<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q
(Mark One)

      [X]             QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                            OF THE SECURITIES EXCHANGE ACT OF 1934

                         FOR THE QUARTERLY PERIOD ENDED JUNE 26, 1999

                                              OR

      [ ]             TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                            OF THE SECURITIES EXCHANGE ACT OF 1934

            For the transition period from ___________ to __________

                         Commission File Number: 0-24617


                            IDG BOOKS WORLDWIDE, INC.
             (Exact name of registrant as specified in its charter)

                     Delaware                             04-3078409
          (State or other jurisdiction of              (I.R.S. Employer
          incorporation or organization)             Identification No.)

          919 East Hillsdale Blvd., Suite 400, Foster City, California
            94404 (Address of principal executive offices) (zip code)

       Registrant's telephone number, including area code: (650) 655-3000

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                                 Yes [X] No [ ]

The number of shares outstanding of the issuer's Common Stock as of July 30,
1999 was 14,438,563.

This quarterly report on Form 10-Q contains a total of 17 pages, of which this
page is page 1.

<PAGE>   2



INDEX

<TABLE>
<CAPTION>

PART I. FINANCIAL INFORMATION                                              PAGE NO.
                                                                           --------
<S>                                                                        <C>

       Item 1: Consolidated Financial Statements

           Consolidated Balance Sheets
           as of June 30, 1999 (Unaudited) and September 30, 1998...............3

           Consolidated Statements of Income for the Three
           and Nine Months Ended June 30, 1999 and 1998 (Unaudited).............4

           Consolidated Statements of Cash Flows
           for the Nine Months Ended June 30, 1999 and 1998 (Unaudited).........5

           Notes to Consolidated Financial Statements.........................6-8


       Item 2: Management's Discussion and Analysis of Financial
                  Condition and Results of Operations........................9-15


PART II.   OTHER INFORMATION

       Item 6: Exhibits........................................................16

               Signatures......................................................17

</TABLE>

                                      -2-
<PAGE>   3
                         PART I -- FINANCIAL INFORMATION


ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

                   IDG BOOKS WORLDWIDE, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                              ASSETS                             JUNE 30, 1999    SEPTEMBER 30, 1998
                                                                ---------------   -------------------
                                                                   (UNAUDITED)
<S>                                                             <C>               <C>
Current Assets:
   Cash ...........................................................   $    751          $ 15,466
   Accounts receivable - net ......................................     42,915            27,477
   Inventory - net ................................................     14,481            10,367
   Receivable from parent .........................................         --             1,514
   Other current assets ...........................................      1,552               903
   Deferred tax assets ............................................     21,073            18,144
                                                                      --------          --------
      Total current assets ........................................     80,772            73,871
   Royalty advances - net .........................................      6,472             5,195
   Property and equipment - net ...................................      5,183             5,605
   Intangible assets - net ........................................     19,050             3,583
   Other assets ...................................................      2,031                --
                                                                      --------          --------
         Total Assets .............................................   $113,508          $ 88,254
                                                                      ========          ========


                      LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
   Accounts payable ...............................................   $  7,672          $  5,885
   Accrued liabilities ............................................     42,716            35,779
   Line of credit .................................................      4,000                --
                                                                      --------          --------
      Total current liabilities ...................................     54,388            41,664
                                                                      --------          --------

Stockholders' Equity:
   Preferred stock, $.001 par value; authorized:
     5,000,000 shares;  issued and outstanding: 0 shares ..........         --                --
   Common stock, $.001 par value; authorized:
     25,000,000 Class A shares and 400,000 Class B shares;
     Issued and outstanding:
     FY 1999 - 14,238,178 Class A and 200,000 Class B shares ......         14
     FY 1998 - 14,080,000 Class A and 200,000 Class B shares ......                           14
Additional paid-in capital ........................................     46,197            44,029
Retained earnings .................................................     12,909             2,547
                                                                      --------          --------
      Total stockholders' equity ..................................     59,120            46,590
                                                                      --------          --------
         Total Liabilities and Stockholders' Equity ...............   $113,508          $ 88,254
                                                                      ========          ========
</TABLE>


                 See notes to consolidated financial statements

                                      -3-
<PAGE>   4
                   IDG BOOKS WORLDWIDE, INC. AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>

                                                   THREE MONTHS ENDED          NINE MONTHS ENDED
                                                          JUNE 30,                  JUNE 30,
                                                    1999           1998          1999          1998
                                                   --------      --------      --------      --------
                                                (UNAUDITED)   (UNAUDITED)   (UNAUDITED)    (UNAUDITED)
<S>                                               <C>           <C>            <C>           <C>
Revenue:
   Net Sales ................................     $ 39,896      $ 33,160      $119,149      $102,742
   Licensing revenues and other .............        1,586         1,133         4,324         3,466
                                                  --------      --------      --------      --------
         Net revenue ........................       41,482        34,293       123,473       106,208
                                                  --------      --------      --------      --------
Operating Costs and Expenses:
   Cost of sales ............................       20,680        17,832        60,850        55,688
   Selling, general and administrative ......       14,888        12,294        40,828        33,041
   Depreciation and amortization ............        1,303           875         3,772         2,542
                                                  --------      --------      --------      --------
         Total operating costs and expenses..       36,871        31,001       105,450        91,271
                                                  --------      --------      --------      --------
Operating Income ............................        4,611         3,292        18,023        14,937
                                                  --------      --------      --------      --------
   Interest Expense - net ...................           74            --            92            --
                                                  --------      --------      --------      --------
Income Before Provision for Income Taxes ....        4,537         3,292        17,931        14,937
   Provision for Income Taxes ...............        1,906         1,350         7,569         6,125
                                                  --------      --------      --------      --------
Net Income ..................................     $  2,631      $  1,942      $ 10,362      $  8,812
                                                  ========      ========      ========      ========

