating certain deductions.

The effects of the 2017 Tax Act are reflected in the tables above.

Shortly after the 2017 Tax Act was enacted, the SEC staff issued Staff Accounting Bulletin No.

118 (“SAB 118”) to address the application of GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the 2017 Tax Act.

In accordance with SAB 118, the Company had determined that the $ 117.0 million of the deferred tax expense recorded in connection with the remeasurement of certain deferred tax assets and liabilities during the three months ended December 31, 2017 was a provisional amount and a reasonable estimate at December 31, 2017.

The Company's measurement period for implementing the accounting changes required by the 2017 Tax Act closed on December 22, 2018, and the Company completed the accounting under ASC Topic 740, Income Taxes, within the measurement period provided under SAB 118.

We have determined that there were no additional material adjustments to record during the measurement period for the year ended December 31, 2018.

The Company evaluates its deferred tax assets on a quarterly basis to determine if they can be realized and establishes valuation allowances when it is more likely than not that all or a portion of the deferred tax assets may not be realized.

As further described in Note 1 — Summary of Significant Accounting Policies — COVID-19, in response to the COVID-19 pandemic, many governments have enacted or are contemplating measures to provide aid and economic stimulus.

These measures may include deferring the due dates of income tax and payroll tax payments or other changes to their income and non-income-based tax laws.

The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which was enacted on March 27, 2020 in the U.S., includes measures to assist companies, including temporary changes to income and non-income-based tax laws.

For the year ended December 31, 2020, there were no material impacts to the Company’s consolidated financial statements as it relates to COVID-19 measures other than the deferral of non-income-based payroll taxes under the CARES Act of $ 29.2 million as of December 31, 2020, of which $ 14.6 million was included in other current liabilities and $ 14.6 million was included in other long-term liabilities in the consolidated balance sheets.

At December 31, 2020, the Company determined that all of its deferred tax assets (except those of Camping World Inc.

(“CW”) and the Outside Basis Deferred Tax Asset discussed below) are more likely than not to be realized.

The valuation allowance for CW increased by $ 79.7 million in the year ended December 31, 2019, compared to an increase of $ 43.2 million in the year ended December 31, 2018 primarily as a result of increased operating losses incurred during 2019 and transferring certain assets relating to its Good Sam Club and co-branded credit card from GSS to CWI, as described above.

The valuation allowance for CW increased by $ 19.7 million in the year ended December 31, 2020, compared to an increase of $ 79.7 million in the year ended December 31, 2019, primarily as a result of increased operating losses incurred during 2020.

Since it was determined that CW would not have sufficient taxable income in the current or carryforward periods under the tax law to realize the future tax benefits of its deferred tax assets, it continues to maintain a full valuation allowance.

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The partial valuation allowance for the Outside Basis Deferred Tax Asset increased by $ 9.8 million in the year ended December 31, 2020, compared to an increase of $ 6.2 million in the year ended December 31, 2019.

The increase in the year ended December 31, 2019 was primarily the result of a reduction in enacted state income tax rates, the transfer of assets described above.

The increase in the year ended December 31, 2020 was primarily the result of increased ownership, net of a reduction in enacted state income tax rates.

The Company and its subsidiaries file U.S.

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federal, state, and local income tax examinations by tax authorities for years before 2017.

The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position.

The tax benefits recognized in the consolidated financial statements related to a particular tax position are measured based on the largest benefit that has a greater than a 50% likelihood of being realized upon settlement.

The amount of unrecognized tax benefits is adjusted as appropriate for changes in facts and circumstances, such as significant amendments to existing tax law, new regulations or interpretations by the taxing authorities, new information obtained during a tax examination, or resolution of an examination.

As of December 31, 2019 and 2018, the Company recorded an immaterial amount related to uncertain tax positions.

As of December 31, 2020 and 2019, the Company recorded $ 2.7 million and $ 0.3 million, respectively, related to uncertain tax positions.

The Company does not expect the total amount of unrecognized tax benefits to significantly change in the next 12 months.

The Company is party to a tax receivable agreement (the “Tax Receivable Agreement”) that provides for the payment by the Company to the Continuing Equity Owners and Crestview Partners II GP, L.P.

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maintaining a continued ownership interest in CWGS, LLC.

In general, the Continuing Equity Owners’ or Crestview Partners II GP, L.P.’s rights under the Tax Receivable Agreement are assignable, including to transferees of its common units in CWGS, LLC (other than the

Company as transferee pursuant to a redemption or exchange of common units in CWGS, LLC).

The Company expects to benefit from the remaining 15 % of the tax benefits, if any, which may be realized.

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The Company recognized a liability for the Tax Receivable Agreement payments due to those parties that redeemed common units, representing 85 % of the aggregate tax benefits the Company expects to realize from the tax basis increases related to the exchange, after concluding it was probable that the Tax Receivable Agreement payments would be paid based on estimates of future taxable income.

As of December 31, 2019, and December 31, 2018, the amount of Tax Receivable Agreement payments due under the Tax Receivable Agreement was $ 114.8 million and $ 134.2 million, respectively, of which $ 6.6 million and $ 9.4 million, respectively, were included in current portion of the Tax Receivable Agreement liability in the Consolidated Balance Sheets.

The Company consolidated CWGS, LLC, which, as a limited liability company, is not subject to U.S.

federal income taxes.

Rather, the LLC’s taxable income flows through to the owners, who are responsible for paying the applicable income taxes on the income allocated to them.

As of December 31, 2020, and December 31, 2019, the amount of Tax Receivable Agreement payments due under the Tax Receivable Agreement was $ 145.9 million and $ 114.8

million, respectively, of which $ 8.1 million and $ 6.6 million, respectively, were included in current portion of the Tax Receivable Agreement liability in the consolidated balance sheets.

From January 1, 2021 to February 17, 2021, Crestview Partners II GP, L.P.

has redeemed 1.3 million common units in CWGS, LLC for 1.3 million shares of the Company’s Class A common stock as a result of transactions pursuant to a trading plan.

The estimated increase in deferred tax assets, the non-current portion of the Tax Receivable Agreement liability, and additional paid-in capital resulting from these redemptions is $ 13.3 million, $ 11.3 million, and $ 2.0 million, respectively.

Payments pursuant to the Tax Receivable Agreement relating to these redemptions would begin during the year ended December 31, 2022.

For tax years beginning on or after January 1, 2018, CWGS, LLC is subject to partnership audit rules enacted as part of the Bipartisan Budget Act of 2015 (the “Centralized Partnership Audit Regime”).

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The following table presents the reported carrying value and fair value information for the Company’s debt instruments.

The fair values shown below for the Term Loan Facility, as applicable, are based on quoted prices in the inactive market for identical assets (Level 2) and the fair values shown below for the Floor Plan Facility Revolving Line of Credit and the Real Estate Facility is estimated by discounting the future contractual cash flows at the current market interest rate that is available based on similar financial instruments.

The fair values shown below for the Term Loan Facility, as applicable, are based on quoted prices in the inactive market for identical assets (Level 2) and the fair values shown below for the Floor Plan Facility, the Revolving Line of Credit, and the Real Estate Facility are estimated by discounting the future contractual cash flows at the current market interest rate that is available based on similar financial instruments.

December 31, 2020

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Current sponsorship agreements run through 2024.