Net Income per Share:
   Basic ....................................     $   0.18      $   0.17      $   0.72      $   0.79
                                                  ========      ========      ========      ========
   Diluted ..................................     $   0.17      $   0.17      $   0.70      $   0.79
                                                  ========      ========      ========      ========

Pro Forma Net Income per Share(1):
   Basic ....................................                   $   0.14                    $   0.64
                                                                ========                    ========
   Diluted ..................................                   $   0.14                    $   0.63
                                                                ========                    ========

Shares Used in per Share Calculations:
   Basic net income .........................       14,438        11,100        14,379        11,100
                                                  ========      ========      ========      ========
   Diluted net income .......................       15,162        11,220        14,773        11,140
                                                  ========      ========      ========      ========
   Pro forma basic net income(1) ............                     13,873                      13,873
                                                                ========                    ========
   Pro forma diluted net income(1) ..........                     13,993                      13,913
                                                                ========                    ========
</TABLE>


(1) Pro forma amounts for the three and nine months ended June 30, 1998 reflect
as outstanding the number of shares required to be sold in the July 1998 initial
public offering to pay a $38.4 million dividend declared prior to the offering
(see Note 2).


                 See notes to consolidated financial statements


                                      -4-
<PAGE>   5
                   IDG BOOKS WORLDWIDE, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>

                                                                                          NINE MONTHS ENDED JUNE 30,
                                                                                            1999               1998
                                                                                          --------           --------
                                                                                         (UNAUDITED)        (UNAUDITED)
<S>                                                                                      <C>                <C>
Cash Flows from Operating Activities:
   Net Income ......................................................................      $ 10,362           $  8,812
   Adjustments to reconcile net income to net cash
     provided (used) by operating activities:
        Depreciation and amortization ..............................................         3,772              2,542
        Deferred income taxes ......................................................        (1,085)            (5,046)
        Changes in operating assets and liabilities:
          Accounts receivable - net ................................................       (13,651)             4,107
          Inventory - net ..........................................................        (2,978)            (3,556)
          Royalty advances .........................................................        (1,278)            (2,149)
          Other current assets .....................................................           939             (1,859)
          Accounts payable .........................................................         1,375                935
          Accrued liabilities ......................................................         5,363              5,039
                                                                                          --------           --------
            Net cash provided by operating activities...............................         2,819              8,825

Cash Flows from Investing Activities:
   Capital expenditures ............................................................        (2,428)            (2,652)
   Acquisitions ....................................................................       (17,118)            (3,439)
   Other investments ...............................................................        (1,891)                --
                                                                                          --------           --------
            Net cash used by investing activities ..................................       (21,437)            (6,091)

Cash Flows from Financing Activities:
   Advances on the line of credit ..................................................         4,000                 --
   Exercises of stock options ......................................................           245                 --
   Repayment of Cliffs Notes, Inc. line of credit ..................................          (342)                --
   Advances due to Parent - net change .............................................            --              3,198
                                                                                          --------           --------
            Net cash provided by financing activities ..............................         3,903              3,198
                                                                                          --------           --------
Net Increase (Decrease) in Cash ....................................................       (14,715)             5,932
Cash, Beginning of Period ..........................................................        15,466                 74
                                                                                          --------           --------
Cash, End of Period ................................................................      $    751           $  6,006
                                                                                          ========           ========


Noncash Investing Activity:
   Acquisitions (Note 6):
      Assets .......................................................................      $  5,217           $  1,400
      Goodwill (Notes 2) ...........................................................        15,449                 --
      Other intangible assets (Notes 2) ............................................           700                 --
      Publishing rights ............................................................            --              4,000
      Less: cash paid ..............................................................       (17,118)            (3,439)
                                                                                          --------           --------
      Liabilities assumed ..........................................................      $  4,248           $  1,961
                                                                                          ========           ========
</TABLE>

                 See notes to consolidated financial statements


                                      -5-
<PAGE>   6

                   IDG BOOKS WORLDWIDE, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             THREE AND NINE MONTHS ENDED JUNE 30, 1999 AND 1998 AND
                   AS OF JUNE 30, 1999 AND SEPTEMBER 30, 1998

1.  BASIS OF  PRESENTATION

The accompanying interim consolidated financial statements for the three and
nine months ended June 30, 1999 and 1998, and as of June 30, 1999 are unaudited,
but have been prepared in accordance with generally accepted accounting
principles for interim consolidated financial statements. Certain information or
footnote disclosure normally included in the financial statements prepared in
accordance with generally accepted accounting principles has been condensed or
omitted in accordance with guidance for interim financial statements. In the
opinion of management, all adjustments (consisting only of normal recurring
adjustments) considered necessary for a fair presentation have been included.
The results of operations of any interim period are not necessarily indicative
of the results of the operations for the full year. These consolidated financial
statements should be read in conjunction with the audited, consolidated
financial statements as of and for the year ended September 30, 1998, and the
related notes thereto, included in the Company's Form 10-K filed with the SEC.

Organization and Description of Business -- IDG Books Worldwide, Inc. ("the
Company"), a Massachusetts company, was founded in 1990 as a wholly-owned
subsidiary (through intermediate companies) of International Data Group, Inc.
("Parent"). On March 24, 1998, the Company was reincorporated in Delaware. On
July 31, 1998, the Company consummated its initial public offering (the
"Offering") of 3,180,000 shares of Class A common stock at an offering price of
$15.50 per share pursuant to a Registration Statement declared effective by the
SEC on July 27, 1998. After deducting expenses, the net proceeds to the Company
from the Offering were $44,032,000. The Company used $38,400,000 of the net
proceeds of the Offering to repay indebtedness owed to the Parent.

The Company is a leading global knowledge company with best-selling technology,
business and general know-how books and computer-based training tools designed
to make learning accessible and fun. The Company publishes and markets its books
under brand names, including the "...For Dummies(R)" series and the Cliffs'
Notes brand.

Principles of Consolidation -- The consolidated financial statements include the
accounts of IDG Books Worldwide, Inc. and its majority controlled subsidiaries
(collectively referred to as the Company). All significant intercompany accounts
and transactions have been eliminated.

Reclassifications -- Certain amounts in prior years' consolidated financial
statements and related notes have been reclassified to conform to the fiscal
1999 presentation.

2.  SIGNIFICANT  ACCOUNTING POLICIES

Fiscal Year -- The Company's fiscal year ends on the last Saturday of each
September. Fiscal year 1998, ended on September 26, 1998, and consisted of 52
weeks. For convenience, fiscal year-ends are denoted in the accompanying
consolidated financial statements as September 30. Similarly, the thirteen- and
thirty-nine-week periods ended June 26, 1999 and June 27, 1998 are referred to
as the three-and nine months ended June 30, 1999, and 1998, respectively.

Intangible Assets - Intangible assets represent goodwill, publishing rights and
other intangible assets, as applicable to the period reported. Amortization is
provided on a straight-line method over the estimated useful lives of these
assets, not exceeding forty years.

Net Income Per Share -- Net income per share is computed using the basic and
diluted weighted average number of common shares outstanding during the year in
accordance with Statement of Financial Accounting Standards (SFAS) No. 128,
Earnings Per Share. Basic net income per share excludes dilution and is computed
using the weighted average number of common shares outstanding for the period.
Diluted net income per share reflects the potential dilution that could occur if
securities or other contracts to issue common stock (stock options) were
exercised or converted into common stock. For the three and nine months ended
June 30, 1999, approximately 724,000 and 394,000 shares reflecting the dilutive
effects of outstanding stock options, respectively, were included in computing
diluted net income per share.

                                      -6-
<PAGE>   7

                   IDG BOOKS WORLDWIDE, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, (CONTINUED)

Unaudited Pro Forma Earnings Per Share - For the three and nine months ended
June 30, 1998, unaudited pro forma basic net income per share amounts were
calculated using common shares outstanding plus the number of shares (2,773,000)
whose proceeds were required to be used to repay a $38.4 million note payable
(issued as a pre-offering dividend) at the $15.50 initial public offering price
reduced by per share offering costs. The pro forma diluted net income per share
amounts also reflect the dilutive effect of outstanding stock options.

Comprehensive Income - Under SFAS No. 130, an enterprise is required to report
the change in its net assets during the period from nonowner sources
("Comprehensive Income"). The Company's comprehensive income for the three and
nine months ended June 30, 1999 and 1998 was equal to its net income for those
periods.

Accounting for Derivative Instruments and Hedging Activities - In June 1998, the
Financial Accounting Standards Board issued SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities," which defines derivatives,
requires that derivatives be carried at fair value, and provides for hedge
accounting when certain conditions are met. This statement is effective for the
Company beginning in the first quarter of its fiscal year 2001. Although the
Company has not fully assessed the implications of this new statement, the
Company does not believe adoption of this statement will have a material impact
on its financial statements.

3.      ACCOUNTS RECEIVABLE

Accounts receivable consisted of the following (in thousands):
<TABLE>
<CAPTION>

                                                       June 30, 1999     September 30, 1998
                                                       -------------     ------------------
                                                        (unaudited)

<S>                                                    <C>                <C>
Accounts receivable .................................      $ 71,926           $ 53,922
Allowance for doubtful accounts .....................        (4,643)            (4,555)
Allowance for sales returns .........................       (24,368)           (21,890)
                                                           --------           --------
     Total ..........................................      $ 42,915           $ 27,477
                                                           ========           ========
</TABLE>

4.      INVENTORIES

Inventories consisted of the following (in thousands):
<TABLE>
<CAPTION>

                                June 30, 1999    September 30, 1998
                                -------------    ------------------
                                (unaudited)

<S>                             <C>              <C>
Books (finished goods) .......    $ 26,507           $ 22,185
Paper ........................       1,658              2,560
                                  --------           --------
   Total Inventory ...........      28,165             24,745
Reserve for obsolescence .....     (13,684)           (14,378)
                                  --------           --------

   Net Inventory .............    $ 14,481           $ 10,367
                                  ========           ========
</TABLE>

                                      -7-

<PAGE>   8
                   IDG BOOKS WORLDWIDE, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, (CONTINUED)

5.      ACCRUED LIABILITIES

Accrued liabilities consisted of the following (in thousands):
<TABLE>
<CAPTION>

                                              June 30, 1999     September 30, 1998
                                              -------------     ------------------
                                               (unaudited)

<S>                                           <C>               <C>
Accrued royalties ............................     $12,724          $11,545
Accrued compensation and benefits ............       7,113            9,315
Accrued promotion ............................      12,932            9,923
Accrued federal and state corporate taxes ....       1,043            1,272
Other accrued liabilities ....................       8,904            3,724
                                                   -------          -------
     Total ...................................     $42,716          $35,779
                                                   =======          =======
</TABLE>

6.      ACQUISITION ACTIVITY

In December 1998, the Company purchased all of the capital stock of Cliffs
Notes, Inc., a privately held publisher of the popular study guides. The
acquisition price included approximately $17.1 million in payments to Cliffs'
shareholders, retirement of shareholder notes and bank debt, plus $.5 million in
transaction costs. The acquisition was accounted for as a purchase business
combination and, accordingly, the acquisition cost has been allocated to the
fair value of the assets acquired of $5.2 million and liabilities assumed of
$4.2 million. Assumed liabilities include $1.8 million for the cost of a
restructuring plan to relocate certain employees of Cliffs and terminate certain
facility leases and other business contracts. Of the acquisition cost, $15.4
million was allocated to goodwill. As of June 30, 1999, approximately $700,000
of restructuring plan costs had been incurred.