The agreements consist of annual fees payable in aggregate of $ 10.0 million in 2020, $ 10.4 million in 2021, $ 10.7 million in 2022, $ 1.4 million in 2023, and $ 1.5 million in 2025 and thereafter , which are recognized to expense over the expected benefit period.

The agreements consist of annual fees payable in aggregate of $ 11.6 million in 2021, $ 14.5 million in 2022, $ 5.6 million in 2023, and $ 4.5 million in 2024, which are recognized to expense over the expected benefit period.

The Company entered into a subscription agreement for a customer relationship management software application in 2014.

The subscription agreement was amended on October 28, 2016 and again October 18, 2017.

The newly amended subscription agreement for future software services consists of annual fees payable as follows:

The amended subscription agreement for future software services consists of annual fees payable as follows:

$ 4.5 million in 2019, $ 4.8 million in 2020, and $ 5.0 million in 2021.

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As of December 31, 2020 and 2019, these letters of credit were approximately $ 17.7 million and $ 15.3 million, respectively.

This includes $ 11.2 million and $ 10.4 million as of December 31, 2019 and 2018, respectively, issued under the FreedomRoads, LLC Floor Plan Facility (see Note 4 — Inventories, net and Notes Payable — Floor Plan, net), and the balance issued under the Company’s Senior Secured Credit Facilities (see Note 9 — Long-Term Debt).

This includes $ 11.7 million and $ 11.2 million as of December 31, 2020 and 2019, respectively, issued under the Floor Plan Facility (see Note 4 — Inventories, net and Notes Payable — Floor Plan, net), and the balance issued under the Company’s Senior Secured Credit Facilities (see Note 9 — Long-Term Debt).

On October 19, 2018, a purported stockholder of the Company filed a putative class action lawsuit, captioned Ronge v.

Camping World Holdings, Inc.

et al., in the United States District Court for the Northern District of Illinois against us, certain of our officers and directors, and Crestview Partners II GP, L.P.

et al ., in the United States District Court for the Northern District of Illinois against the Company, certain of its officers and directors, and Crestview Partners II GP, L.P.

and Crestview Advisors, L.L.C.

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Camping World Holdings , Inc.

et al., in the United States District Court for the Northern District of Illinois against us, certain of our officers and directors, and Crestview Partners II GP, L.P.

et al ., in the United States District Court for the Northern District of Illinois against the Company, certain of its officers and directors, and Crestview Partners II GP, L.P.

and Crestview Advisors, L.L.C.

(the “Strougo Complaint”).

The Ronge and Strougo Complaints were consolidated and lead plaintiffs appointed by the court.

On February 27, 2019, lead plaintiffs filed a consolidated complaint against us, certain of our officers and directors, Crestview Partners II GP, L.P.

and Crestview Advisors, L.L.C., and the underwriters of the May and October 2017 secondary offerings of our Class A common stock (the “Consolidated Complaint”).

The Consolidated Complaint alleges violations of Sections 11 and 12(a)(2) of the Securities Act of 1933, as well as Section 10(b) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 thereunder, based on allegedly materially misleading statements or omissions of material facts necessary to make certain statements not misleading related to the business, operations, and management of the Company.

Additionally, it alleges that certain of our officers and directors, Crestview Partners II GP, L.P., and Crestview Advisors, L.L.C.

The Ronge and Strougo Complaints were consolidated and lead plaintiffs (the “ Ronge Lead Plaintiffs”) appointed by the court.

On February 27, 2019, the Ronge lead plaintiffs filed a consolidated complaint against the Company, certain of its officers, directors, Crestview Partners II GP, L.P.

and Crestview Advisors, L.L.C., and the underwriters of the May and October 2017 secondary offerings of the Company’s Class A common stock (the “Consolidated Complaint”).

The Consolidated Complaint alleged violations of Sections 11 and 12(a)(2) of the Securities Act of 1933, as well as Section 10(b) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 thereunder, based on allegedly materially misleading statements or omissions of material facts necessary to make certain statements not misleading related to the business, operations, and management of the Company.

Additionally, it alleged that certain of the Company’s officers and directors, Crestview Partners II GP, L.P., and Crestview Advisors, L.L.C.

violated Section 15 of the Securities Act of 1933 and Section 20(a) of the Securities Exchange Act of 1934, as amended, by allegedly acting as controlling persons of the Company.

The lawsuit brings claims on behalf of a putative class of purchasers of our Class A common stock between March 8,

2017 and August 7, 2018, and seeks compensatory damages, rescission, attorneys’ fees and costs, and any equitable or injunctive relief the court deems just and proper.

On May 17, 2019, the Company, along with the other defendants, moved to dismiss the Consolidated Complaint.

While the Company believes it has meritorious defenses to the claims of the plaintiffs and members of the putative class, the Company has been engaged in a mediation process with the plaintiffs in the Consolidated Complaint in an effort to avoid the uncertainty and expense of litigation, and as a result, is currently having ongoing settlement discussions.

However, there can be no assurance that a settlement agreement will ultimately be reached.

The parties have informed the court of the status of their negotiations, and on January 24, 2020, the court struck the pending motions to dismiss without prejudice.

Any losses that the Company believes are probable are expected to be covered directly by the Company’s applicable insurance policies.

The Company is not currently able to estimate a range of reasonably possible loss in excess of any amount that would be paid directly by the Company’s insurance carriers.

Moreover, no assurance can be made that this matter either individually or together with the potential for similar suits, will not result in a material financial exposure in excess of insurance coverage, which could have a material adverse effect upon the Company's financial condition and results of operations.

On March 12, 2020, Ronge Lead Plaintiffs filed an Amended Consolidated Complaint, adding those allegations contained in the Geis Complaint (defined below).

On March 13, 2020, Ronge Lead Plaintiffs filed an unopposed motion for preliminary approval of class action settlement, which the Court granted on April 7, 2020.

On August 5, 2020, the Court granted final approval of the class action settlement and the case was dismissed with prejudice.

The settlement was paid directly by the Company’s insurance carriers.

On December 12, 2018, a putative class action complaint styled International Union of Operating Engineers Benefit Funds of Eastern Pennsylvania and Delaware v.

Camping World Holdings Inc ., et al.

was filed in the Supreme Court of the State of New York, New York County, on behalf of all purchasers of Camping World Class A common stock issued pursuant and/or traceable to a secondary offering of such securities in October 2017 (“IUOE Complaint”).

The IUOE Complaint names as defendants the Company, and certain of its officers and directors, among others, and alleges violations of Sections 11, 12(a), and 15 of the Securities Act of 1933 based on allegedly materially misleading statements or omissions of material facts necessary to make certain statements not misleading and seeks compensatory damages, including prejudgment and post-judgment interest, attorneys’ fees and costs, and any equitable or injunctive relief the court deems just and proper, including rescission.

On February 28, 2019, we, along with the other defendants, moved to dismiss this action.

The parties argued the merits of defendants’ motion to dismiss before the Supreme Court of the State of New York, Commercial Division, on September 6, 2019.

The Company believes it has meritorious defenses to the claims of the plaintiffs and members of the putative class, and any liability for the alleged claims is not currently probable or reasonably estimable.

October 2017 (“IUOE Complaint”).

The IUOE Complaint named as defendants the Company, and certain of its officers and directors, among others, and alleged violations of Sections 11, 12(a), and 15 of the Securities Act of 1933 based on allegedly materially misleading statements or omissions of material facts necessary to make certain statements not misleading.

On July 13, 2020, the parties entered into a confidential settlement agreement resolving the named plaintiff’s claims.

The putative class’s claims were duplicative of certain claims in the Ronge case described above, and thus were included in the settlement agreement that the Ronge court approved at the settlement hearing on August 5, 2020.

The Court entered an order of final dismissal on September 8, 2020.

On February 22, 2019, a putative class action complaint styled Daniel Geis v.

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was filed in the Circuit Court of Cook County, Illinois, Chancery Division, on behalf of all purchasers of Camping World Class A common stock in and/or traceable to the Company’s initial public offering on October 6, 2016 (“Geis Complaint”).

The Geis Complaint names as defendants the Company, certain of its officers and directors, and the underwriters of the offering, and alleges violations of Sections 11, 12(a)(2), and 15 of the Securities Act of 1933 based on allegedly materially misleading statements or omissions of material facts necessary to make certain statements not misleading.

The Geis Complaint seeks compensatory damages, prejudgment and post-judgment interest, attorneys’ fees and costs, and any other and further relief the court deems just and proper.

On April 19, 2019, we, along with the other defendants, moved to dismiss this action.

The parties argued the merits of defendants’ motion to dismiss before the Circuit Court of Cook County, Illinois, Chancery Division on August 20, 2019.

On August 26, 2019, the Court stayed the Geis Complaint pending resolution of the motion to dismiss the Consolidated Complaint that is pending in the United States District Court for the Northern District of Illinois.

The Company believes it has meritorious defenses to the claims of the plaintiff and members of the putative class, and any liability for the alleged claims is not currently probable or reasonably estimable.

The Geis Complaint named as defendants the Company, certain of its officers and directors, and the underwriters of the offering, and alleged violations of Sections 11, 12(a)(2), and 15 of the Securities Act of 1933 based on allegedly materially misleading statements or omissions of material facts necessary to make certain statements not misleading.

The Geis plaintiff became a plaintiff in Ronge , and the Geis putative class’s claims were duplicative of certain claims in the Ronge case described above, and thus were included in the settlement agreement that the Ronge court approved on August 5, 2020.

The Court entered an order of final dismissal on August 18, 2020.

On March 5, 2019, a shareholder derivative suit styled Hunnewell v.

Camping World Holdings, Inc., et al., was filed in the Court of Chancery of the State of Delaware, alleging breaches of fiduciary duty for alleged failure to implement effective disclosure controls and internal controls over financial reporting and to properly oversee certain acquisitions and for alleged insider trading (the “Hunnewell Complaint”).

The Hunnewell Complaint names the Company as nominal defendant, and names certain of its officers and directors, among others, as defendants and seeks restitutionary and/or compensatory damages, disgorgement of all management fees, advisory fees, expenses and other fees paid by us during the period in question, disgorgement of profits pursuant to the alleged insider trading, attorneys’ fees and costs, and any other and further relief the court deems just and proper.

Camping World Holdings, Inc., et al.

, was filed in the Court of Chancery of the State of Delaware, alleging breaches of fiduciary duty for alleged failure to implement effective disclosure controls and internal controls over financial reporting and to properly oversee certain acquisitions and for alleged insider trading (the “Hunnewell Complaint”).

On April 17, 2019, a shareholder derivative suit styled Lincolnshire Police Pension Fund v.

Camping World Holdings, Inc., et al ., was filed in the Court of Chancery of the State of Delaware, alleging breaches of fiduciary duty for alleged failure to implement effective disclosure controls and internal controls over financial reporting and to properly oversee certain acquisitions and for alleged insider trading and unjust enrichment for compensation received during that time (the “LPPF Complaint”).

The LPPF Complaint names us as nominal defendant, and names certain of our officers and directors, among others, as defendants and seeks compensatory damages, extraordinary equitable and/or injunctive relief, restitution and disgorgement, attorneys’ fees and costs, and any other and further relief the court deems just and proper.

On May 30, 2019, the Court granted the parties’ joint motion to consolidate the Hunnewell and LPPF Complaints (as well as any future filed actions relating to the subject matter) and stay the newly consolidated action pending the resolution of defendants’ motion to dismiss the Consolidated Complaint pending in the United States District Court for the Northern District of Illinois.

The Company believes it has meritorious defenses to the claims of the plaintiffs, and any liability for the alleged claims is not currently probable or reasonably estimable.

The LPPF Complaint names the Company as nominal defendant, and names certain of the Company’s officers and directors, among others, as defendants and seeks compensatory damages, extraordinary equitable and/or injunctive relief, restitution and disgorgement, attorneys’ fees and costs, and any other and further relief the court deems just and proper.

Following the Ronge court’s approval of settlement and entry of a final judgment and order dismissing the Ronge action with prejudice, on August 31, 2020, the parties filed a stipulation and proposed order designating the LPPF Complaint as the operative complaint in the consolidated action, and setting forth a schedule for defendants to respond to that Complaint, which the Court granted.

On October 30, 2020, the Company, along with the other defendants, moved to dismiss this action.

On December 30, 2020, the Court granted the parties’ stipulated schedule for Plaintiffs to file an amended complaint.

On January 7, 2021, Plaintiffs filed their Amended Complaint, alleging substantially same claims and seeking the same relief.

Defendants’ response to the Amended Complaint is due to be filed on or before March 8, 2021.

On August 6, 2019, two shareholder derivative suits, styled Janssen v.

Camping World Holdings, Inc., et al., and Sandler v.

Camping World Holdings, Inc., et al.

, and Sandler v.

Camping World Holdings, Inc.

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District Court of Delaware.

Both actions name us as a nominal defendant, and name certain of our officers and directors, Crestview Partners II GP, L.P.

Both actions name the Company as a nominal defendant, and name certain of the Company’s officers and directors, Crestview Partners II GP, L.P.

and Crestview Advisors, L.L.C.

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(i) violations of Section 14(a) of the Securities Exchange Act for issuing proxy statements that allegedly omitted material information and allegedly included materially false and misleading financial statements;

(ii) violations of Section 10(b) and 20(a) of the Securities Exchange Act of 1934, seeking contribution for causing us to issue allegedly false and misleading statements and/or allegedly omit material information in public statements and/or filings concerning our financial performance, the effectiveness of internal controls to ensure accurate financial reporting, and the success and profitability of the integration and rollout of Gander Outdoors stores;

(iii) breaches of fiduciary duty, unjust enrichment, abuse of control, and gross mismanagement for allegedly causing or allowing us to disseminate to our shareholders materially misleading and inaccurate information through our SEC filings;

(ii) violations of Section 10(b) and 20(a) of the Securities Exchange Act of 1934, seeking contribution for causing the Company to issue allegedly false and misleading statements and/or allegedly omit material information in public statements and/or the Company’s filings concerning the Company’s financial performance, the effectiveness of internal controls to ensure accurate financial reporting, and the success and profitability of the integration and rollout of Gander Outdoors (now Gander RV) stores;

(iii) breaches of fiduciary duty, unjust enrichment, abuse of control, and gross mismanagement for allegedly causing or allowing the Company to disseminate to Camping World

shareholders materially misleading and inaccurate information through the Company’s SEC filings;

and (iv) breach of fiduciary duties for alleged insider selling and misappropriation of information (together, the “Janssen and Sandler Complaints”).

The Janssen and Sandler Complaints seek restitutionary and/or compensatory damages, injunctive relief, disgorgement of all profits, benefits, and other compensation obtained by the certain of our officers and directors, attorneys’ fees and costs, and any other and further relief the court deems just and proper.