The unaudited pro forma information in the following paragraph presents the
combined results of operations of the Company as if the Cliffs' Notes, Inc.
acquisition had occurred on October 1, 1997. The pro forma adjustments are based
upon available information and assumptions that management believes are
reasonable. This unaudited pro forma information is not necessarily indicative
of the results that the Company would have achieved if the Cliffs' Notes, Inc.
acquisition had taken place on October 1, 1997.

Pro forma net revenue for the three and nine month periods ended June 30, 1998
would have been $36.6 million and $113.9 million reflecting Cliffs' net revenues
of $2.3 million and $7.7 million for the respective periods. This compares to
reported net revenue of $34.3 million and $106.2 million for the three and nine
month periods ending June 30, 1998, respectively. Pro forma net income would
have been $1.6 million and $7.6 million for the three and nine month periods
ending June 30, 1998. This compares to reported net income of $1.9 million and
$8.8 million for the three and nine month periods ending June 30, 1998,
respectively. Pro forma diluted net income per share would have been $0.14 per
share and $0.63 per share for the three and nine month periods ending June 30,
1998 compared to reported net income of $0.17 per share and $0.79 per share,
respectively.

7.      SUBSEQUENT EVENTS

On July 30, 1999 the Company entered into a $110 million credit agreement with a
group of banks. On August 2, 1999, the Company completed the purchase of all the
outstanding common stock of Macmillan General Reference USA Inc. from Pearson
Education, Inc. for $83 million, subject to adjustments for changes in working
capital. The Company borrowed $87 million under the new agreement including $83
million used to fund this acquisition and $4 million for working capital needs.
The acquisition includes over 3,000 active titles and such leading brands as the
Frommer's Travel Guides(R), Weight Watchers(R) and Betty Crocker(R) Dieting and
Cookbooks, Webster's New World(TM) Dictionaries and J.K. Lasser(TM) Tax Guides.
Additionally the Company acquired the travel website, frommers.com and related
rights. The Company's existing $20 million working capital facility, under which
no amounts were outstanding as of August 2, 1999 was terminated in conjunction
with the closing of the new agreement.



                                      -8-
<PAGE>   9


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

OVERVIEW

IDG Books is a leading global knowledge company featuring a diverse portfolio of
technology, business and general know-how books and computer-based learning
tools. The Company publishes and markets 20 book series under well-known brand
names, including its popular "...For Dummies(R)" series. These books have
created widespread recognition of the Company's brands by consumers, enabling it
to successfully publish across a variety of categories in technology, business
and general know-how. The Company's portfolio of brand names includes more than
1,000 active titles. The Company has over 94 million English-language books in
print and has translated its books into 36 languages. The Company believes that
its readers value and trust its products and brands to help obtain computer
proficiency and professional certification, general business know-how, career
growth and personal enrichment.

In December 1998, the Company purchased all of the capital stock of Cliffs
Notes, Inc., a privately held publisher of the popular literary study guides.
Cliffs Notes currently publishes approximately 300 titles, including its
original Cliffs Notes(R) plus Cliffs Quick Review(R) for high school and college
courses, Test Preparation guides, Advanced Placement study aids, and Test
Preparation software.

On August 2, 1999, the Company completed the purchase of all the outstanding
common stock of Macmillan General Reference USA Inc. (MGR) from Pearson
Education, Inc. for $83 million, subject to adjustments for changes in working
capital. The acquisition includes over 3,000 active titles and such leading
brands as the Frommer's Travel Guides(R), Weight Watchers(R) and Betty
Crocker(R) Dieting and Cookbooks, Webster's New World(TM) Dictionaries and J.K.
Lasser(TM) Tax Guides. Additionally the Company acquired the travel website,
frommers.com and related rights.

Sales of technology-related books account for a majority of the Company's net
revenue. In this regard, sales of books devoted to the use of software products
sold by Microsoft, including its Windows operating system, accounted for
approximately 44% and 42% of the Company's net revenue for the three and nine
months ended June 30, 1999. As a result of the acquisition of MGR, the Company
does not expect the percentage of net revenue related to the sale of Microsoft
software products to be as significant as it has in the past.

The Company's customers consist principally of national retail chain
booksellers, wholesale distributors, office superstores, membership clubs and
computer/electronic superstores located primarily in the United States and
Canada. Over the last several years, there has been significant consolidation in
the distribution channels for books, including retail outlets, although
alternative distribution channels have emerged. As a result, the Company expects
that this trend will lead to increased concentration within each distribution
channel. During the three and nine months ended June 30, 1999, the Company's top
three customers accounted for approximately 34.2% and 36.4% of the Company's net
revenue as compared to 27.7% and 38.5% in 1998, respectively.