We are only a nominal defendant in the Janssen and Sandler Complaints.

On September 25, 2019, the Court granted the parties’ joint motion to consolidate the action and stay the action pending resolution of the motion to dismiss the Consolidated Complaint that is pending in the United States District Court for the Northern District of Illinois.

The Janssen and Sandler Complaints seek restitutionary and/or compensatory damages, injunctive relief, disgorgement of all profits, benefits, and other compensation obtained by the certain of the Company’s officers and directors, attorneys’ fees and costs, and any other and further relief the court deems just and proper.

On September 25, 2019, the Court granted the parties’ joint motion to consolidate the action and stay the action pending resolution of defendants’ motion to dismiss in the Ronge action.

Following the Ronge court’s approval of settlement and entry of a final judgment and order dismissing the Ronge action with prejudice, the case remains stayed while the parties confer regarding the schedule for further proceedings in the action.

On May 28, 2020, Kamela Woodings (“Woodings”), in her representative capacity under the Private Attorney General Action (“PAGA”) filed a lawsuit styled Woodings v.

FreedomRoads, LLC in Los Angeles County Superior Court against FreedomRoads, LLC in which she alleged that she and the putative class members often performed off-the-clock work for which they were not adequately compensated, and alleged the following causes of action:

Violation of California Labor Code Sections 2698, et seq, (Private Attorney General Act of 2004), which includes allegations of (1) Failure to Pay Minimum Wage, (2) Failure to Pay Overtime, (3) Failure to Provide Meal Periods, (4) Failure to Provide Rest Breaks, (5) Failure to Timely Wage Upon Termination, (6) Failure to Timely Pay Wages During Employment, (7) Failure to Provide Complete And Accurate Wage Statements, and (8) Failure to Keep Accurate Business Records (the “PAGA Complaint”).

The PAGA Complaint seeks civil penalties and attorneys’ fees and costs pursuant to California Labor Code Section 2699.

On June 25, 2020, Woodings filed a class action complaint styled Woodings v.

FreedomRoads, LLC in Los Angeles County Superior Court against FreedomRoads, LLC in which Woodings alleged that she and the putative class members, all of FreedomRoads, LLC’s non-exempt California employees, were not appropriately compensated for all wages earned in the form of commission, and that she and the putative class members often performed off-the-clock work for which they were not adequately compensated.

Woodings also alleged the following causes of action:

(1) Violation of California Labor Code §§ 1194, 1197, and 1197.1 (unpaid minimum wages);

(2) Violation of California Labor Code §§ 1198 (unpaid overtime);

(3) Violation of California Labor Code § 226.7 (unpaid meal period premiums);

(4) Violation of California Labor Code § 226.7 (unpaid rest period premiums);

(5) Violation of California Labor Code §§ 201 and 202 (final wages not timely paid);

(6) Violation of California Labor Code § 226(a) (non-compliant wage statements);

(8) Negligent Misrepresentation;

(9) Breach of Contract;

(10) Accounting;

and (11) Violation of California Business and Professions Code §§ 17200, et seq., with the following sub-claims of (a) Failure to Pay Overtime, (b) Failure to Provide Meal Periods, (c) Failure to Provide Rest Periods, (d) Failure to Pay Minimum Wages, (e) Failure to Timely Wage Upon Termination, (f) Failure to Timely Pay Wages During Employment, (g) Failure to Keep Complete and Accurate Payroll Records, and (h) Failure to Pay Commissions seeking certification as a class action, monetary damages including general unpaid wages, unpaid wages at overtime wage rates, premium wages for meal and rest breaks not provided, general and special damages, actual, consequential and incidental losses and damages, statutory wage penalties, punitive damages, pre-judgment interest, attorneys’ fees and costs, liquidated damages, and non-monetary damages including an accounting of FreedomRoads, LLC’s revenues, costs and profits in connection with each sale of goods made by the putative class members and the appointment of a receiver to receive, manage and distribute any funds disgorged from FreedomRoads, LLC as may be determined to have been wrongly acquired by FreedomRoads, LLC, and any other and further relief the court deems just and proper (“Class Action”).

On August 6, 2020, the Class Action was removed to the U.S.

District Court for the Central District of California.

On August 27, 2020, Woodings amended the Class Action to add a second plaintiff, Jodi Dormaier, representing a Washington subclass of all non-exempt FreedomRoads, LLC employees, in an amended lawsuit styled Kamela Woodings and Jodi Dormaier v.

FreedomRoads, LLC (the “Amended Class Action”).

The Amended Class Action alleged the following additional causes of action:

Violation of Wash.

Code §§ 49.46.090 and 49.46.090 (failure to pay minimum wage);

Violation of Wash.

Code § 49.46.130 (failure to pay overtime);

Violation of Wash.

Code §§ 49.12.020 (failure to provide meal breaks);

Violation of Wash.

Code §§ 49.12.020 (failure to provide rest breaks);

Violation of Wash.

Code §§ 49.48.010 (payment of wages upon termination);

and Violation of Wash.

Code §§ 49.52.050 (willful exemplary damages) seeking class certification, damages and restitution for all unpaid wages and other injuries to Woodings,

Dormeir, and the putative class, pre-judgment interest, declaratory judgment establishing a violation of California Labor Code, California Business and Professional Code §§ 17200, et seq., Revised Code of Washington and other laws of the States of California and Washington, and public policy, compensatory damages including lost wages, earnings, liquidated damages, and other employee benefits together with interest, restitution, recovery of all money, actual damages and all other sums of money owed to Woodings, Dormaier, and the putative class members, together with interest, an accounting of FreedomRoads, LLC’s revenues, costs, and profits in connection with each sale of goods and services made by Woodings, Dormaier, and the putative class, and reasonable attorneys’ fees and costs, and any other and further relief the court deems just and proper.

On January 18, 2021, the parties entered into a preliminary agreement to settle the Amended Class Action and the PAGA Complaint subject to the terms of a long-form settlement agreement to be executed by the parties and approval by the courts.

As of December 31, 2020, the Company had a reserve totaling $ 4.0 million for estimated losses related to this matter.

No assurance can be made that these or similar suits will not result in a material financial exposure in excess of insurance coverage, which could have a material adverse effect upon the Company’s financial condition and results of operations.

From time to time, the Company is involved in other litigation arising in the normal course of business operations.

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The Company has employment agreements with certain officers.

The agreements include, among other things, an annual bonus based on earnings before interest, taxes, depreciation and amortization, and up to one year ’s severance pay beyond termination date.

The agreements include, among other things, an annual bonus based on adjusted earnings before interest, taxes, depreciation and amortization, and up to one year ’s severance pay beyond termination date.

Related Party Transactions

Transactions with Directors, Equity Holders and Executive Officers

FreedomRoads leases various RV and Outdoor Retail locations from managers and officers.

FR leases various retail locations from managers and officers.

During 2020, 2019 and 2018, the related party lease expense for these locations was $ 2.0 million, $ 2.2 million and $ 1.9 million, respectively.

In January 2012, FreedomRoads entered into a lease (the “Original Lease”) for the offices in Lincolnshire, Illinois, which was amended as of March 2013.

The Original Lease base rent was $ 29,000 per month that was amended to $ 31,500 per month in March 2013 and is subject to annual increases.

Commencing on November 1, 2019, by way of the Second Amendment to the Office Lease, the Company

began leasing additional space for an additional monthly base rent of $ 5,200 .

The Company’s Chairman and Chief Executive Officer has personally guaranteed the lease.

In January 2012, FR entered into a lease (the “Original Lease”) for the offices in Lincolnshire, Illinois, which was amended as of March 2013 (the “First Amendment”).

The Original Lease base rent was $ 29,000 per month that was amended to $ 31,500 per month in March 2013 by virtue of the First Amendment and is subject to annual increases.

As of November 1, 2019, by way of the Second Amendment to the Office Lease, (together with the Original Lease and the First Amendment, collectively, the “Office Lease”), the Company began leasing additional space for an additional monthly base rent of $ 5,200 .

The Company’s Chairman and Chief Executive Officer has personally guaranteed the Office Lease.

Other Transactions

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Crestview Partners II GP, L.P., an affiliate of CVRV, was the beneficial owner of Cumulus Media’s Class A common stock until approximately June 6, 2018, according to Crestview Partners II GP, L.P.’s most recently filed Schedule 13D amendment with respect to the company.

For the years ended December 31, 2018 and 2017, the Company incurred Cumulus Media expenses of $ 0.3 million and $ 0.4 million, respectfully, for the aforementioned advertising services.

Cumulus Media was no longer a related party in the year ended December 31, 2019.

For the year ended December 31, 2018, the Company incurred Cumulus Media expenses of $ 0.3 million for the aforementioned advertising services.

Cumulus Media was not a related party in the years ended December 31, 2019 and 2020.

The Company does business with certain companies in which Mr.

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The Company purchased fixtures for interior store sets at the Company’s retail locations from Precise Graphix.

Lemonis has a 67 % economic interest in Precise Graphix and the Company incurred expenses from Precise Graphix of $ 1.4 million, $ 5.6 million and $ 2.7 million for the years ended December 31, 2019, 2018 and 2017, respectively.

Lemonis has a 67 % economic interest in Precise Graphix.

The Company incurred expenses from Precise Graphix of $ 0.3 million, $ 1.4 million and $ 5.6 million for the years ended December 31,

2020, 2019 and 2018, respectively.

The Company purchased point of purchase and visual merchandise displays from JD Custom Design (“JD Custom”) for use in Camping World’s retail store operations.

Lemonis is a holder of 52 % of the combined voting power in JD Custom and the Company paid JD Custom $ 0 , $ 0.4 million and $ 0 for the years ended December 31, 2019, 2018 and 2017, respectively.

Lemonis is a holder of 52 % of the combined voting power in JD Custom and the Company paid JD Custom $ 0 , $ 0 and $ 0.4 million for the years ended December 31, 2020, 2019 and 2018, respectively.

The Company does business with certain companies in which Stephen Adams, a member of the Company’s board of directors, has a direct or indirect material interest.

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Adams has an indirect 90 % interest.

The Company paid Adams Radio $ 0.2 million, $ 0.2 million, and $ 0 for the years ended December 31, 2019, 2018 and 2017, respectively.

The Company paid Adams Radio $ 0 million, $ 0.2 million, and $ 0.2 million for the years ended December 31, 2020, 2019 and 2018, respectively.

The Company paid Kaplan, Strangis and Kaplan, P.A., of which Andris A.

Baltins is a member, and a member of the Company’s board of directors, $ 0.3 million for each of the years ended December 31, 2019, 2018 and 2017, respectively, for legal services.

Baltins is a member, and a member of the Company’s board of directors, $ 0.2 million, $ 0.3 million and $ 0.3 million for the years ended December 31, 2020, 2019 and 2018, respectively, for legal services.

In 2020 and 2019, subsidiaries of the Company acquired the assets or stock of multiple RV dealerships that constituted businesses under accounting rules.

The Company used a combination of cash, and floor plan financing, and additional borrowing on the Term Loan Facility in March 2018 (see Note 9 — Long-term Debt) to complete the acquisitions.

The Company considers acquisitions of independent dealerships to be a fast and capital efficient alternative to opening new RV and Outdoor Retail locations to expand its business and grow its customer base.

The Company acquires consumer shows as another channel for increasing its customer base.

Additionally, the Company believes that its experience and scale allow it to operate these acquired dealerships.

The Company used a combination of cash and floor plan financing to complete the acquisitions.

The Company considers acquisitions of independent dealerships to be a fast and capital efficient alternative to opening new retail locations to expand its business and grow its customer base.

Additionally, in October 2020, the RV and Outdoor Retail segment acquired the assets of an RV furniture distributor.

The Company expects to benefit from synergies from this RV furniture distributor acquisition with its private label RV offerings, installation services, and retail offerings.

The acquired businesses were recorded at their estimated fair values under the acquisition method of accounting.

The balance of the purchase prices in excess of the fair values of net assets acquired were recorded as goodwill.

In 2019, the RV and Outdoor Retail segment acquired the assets of various RV dealership groups comprised of five locations for an aggregate purchase price of approximately $ 48.4 million.

In 2019, the RV and Outdoor Retail segment acquired the assets of various RV dealerships comprised of five locations for an aggregate purchase price of approximately $ 48.4 million.

The purchases were partially funded through $ 13.9 million of borrowings under the Floor Plan Facility revolving line of credit.

In 2020, the RV and Outdoor Retail segment acquired the assets of various RV dealerships comprised of nine locations for an aggregate purchase price of approximately $ 37.9 million plus real property of $ 53.1 million.

The purchases were partially funded through $ 10.3 million of borrowings under the Floor Plan Facility revolving line of credit.

Three of these acquired locations will open in 2021.

Additionally, in October 2020, the RV and Outdoor Retail segment acquired the assets of an RV furniture distributor for $ 9.7 million in cash.

For the years ended December 31, 2020 and 2019, the Company purchased real property of $ 53.1 million and $ 31.6 million, respectively, of which $ 34.1 million and $ 2.9 million, respectively, was from parties related to the sellers of the businesses.

The estimated fair values of the assets acquired and liabilities assumed for the acquisitions of dealerships, retail and consumer shows consist of the following:

The estimated fair values of the assets acquired and liabilities assumed for the acquisitions of dealerships and the RV furniture distributor consist of the following:

Year Ended December 31,

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Tangible assets (liabilities) acquired (assumed):

Cash and cash equivalents

Contracts in transit

Accounts receivable, net

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Property and equipment, net

Deferred tax asset, net

Operating lease assets

Finance lease asset

Accounts payable

Year Ended December 31,

($ in thousands)

Accrued liabilities

Deferred revenues and gains

Other liabilities

Operating lease liabilities

Finance lease liabilities

Total tangible net assets acquired

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Trademarks and trade names

Membership and customer lists

Supplier and customer relationships

Total intangible assets acquired

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Cash payment net of floor plan financing

The fair values above are preliminary relating to the year ended December 31, 2019 as they are subject to measurement period adjustments for up to one year from the date of acquisition as new information is obtained about facts and circumstances that existed as of the acquisition date relating to the valuation of the acquired assets, including acquired inventories.

The fair values above are preliminary relating to the year ended December 31, 2020 as they are subject to measurement period adjustments for up to one year from the date of acquisition as new information is obtained about facts and circumstances that existed as of the acquisition date relating to the valuation of the acquired assets, primarily the acquired inventories.

The primary items that generated the goodwill are the value of the expected synergies between the acquired businesses and the Company and the acquired assembled workforce, neither of which qualify for recognition as a separately identified intangible asset.