                                      -9-
<PAGE>   10


RESULTS OF OPERATIONS

The following table summarizes the results of operations as a percentage of net
revenue for the periods shown:
<TABLE>
<CAPTION>

                                              Three months ended June 30,  Nine months ended June 30,
                                              ---------------------------  ----------------------------
                                                    1999       1998           1999           1998
                                                  -------     -------        -------        -------
<S>                                               <C>         <C>            <C>            <C>
STATEMENT OF INCOME DATA:
Net Revenue:
Branded Franchise Group .........................    61.8%       60.0%          64.0%          63.4%
IDG Books Technology ............................    38.2        40.0           36.0           36.6
                                                  -------     -------        -------        -------
Total Net Revenue ...............................   100.0%      100.0%         100.0%         100.0%
                                                  =======     =======        =======        =======

Cost of Sales....................................    49.9%       52.0%          49.3%          52.4%
Selling, general and administrative expenses ....    35.9        35.8           33.1           31.1
Depreciation and amortization ...................     3.1         2.6            3.0            2.4
                                                  -------     -------        -------        -------
Operating Income ................................    11.1         9.6           14.6           14.1
Interest Expense- net ...........................     0.2         0.0            0.1            0.0
                                                  -------     -------        -------        -------
Income before provision for income taxes ........    10.9         9.6           14.5           14.1
                                                  -------     -------        -------        -------
Net income ......................................     6.3%        5.7%           8.4%           8.3%
                                                  =======     =======        =======        =======

OTHER DATA:
EBITDA(1) .......................................    14.3%       12.2%          17.7%          16.5%
                                                  =======     =======        =======        =======

</TABLE>

THIRD QUARTER ENDED JUNE 30, 1999 COMPARED TO THIRD QUARTER ENDED JUNE 30, 1998

        Net Revenue. Net revenue increased $7.2 million, or 21.0%, to $41.5
million for the three months ended June 30, 1999 from $34.3 million for the
three months ended June 30, 1998. This increase was primarily the result of an
increase in net revenue of $5.1 million, or 24.8%, for the Company's branded
franchise group, which includes the "...For Dummies(R)" brand and Cliffs Notes
brand, and $2.1 million, or 15.2%, for the IDGB Technology Group. Of the
Company's net revenue for the three months ended June 30, 1999, $15.3 million
was attributable to sales of titles (including new editions) first published
during that period, as compared to $16.3 million for titles (including new
editions) first published during the same period for 1998.

        Cost of Sales. Cost of sales increased $2.8 million, or 16.0%, to $20.7
million for the three months ended June 30, 1999 from $17.8 million for the
three months ended June 30, 1998. Cost of sales as a percentage of net revenue
was 49.9% and 52.0% for the three months ended June 30, 1999 and June 30, 1998,
respectively. Product costs, including paper, printing, binding, royalty, and
inventory obsolescence expenses decreased as a percentage of net revenue to
30.0% for the three months ended June 30, 1999 from 30.9% for the three months
ended June 30, 1998 as a result of favorable paper, printing and binding prices.
Product development costs remained consistent as a percentage of net revenue at
12.3% for the three months ended June 30, 1999 and 1998, reflecting the
Company's consistent release of new titles in the two quarters. Fulfillment and
distribution expense decreased as a percentage of net revenue to 7.6% for the
three months ended June 30, 1999 from 8.8% for the three months ended June 30,
1998 as a result of efficiencies achieved in the Company's distribution
facilities.

        Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $2.6 million, or 21.1%, to $14.9 million for
the three months ended June 30, 1999 from $12.3 million for the three months
ended June 30, 1998. Approximately $2.1 million of this increase was
attributable to increased selling and marketing expenses including increases as
a result of the implementation of a new retail marketing incentive program and
expenses for other marketing programs where costs increase as net revenues
increase.

----------

(1)"EBITDA" is defined as income before provision for income taxes, interest,
depreciation and amortization. EBITDA is not intended to represent cash flows
from operations and should not be considered as an alternative to net income as
an indicator of the Company's operating performance or to cash flows as a
measure of liquidity. The Company believes EBITDA is a standard measure commonly
reported and widely used by analysts, investors and other interested parties in
the publishing and media industries, however, EBITDA, as presented herein, may
not be comparable to similarly titled measures reported by other companies.
EBITDA for the three and nine months ended June 30, 1999 was $5.9 million and
$21.8 million, respectively, compared to $4.2 million and $17.5 million,
respectively, for the three and nine months ended June 30, 1998.


                                      -10-
<PAGE>   11
        Operating Income. Operating income increased $1.3 million, or 40.1%, to
$4.6 million for the three months ended June 30, 1999 from $3.3 million for the
three months ended June 30, 1998. Operating income increased as a percentage of
net revenue to 11.1% for the three months ended June 30, 1999 from 9.6% for the
same period the prior year due to an increase in sales and a decrease in cost of
sales as a percentage of net revenue.

        Income before Provision for Income Taxes. Income before provision for
income taxes increased $1.2 million, or 37.8%, to $4.5 million for the three
months ended June 30, 1999 from $3.3 million for the three months ended June 30,
1998. Income before provision for income taxes increased as a percentage of net
revenue to 10.9% in the three months ended June 30, 1999 from 9.6% for the same
period the prior year due to an increase in sales and a decrease in cost of
sales as a percentage of net revenue.

        Net Income. Net income of $2.6 million for the three months ended June
30, 1999 increased $0.7 million, or 35.5%, from net income of $1.9 million for
the three months ended June 30, 1998. This increase was primarily due to an
increase in sales and a decrease in cost of sales as a percentage of net
revenue.