For the years ended December 31, 2020 and 2019, acquired goodwill of $ 26.2 million and $ 28.2 million is expected to be deductible for tax purposes.

Included in the years ended December 31, 2019 and 2018 consolidated financial results were $ 44.6 million and $ 105.8 million of revenue, respectively, and $ 0.3 million and $ 4.2 million of pre-tax income, respectively, of the acquired dealerships from the applicable acquisition dates.

Included in the years ended December 31, 2020 and 2019 consolidated financial results were $ 10.1 million and $ 44.6 million of revenue, respectively, and $ 0.5 million of pre-tax loss and $ 0.3 million of pre-tax income, respectively, of the acquired dealerships from the applicable acquisition dates.

Pro forma information on these acquisitions has not been included, because the Company has deemed them to not be individually or cumulatively material.

Statements of Cash Flows

Supplemental disclosures of cash flow information for the years ended December 31, are as follows (in thousands):

Supplemental disclosures of cash flow information for the following periods (in thousands):

Cash paid during the period for:

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Vehicles transferred to property and equipment from inventory

Portion of acquisition purchase price paid through issuance of Class A common stock

Derecognition of non-tenant improvements

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Par value of Class A common stock repurchased for withholding taxes on vested RSUs

Par value of Class A common stock issued for acquisition

The Freedom Roads 401(k) Defined Contribution Plan (“FreedomRewards 401(k) Plan”) is qualified under Sections 401(a) and 401(k) of the Internal Revenue Service Code of 1986, as amended.

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CWH is the sole managing member of CWGS, LLC and, although CWH has a minority economic interest in CWGS, LLC of 47.4 %, 42.0 %, and 41.9 % as of December 31, 2020, 2019, and 2018, respectively, CWH has the sole voting power in, and controls the management of, CWGS, LLC.

The remaining 58.0 %, 58.1 %, and 58.5 % of CWGS, LLC as of December 31, 2019, 2018, and 2017, respectively, was held by the “Continuing Equity Owners,” whom the Company defines as collectively, ML Acquisition Company, a Delaware limited liability company, indirectly owned by each of Stephen Adams and the Company’s Chairman and Chief Executive Officer, Marcus Lemonis ("ML Acquisition”), funds controlled by Crestview Partners II

The remaining 52.6 %, 58.0 %, and 58.1 % of CWGS, LLC as of December 31, 2020, 2019, and 2018, respectively, was held by the “Continuing Equity Owners,” whom the Company defines as collectively, ML Acquisition Company, a Delaware limited liability company, indirectly owned by each of Stephen Adams and the Company’s Chairman and Chief Executive Officer, Marcus Lemonis ("ML Acquisition”), funds controlled by Crestview Partners II GP, L.P.

and, collectively, the Company’s named executive officers (excluding Marcus Lemonis), Andris A.

Baltins and K.

Dillon Schickli, who are members of the Company’s board of directors, and certain other current and former non-executive employees and former directors, in each case, who held profit units in CWGS, LLC pursuant to CWGS, LLC’s equity incentive plan that was in existence prior to the Company’s IPO and who received common units of CWGS, LLC in exchange for their profit units in connection with the reorganization transactions at the time of the IPO (collectively, the “Former Profit Unit Holders”) and each of their permitted transferees that own common units in CWGS, LLC and who may redeem at each of their options their common units for, at the Company’s election (determined solely by the Company’s independent directors (within the meaning of the rules of the New York Stock Exchange) who are disinterested), cash or newly issued shares of the Company’s Class A common stock.

Company’s election (determined solely by the Company’s independent directors (within the meaning of the rules of the New York Stock Exchange) who are disinterested), cash or newly issued shares of the Company’s Class A common stock.

Accordingly, the Company consolidated the financial results of CWGS, LLC and reported a non-controlling interest in its consolidated financial statements.

In accordance with the CWGS LLC Agreement, CWGS, LLC has made cash distributions to all common unit holders of CWGS, LLC in an amount sufficient for 1) CWH to pay its regular quarterly cash dividend to holders of its Class A common stock and 2) the common unit holders of CWGS, LLC to pay their income tax obligation on their allocated portion of CWGS, LLC income at the highest tax rate for all common unit holders of CWGS, LLC.

The payment of these cash distributions by CWGS, LLC to Continuing Equity Owners are recorded as distributions to holders of CWGS, LLC common units in the accompanying Consolidated Statements of Stockholders’ Deficit and Consolidated Statements of Cash Flows.

The payment of these cash distributions by CWGS, LLC to CWH are within the consolidated group and, therefore, are not included in the distributions to holders of CWGS LLC common units in the accompanying Consolidated Statements of Stockholders’ Deficit and Consolidated Statements of Cash Flows.

Common Stock Economic and Voting Rights

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Lemonis, Chairman and Chief Executive Officer of the Company, is the sole director, which is included as an increase to additional paid-in capital in the consolidated statement of stockholders’ equity and as a financing activity in the consolidated statement of cash flows.

Stock Repurchase Program

On October 30, 2020, the Company’s Board of Directors authorized a stock repurchase program for the repurchase of up to $ 100.0 million of the Company’s Class A common stock, expiring on October 31, 2022.

Repurchases under the program are subject to any applicable limitations on the availability of funds to be distributed to the Company by CWGS, LLC to fund repurchases and may be made in the open market, in privately negotiated transactions or otherwise, with the amount and timing of repurchases to be determined at the Company’s discretion, depending on market conditions and corporate needs.

Open market repurchases will be structured to occur in accordance with applicable federal securities laws, including within the pricing and volume requirements of Rule 10b-18 under the Securities Exchange Act of 1934, as amended.

The Company may also, from time to time, enter into Rule 10b5-1 plans to facilitate repurchases of its shares under this authorization.

This program does not obligate the Company to acquire any particular amount of Class A common stock and the program may be extended, modified, suspended or discontinued at any time at the Board’s discretion.

The Company expects to fund the repurchases using cash on hand.

During the year ended December 31, 2020, the Company repurchased 811,223 shares of Class A common stock under this program for approximately $ 21.5 million, including commissions paid, at a weighted average price per share of $ 26.53 , which is recorded as treasury stock on the consolidated balance sheets.

Class A common stock held as treasury stock is not considered outstanding.

During the year ended December 31, 2020, the Company reissued 238,776 shares of Class A common stock from treasury stock to settle the exercises of stock options and vesting of restricted stock units.

As of December 31, 2020, the remaining approved amount for repurchases of Class A common stock under the share repurchase program was approximately $ 78.5 million.

Non-Controlling Interests

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At December 31, 2020 and 2019, CWGS, LLC had negative net assets, which resulted in negative non-controlling interest amounts on the consolidated balance sheets.

At the end of each period, the Company will record a non-controlling interest adjustment to additional paid-in capital such that the non-controlling interest on the Consolidated Balance Sheet is equal to the non-controlling interest’s ownership share of the underlying CWGS, LLC net assets (see the Consolidated Statement of Stockholders’ Equity (Deficit)).

At the end of each period, the Company will record a non-controlling interest adjustment to additional paid-in capital such that the non-controlling interest on the consolidated balance sheet is equal to the non-controlling interest’s ownership share of the underlying CWGS, LLC net assets (see the consolidated statement of stockholders’ deficit).

As of December 31, 2020 and December 31, 2019, there were 89,043,176 and 89,158,273 common units of CWGS, LLC interests outstanding, respectively, of which CWH owned 42,226,389 and 37,488,989 common units of CWGS, LLC, respectively, representing 47.4 % and 42.0 % ownership interest in CWGS, LLC., respectively, and the Continuing Equity Owners owned 46,816,787 and 51,669,284 common units of CWGS, LLC, respectively, representing 52.6 % and 58.0 % ownership interests in CWGS, LLC, respectively.

During the year ended December 31, 2020, the funds controlled by Crestview Partners II GP, L.P.

redeemed 4.7 million common units of CWGS, LLC in exchange for 4.7 million shares of the Company’s Class A common stock, which also resulted in the cancellation of 4.7 million shares of the Company’s Class B

common stock that was previously held by the funds controlled by Crestview Partners II GP, L.P.

During the year ended December 31, 2018, the ML Related Parties redeemed 0.1 million common units of CWGS, LLC in exchange for 0.1 million shares of the Company’s Class A common stock, which also resulted in the cancellation of 0.1 million shares of the Company’s Class B common stock that was previously held by the ML Related Parties.

The following table summarizes the effects of changes in ownership in CWGS, LLC on the Company’s equity:

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Transfers to non-controlling interests:

Decrease in additional paid-in capital as a result of the purchase of common units from CWGS, LLC with proceeds from a public offering

Decrease in additional paid-in capital as a result of the contribution of Class A common stock to CWGS, LLC for an acquisition by a subsidiary

Decrease in additional paid-in capital as a result of the purchase of common units from CWGS, LLC with proceeds from the exercise of stock options

Increase in additional paid-in capital as a result of the vesting of restricted stock units

(Decrease) increase in additional paid-in capital as a result of the vesting of restricted stock units

Decrease in additional paid-in capital as a result of repurchases of Class A common stock for withholding taxes on vested RSUs

Increase in additional paid-in capital as a result of the redemption of common units of CWGS, LLC

Increase in additional paid-in capital as a result of repurchases of Class A common stock for treasury stock

Increase (decrease) in additional paid-in capital as a result of the redemption of common units of CWGS, LLC

Change from net income (loss) attributable to Camping World Holdings, Inc.

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The Company does not intend to use cash to settle any of its equity-based awards.

Upon the exercise of a stock option award, the vesting of a restricted stock unit or the award of common stock or restricted stock, shares of Class A common stock are issued from authorized but unissued shares.

Upon the exercise of a stock option award, the vesting of

a restricted stock unit or the award of common stock or restricted stock, shares of Class A common stock are issued from authorized but unissued shares or from shares held in treasury.

Stock options and restricted stock units granted to employees generally vest in equal annual installments over a three to five-year period and are canceled upon termination of employment.

In accordance with the 2016 Plan, the Company’s Compensation Committee may modify these vesting terms at its discretion.

Stock options are granted with an exercise price equal to the fair market value of the Company’s Class A common stock on the date of grant.

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A summary of stock option activity for the year ended December 31, 2020 is as follows:

Weighted Average

Stock Options

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Options exercisable at December 31, 2020

At December 31, 2019, total unrecognized compensation cost related to unvested stock options was $ 1.1 million and is expected to be recognized over a weighted-average period of 0.8 years.

At December 31, 2020, all stock options were fully vested.

There were no exercises of stock options during the year ended December 31, 2019.

The intrinsic value of stock options exercised was $ 2.3 million and $ 0.1 million for the years ended December 31, 2020 and 2018, respectively.

The actual tax benefit for the tax deductions from the exercise of stock options was not significant and $ 0.3 million for the years ended December 31, 2018 and 2017, respectively.

The actual tax benefit for the tax deductions from the exercise of stock options was $ 0.3 million and not significant for the years ended December 31, 2020 and 2018, respectively.

A summary of restricted stock unit activity for the year ended December 31, 2020 is as follows:

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Outstanding at December 31, 2020

The weighted-average grant date fair value of restricted stock units granted during the years ended December 31, 2019, 2018 and 2017 were $ 11.17 , $ 25.73 , and $ 39.10 , respectively.

The weighted-average grant date fair value of restricted stock units granted during the years ended December 31, 2020, 2019 and 2018 was $ 32.54 , $ 11.17 , and $ 25.73 , respectively.

At December 31, 2020, the intrinsic value of unvested restricted stock units was $ 88.4 million.

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These net share settlements had the effect of share repurchases by the Company as they reduced the number of shares that would have otherwise been issued as a result of the vesting and did not represent an expense to the Company.

In June 2020, the Company entered into a consulting agreement with Melvin Flanigan that became effective after his resignation as the Company’s Chief Financial Officer and Secretary on June 30, 2020.

Flanigan’s resignation from his employment with the Company, he was previously granted awards of (a) 62,500 restricted stock units (“RSU”) on January 21, 2019 (the “First Award”), and (b) 60,000 RSUs on November 12, 2019 (the “Second Award”) pursuant to the Company’s 2016 Incentive Award Plan.

The consulting agreement provided, among other things, that (i) the remaining unvested 41,667 RSUs held by Mr.

Flanigan pursuant to the First Award would vest on January 1, 2021, provided that the consulting agreement had not been terminated prior to December 31, 2020, and (ii) 20,000 unvested RSUs held by Mr.

Flanigan pursuant to the Second Award that were scheduled to vest on November 15, 2020 would vest on such date, provided that the Consulting Agreement had not been terminated prior to such date.

This modification resulted in an incremental equity-based compensation charge of $ 1.3 million relating to the modified RSUs, which was recorded between June 2020 and December 31, 2020.

Earnings Per Share

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(In thousands except per share amounts)

Net (loss) income

net loss (income) attributable to non-controlling interests

Net income (loss)

net (income) loss attributable to non-controlling interests

Net income (loss) attributable to Camping World Holdings, Inc.

— basic and diluted

reallocation of net income attributable to non-controlling interests from the assumed dilutive effect of stock options and RSUs

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Net income (loss) attributable to Camping World Holdings, Inc.

Weighted-average shares of Class A common stock outstanding — basic

Weighted-average shares of Class A common stock outstanding — basic and diluted

Dilutive options to purchase Class A common stock

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Segment Information

Following the resignation of Roger Nuttall from his position as President of Camping World on December 21, 2018, the Company took steps during the quarter ended March 31, 2019 to realign the reporting structure of the Company including management and internal reporting.

As a result of these changes, the Company determined that its reportable segments had changed.

The Company’s reportable segments have been identified based on various commonalities amongst the Company’s individual product lines, which is consistent with the Company’s operating structure and associated management structure and management evaluates the performance of and allocates resources to these segments based on segment revenues and segment profit.

The segment reporting for prior comparative periods have been recast to conform to the current period presentation.

As previously discussed, the Company previously had three reportable segments:

(i) Consumer Services and Plans, (ii) Dealership and (iii) Retail.

Following the realignment, the Company now has the following two reportable segments:

(i) Good Sam Services and Plans, and (ii) RV and Outdoor Retail.

In conjunction with the first quarter 2019 realignment of its reporting structure, the Company combined its prior Dealership and Retail segments into the RV and Outdoor Retail segment and reclassified the Good Sam Club and co-branded credit card operations to the RV and Outdoor Retail segment from the Consumer Services and Plans segment to reflect the alignment and synergies of these businesses with the RV and Outdoor Retail locations.