NINE MONTHS ENDED JUNE 30, 1999 COMPARED TO NINE MONTHS ENDED JUNE 30, 1998

        Net Revenue. Net revenue increased $17.3 million, or 16.3%, to $123.5
million for the nine months ended June 30, 1999 from $106.2 million for the nine
months ended June 30, 1998. This increase was primarily the result of an
increase in net revenue of $11.5 million, or 17.0%, for the Company's branded
franchise group, which includes the "...For Dummies(R)" brand and Cliffs Notes
brand, and $5.8 million, or 14.9%, for the IDGB Technology Group. Of the
Company's net revenue for the nine months ended June 30, 1999, $35.8 million was
attributable to sales of titles (including new editions) first published during
that period, as compared to $38.2 million for titles (including new editions)
first published during the same period for 1998.

        Cost of Sales. Cost of sales increased $5.2 million, or 9.3%, to $60.9
million for the nine months ended June 30, 1999 from $55.7 million for the nine
months ended June 30, 1998. Cost of sales as a percentage of net revenue was
49.3% and 52.4% for the nine months ended June 30, 1999 and June 30, 1998,
respectively. Product costs, including paper, printing, binding, royalty, and
inventory obsolescence expenses decreased as a percentage of net revenue to
31.4% for the nine months ended June 30, 1999 from 32.6% for the nine months
ended June 30, 1998 as a result of favorable paper, printing and binding prices.
Product development costs decreased as a percentage of net revenue to 10.6% for
the nine months ended June 30, 1999 from 11.6% for the nine months ended June
30, 1998, reflecting the Company's decrease in new title releases as compared to
the same period in 1998. Fulfillment and distribution expense decreased as a
percentage of net revenue to 7.2% for the nine months ended June 30, 1999 from
8.2% for the nine months ended June 30, 1998 as a result of efficiencies
achieved in the Company's distribution facilities.

        Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $7.8 million, or 23.6%, to $40.8 million for
the nine months ended June 30, 1999 from $33.0 million for the nine months ended
June 30, 1998. Approximately $5.3 million of this increase was attributable to
increased selling and marketing expenses including increases as a result of the
implementation of a new retail marketing incentive program and expenses for
other marketing programs where costs increase as net revenues increase. The
remainder of the increase was attributed to a $2.5 million increase in general
and administrative expenses, including costs incurred relating to the
elimination of the Parent Corporate Services Fee on January 1, 1998 and
subsequent, but gradual, increase in staff and expenses to replace these
services during the balance of fiscal year 1998. These additional expenses are
included as general and administrative expenses on the Company's books.

        Operating Income. Operating income increased $3.1 million, or 20.7%, to
$18.0 million for the nine months ended June 30, 1999 from $14.9 million for the
nine months ended June 30, 1998. Operating income increased as a percentage of
net revenue to 14.6% for the nine months ended June 30, 1999 from 14.1% for the
same period the prior year due to an increase in sales and a decrease in cost of
sales, offset by an increase in selling, general and administrative expense as a
percentage of net revenue, as described above.

        Income before Provision for Income Taxes. Income before provision for
income taxes increased $3.0 million, or 20.0%, to $17.9 million for the nine
months ended June 30, 1999 from $14.9 million for the nine months ended June 30,
1998. Income before provision for income taxes increased as a percentage of net
revenue to 14.5% in the nine months ended June 30, 1999 from 14.1% for the same
period the prior year due to an increase in sales and a decrease in cost of


                                      -11-
<PAGE>   12

sales, offset by an increase in selling, general and administrative expense as a
percentage of net revenue, as described above.

        Net Income. Net income of $10.4 million for the nine months ended June
30, 1999 increased $1.6 million, or 17.6%, from net income of $8.8 million for
the nine months ended June 30, 1998. This increase was primarily due to an
increase in sales and a decrease in cost of sales, offset by an increase in
selling, general and administrative expense as a percentage of net revenue, as
described above.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

Historically, the financing requirements of the Company were funded through
intercompany advances from IDG, its parent, while excess cash generated by the
Company was remitted to IDG. Accordingly, the Company maintained minimal cash
balances. In addition, balances owed to or due from IDG were non-interest
bearing and periodic settlements of the net amounts were not made. As of June
22, 1998, IDG suspended the cash sweep process allowing cash receipts and cash
generated by the Company to be retained by the Company. During the Company's
fiscal fourth quarter ended September 30, 1998, the advances due from Parent
account balance was paid by IDG and reduced to zero.

As of June 30, 1999 the Company's working capital decreased $5.8 million to
$26.4 million from $32.2 million at September 30, 1998. The decrease in working
capital at June 30, 1999 was primarily the result of a net decrease in cash of
$14.1 million due to the acquisition of Cliffs Notes, Inc. Additionally, there
was a $6.9 million increase in accrued liabilities, and a $4.0 million increase
in the line of credit, offset by an $15.4 million increase in net accounts
receivable, and a $3.6 million increase in other current assets and deferred tax
assets.

The Company's net cash used in investing activities for the nine months ended
June 30, 1999 was $21.4 million. In December 1998, the Company acquired all of
the capital stock of Cliffs Notes, Inc. which included $17.1 million in payments
to Cliffs' shareholders, retirement of stockholder notes and bank debt.

The Company's net cash provided by financing activities was $3.9 million for the
nine months ended June 30, 1999 as a result of borrowing on the line of credit
and $3.2 million for the nine months ended June 30, 1998, as a result of changes
in the net amount of intercompany advances from IDG or excess cash generated by
the Company and retained by IDG prior to June 22, 1998.

On July 30, 1999 the Company entered into a $110 million credit agreement with a
group of banks. On August 2, 1999, the Company borrowed $87 million under the
new agreement including $83 million used to fund the acquisition of Macmillan
General Reference USA Inc. and $4 million for working capital needs. The
Company's existing $20 million working capital facility was terminated in
conjunction with the closing of the new agreement.

FACTORS AFFECTING FUTURE OPERATING RESULTS

        Dependence on Microsoft Products and Competition with Microsoft Press.
Sales of books devoted to the use of software products sold by Microsoft
Corporation ("Microsoft"), including its Windows operating system, accounted for
approximately 44% and 42% of the Company's net revenue for the three and nine
months ended June 30, 1999, respectively. As a result, future financial results
will depend in large part on continued consumer demand for Microsoft products. A
decline in the use of Microsoft products would likely result in decreased demand
for the Company's books and could adversely affect future financial results.
However, the acquisition of Macmillan General Reference USA Inc. is expected to
reduce this dependence on Microsoft and its products.

        In addition to relying on the sales of books devoted to Microsoft
products, the Company competes with Microsoft's publishing division, Microsoft
Press, for readers of computer-related books, including books covering Microsoft
products. Microsoft Press has substantially greater financial resources than the
Company and, because it is owned by Microsoft, may have better access to planned
and new Microsoft products. As a result, Microsoft Press may have a competitive
advantage over the Company in providing books devoted to the use of software
products sold by Microsoft.

        Dependence on " . . . For Dummies(R)" Publications. The Company derives
a substantial proportion of its net revenue from the sale of the " . . . For
Dummies(R)" family of books. In addition, the Company has devoted substantial
resources to the publication of these books and the development of the " . . .
For Dummies(R)" brand name. As a result, any change in reader preferences
leading to a decline in demand for the " . . . For Dummies(R)" books would
likely have a material adverse effect on future financial results.

                                      -12-
<PAGE>   13

        Risks of New Product Introductions. Generally as a particular book gets
older, the Company sells fewer copies of that book. Consequently, the Company's
future success depends on its ability to identify trends in the technology,
business and general know-how markets and to offer new titles, as well as other
products and services, that address the changing needs of the target audiences.
To establish market acceptance of a new publication, the Company must dedicate
significant resources to research and editorial development, production and
sales and marketing. The Company incurs significant costs in developing,
publishing and selling a new book, which often significantly precede meaningful
revenues from its sale. Consequently, new publications can require significant
time and investment to achieve profitability. Investors should note, however,
that there can be no assurance that the Company's efforts to introduce new
publications or other products or services will be successful or profitable.

        The Company records as an expense the costs related to the development
of new publications and products, other than author advances, as they are
incurred. As a result, the Company's profitability from quarter-to-quarter and
from year-to-year may be adversely affected by the number and timing of new
publications and product launches in any period and the level of acceptance
gained by such publications and products.

        Risks Associated with Fluctuations in Paper Costs. Paper is the
principal raw material used in the Company's business. The Company generally
purchases paper from merchants representing the paper mills. The Company does
not have long-term paper supply contracts with these paper merchants. The
arrangements with merchants are negotiated each year and provide for quarterly
price adjustments. Paper prices have been volatile over the past several years
and are affected by many factors, including demand, mill capacity, pulp supply,
energy costs and general economic conditions. Consequently, the Company's cost
of paper, relative to our net revenue, can vary from period-to-period. In the
past, paper has also been difficult to obtain due to industry-wide shortages.
Significant paper price increases, sustained over a period of time, could
adversely affect the Company's future financial condition or operating results.

        Fluctuations in Quarterly Results and Cyclicality of Revenue. The
Company's operating expenses, which include product development costs and
selling, general and administrative expenses, are relatively fixed in the
short-term and are based on our long-term revenue expectations. If the Company
sells fewer books or otherwise has lower revenue than expected, the Company may
not be able to quickly reduce its spending. Any shortfall in the Company's
revenue would have a direct impact on its results of operations, and
fluctuations in quarterly results could affect the market price of its Class A
common stock in a manner unrelated to the Company's long-term operating
performance. The Company typically sells more books during the first and second
quarters because of increased sales during the Christmas season. In addition,
the Company sells more books in quarters in which software manufacturers release
new or updated versions of popular software products. Because a substantial
portion of the Company's selling, general and administrative expenses are
incurred evenly throughout the year, the Company generally experiences
relatively lower net profit during quarters not impacted by increases in net
revenue due to seasonal or other factors discussed above.

        In addition, the Company typically publishes books relating to new
trends and technologies. Accordingly, if general economic conditions worsen,
people may defer spending on these new trends and technologies, which could
reduce the number of books sold.

        Risks Associated with Product Distribution Channels; Risk of Product
Returns. The Company sells its books primarily to large retail chains, large
wholesalers, warehouse clubs, office superstores and computer and electronics
superstores. In the three months ended June 30, 1999, the Company's three
largest customers, Barnes & Noble, Inc., Borders/Walden, Inc., and Ingram Book
Company accounted for approximately 16%, 11% and 7% of net revenue,
respectively. In the nine months ended June 30, 1999, the Company's three
largest customers, Barnes & Noble, Inc., Ingram Book Company, and
Borders/Walden, Inc. accounted for approximately 15%, 11% and 11% of net
revenue, respectively. The Company's future financial results depend in large
part on its relationships with its customers. Any disruption in relationships
with its customers could adversely affect financial performance.

        The Company's sales policy generally permits book customers to return
any unsold or damaged books for full credit. The Company records as revenue all
books sold to its customers in a particular quarter and, at the same time,
records a provision for estimated returns. During the three and nine months
ended June 30, 1999, the Company recorded a provision for returns of
approximately 22% of its gross sales. If, during any period, customers return
more books than previously estimated, the Company's financial results in that
period would be adversely affected.