Within the Good Sam Services and Plans segment, the Company primarily derives revenue from the sale of the following offerings:

emergency roadside assistance;

property and casualty insurance programs;

travel assist programs;

extended vehicle service contracts;

vehicle financing and refinancing;

shows and events;

and publications and directories.

Within the RV and Outdoor Retail segment, the

Company primarily derives revenue from the sale of new and used RVs;

the sale of RV products and services, including the sale of parts, accessories, supplies and services for RVs, and equipment, gear and supplies for camping, hunting, fishing, skiing, snowboarding, bicycling, skateboarding, marine and watersport and other outdoor activities;

commissions on the finance and insurance contracts related to the sale of RVs;

and Good Sam Club memberships and co-branded credit cards.

The Company has the following two reportable segments:

(i) Good Sam Services and Plans, and (ii) RV and Outdoor Retail (see Note 1 – Summary of Significant Accounting Policies – Description of the Business for a discussion of the primary revenue generating activities of each segment).

The reportable segments identified above are the business activities of the Company for which discrete financial information is available and for which operating results are regularly reviewed by the Company’s chief operating decision maker to allocate resources and assess performance.

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RV and Outdoor Retail

Total segment income (loss)

Total segment income

Corporate & other

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Loss and expense on debt restructure

(Loss) income before income taxes

Income (loss) before income taxes

(1) Segment income is defined as income from operations before depreciation and amortization plus floor plan interest expense.

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Quarterly Financial Information (Unaudited)

The three months ended December 31, 2019 and September 30, 2019, reflect long-lived asset impairments of approximately $ 16.3 million and $ 50.0 million, respectively, and restructuring charges of $ 19.5 million and $ 27.7 million, respectively, relating to the 2019 Strategic Shift as described in Note 5 — Restructuring and Long-lived Asset Impairments.

The three months ended December 31, 2018 reflect the impairment of goodwill of $ 40.0 million relating to the RV and Outdoor Retail reporting unit as described in Note 7 — Goodwill and Intangible Assets.

The three months ended December 31, 2020, June 30, 2020 and March 31, 2020 reflect long-lived asset impairments of $ 6.6 million, $ 4.4 million, and $ 1.4 million, respectively, and the three months ended December 31, 2020, September 30, 2020, June 30, 2020 and March 31, 2020 reflect restructuring charges of $ 6.3 million, $ 4.6 million, $ 3.7 million and $ 3.0 million, respectively, relating to the 2019 Strategic Shift as described in Note 5 — Restructuring and Long-lived Asset Impairment.

Three Months Ended

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Income (loss) from operations

Net (loss) income

Net income (loss)

Net income (loss) attributable to Camping World Holdings, Inc.

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Cash and cash equivalents

Intercompany receivable

Prepaid income taxes and other

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Commitments and contingencies

Stockholders' equity:

Stockholders' equity (deficit):

Preferred stock, par value $ 0.01 per share – 20,000,000 shares authorized;

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Class B common stock, par value $ 0.0001 per share – 75,000,000 shares authorized;

69,066,445 issued;

and 50,706,629 outstanding as of December 31, 2019 and December 31, 2018

69,066,445 issued as of December 31, 2020 and December 31, 2019;

and 45,999,132 and 50,706,629 outstanding as of December 31, 2020 and December 31, 2019

Class C common stock, par value $ 0.0001 per share – one share authorized, issued and outstanding as of December 31, 2020 and December 31, 2019

Additional paid-in capital

Treasury stock, at cost;

572,447 and 0 shares as of December 31, 2020 and December 31, 2019

Retained deficit

Total stockholders' (deficit) equity

Total stockholders' equity (deficit)

Total liabilities and stockholders' equity

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Tax Receivable Agreement liability adjustment

Equity in net (loss) income of subsidiaries

(Loss) income before income taxes

Equity in net income (loss) of subsidiaries

Income (loss) before income taxes

Income tax expense

Net (loss) income

Net income (loss)

See accompanying Notes to Condensed Financial Information

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Operating activities

Net (loss) income

Adjustments to reconcile net (loss) income to net cash used in operating activities:

Net income (loss)

Adjustments to reconcile net income (loss) to net cash used in operating activities:

Equity in net (loss) income of subsidiaries

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Purchases of LLC Interest from CWGS, LLC

Return of LLC Interest to CWGS, LLC for funding of treasury stock purchases

Distributions received from CWGS, LLC

Net cash provided by (used in) investing activities

Net cash provided by investing activities

Financing activities

Proceeds from issuance of Class A common stock sold in a public offering net of underwriter discounts and commissions

Proceeds from issuance of Class B common stock

Dividends paid to Class A common stockholders

Proceeds from exercise of stock options

Repurchases of Class A common stock to treasury

Disgorgement of short-swing profits by Section 16 officer

Net cash provided by (used in) financing activities

Increase in cash and cash equivalents

Net cash used in financing activities

(Decrease) increase in cash and cash equivalents

Cash and cash equivalents at beginning of year

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For the years ended December 31, 2020, 2019, and 2018, the full amounts of intercompany revenue and equity in net income of subsidiaries in the accompanying Parent Company Statements of Operations were eliminated in consolidation.

No intercompany receivable was owed to the Parent Company by CWGS, LLC at December 31, 2019.

A $ 2.5 million of an intercompany receivable was owed to the Parent Company by CWGS, LLC at December 31, 2018.

No intercompany receivable was owed to the Parent Company by CWGS, LLC at December 31, 2020 and 2019.

Related party amounts that were not eliminated in the consolidated financial statements include the Parent Company's liabilities under the tax receivable agreement, which totaled $ 145.9 million and $ 114.8 million as of December 31, 2020 and 2019, respectively.

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See Note 13 to the consolidated financial statements for information regarding pending and threatened litigation.

P ursuant to the LLC Agreement, the Parent Company receives reimbursements for all costs associated with being a public company, which includes costs of litigation.

Pursuant to the LLC Agreement, the Parent Company receives reimbursements for all costs associated with being a public company, which includes costs of litigation.

Stock Repurchase Program

During the year ended December 31, 2020, the Parent Company repurchased 811,223 shares of Class A common stock under this program for approximately $ 21.5 million, including commissions paid, at a weighted average price per share of $ 26.53 , which is recorded as treasury stock on the Parent Company’s balance sheet.

This $ 21.5 million was concurrently funded by CWGS, LLC in exchange for the return of 811,223 common units in CWGS, LLC, which reduced the Parent Company’s ownership interest in CWGS, LLC.

Class A common stock held as treasury stock is not considered outstanding.

During the year ended December 31, 2020, the Parent Company reissued 238,776 shares of Class A common stock from treasury stock to settle the exercises of stock options and vesting of restricted stock units.

See Note 18 to the consolidated financial statements for a further discussion of the stock repurchase program.

Statements of Cash Flows

Supplemental disclosures of cash flow information for the years ended December 31, are as follows (in thousands):

Supplemental disclosures of cash flow information are as follows (in thousands):

Cash paid during the period for:

Non-cash investing activities:

Portion of subsidiary's acquisition purchase price paid through issuance of Class A common stock

Non-cash financing activities:

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Par value of Class A common stock repurchased for withholding taxes on vested RSUs

Par value of Class A common stock issued for acquisition

Valuation and Qualifying Accounts

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Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

The information required by this Item 9 was previously reported in the Company’s Current Report on Form 8-K that was filed with the Securities and Exchange Commission on May 22, 2018.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data