        Competition. The Company faces competition directly from other book
publishers and indirectly from non-print media. Competition in book publishing
stems mainly from editorial quality, timely introduction of new titles, product
positioning, pricing and brand name recognition. In addition to the Company,
Pearson Education, Microsoft Press and

                                      -13-

<PAGE>   14

McGraw-Hill all have a strong market presence in the United States and
internationally in technology publishing. The principal competitors for the
Company's business and general know-how titles include Random House, Simon &
Schuster and HarperCollins. Each of these competitors has substantially greater
financial resources than the Company.

        Non-print media, such as the Internet and CD-ROMs, may also present
substantial competition. If computer users increase their reliance on
instruction and other information disseminated on-line, the Company's business
could be adversely affected.

        Control by IDG; Potential Conflicts of Interests; Benefits to IDG. IDG
owns all of the shares of the Class B common stock, each share of which is
entitled to ten votes per share on most stockholder actions, and has
approximately 78% of the combined voting power of both classes of common stock
as of June 30, 1999. The remaining holders of the shares of Class A common stock
are entitled to one vote per share and have approximately 22% of the combined
voting power. IDG has two representatives on the Company's Board of Directors
and has enough votes to elect all members of the Board of Directors.

        As a result of its stock ownership, IDG is in a position, without the
approval of the Company's public stockholders, to: amend the Company's charter
or approve a merger, sale of assets or other major corporate transaction; defeat
any non-negotiated takeover attempt that might otherwise benefit the public
stockholders; determine the amount and timing of dividends paid to itself and to
the Company's public stockholders; and otherwise control the Company's
management and operations and the outcome of all matters submitted for a
stockholder vote that could conflict with the interests of its public
stockholders.

        Dependence on Key Personnel. The Company relies, and will continue to
rely, on its senior executive officers and other key management personnel. If
any of these people leaves the Company, the relationships that these people have
with the Company's authors, customers or manufacturers could be lost, and the
Company would need to find people that could develop new relationships. The
competition for employees at all levels of the book publishing industry is
intense and is increasing. In our Northern California operations, in particular,
the Company has experienced increased turnover of employees and is experiencing
difficulty in attracting new employees. If the Company does not succeed in
attracting new employees or retaining and motivating current employees, the
Company's business could suffer significantly.

        Transition to New Distribution Service. The Company outsources
distribution and fulfillment functions to retail and wholesale customers through
two vendors. The contracts with these vendors expire in September 1999. One of
these vendors accounted for more than 60% of our distribution and order
fulfillment costs in each of fiscal 1996, 1997 and 1998. The Company has
selected a single-source vendor for distribution and fulfillment, but has not
started the transition to the new vendor. Any difficulties in transitioning to
the new distribution vendor could adversely impact day-to-day operating
performance and future financial results.

        Risks Associated with Acquisitions. As part of the Company's growth
strategy, it may buy, or make significant investments in complementary
companies, publications or products. The Company has completed the acquisition
of Cliffs Notes, Inc. and recently completed the acquisition of Macmillan
General Reference USA Inc. These acquisitions, as well as any future
acquisition, will be accompanied by the risks commonly encountered in making
acquisitions of products, companies and technologies.

        For example, it could have difficulty assimilating the personnel and
operations of the acquired company. This could cause a disruption of its ongoing
business, distraction of management and other resources, and difficulty in
maintaining uniform standards, controls and procedures. There can be no
assurance that the Company would succeed in overcoming these risks or any other
problems encountered in connection with any acquisitions it may make. In
addition, the Company may be required to incur debt or issue equity to pay for
any future acquisitions.

                                      -14-

<PAGE>   15
YEAR 2000 COMPLIANCE

Many currently installed computer systems and software products are coded to
accept only two-digit entries in the date code field. Beginning in 2000, these
date code fields will need to accept four-digit entries in order to distinguish
21st Century dates from 20th Century dates. As a result, the computer systems
and/or software used by many companies will need to be upgraded to comply with
"Year 2000" requirements by the end of 1999. Significant uncertainty exists in
the software industry concerning the potential effects associated with such
compliance issues.

The Company has completed the review of its computer systems to determine the
extent and impact of the Year 2000 issues. The Company uses a number of computer
software programs and operating systems, including applications for its internal
electronic communications network and for various administrative and billing
functions. Many of the Company's systems are new and were designed to
accommodate the Year 2000 issue when originally installed. The Company has
completed testing its systems for compliance, and believes it has implemented
the necessary changes. The Company believes it has completed corrective measures
to its mission-critical systems. The Company has assessed the scope of its risks
related to problems its computer systems may have related to the Year 2000 issue
and believes such risks are not material. This conclusion is partly based on
statements provided by the manufacturers of hardware and software used by the
Company. The Company is not in a position to confirm or deny the claims of the
manufacturers' products in use. The estimated costs to modify or replace these
applications are included in the Company's cost for its computer systems and
infrastructure upgrades. The Company currently does not have a contingency plan
in the event that the remedial efforts it has completed fail to make its systems
Year 2000 compliant.

The Company is continuing to communicate with its customers, suppliers, and
business partners in an effort to assess how they intend to resolve their Year
2000 issues. The Company, at this time, is not able to form an opinion as to
whether its customers or suppliers will be able to resolve their Year 2000
issues in a satisfactory and timely manner, or the magnitude of the adverse
impact it would have on the Company's operations if they fail to do so. No
assurance can be given that all of these third party systems will be Year 2000
compliant. Any failure of the Company's customers, suppliers, or business
partners to satisfactorily address their Year 2000 problems could have a
material adverse effect on the Company's business, financial condition, and
results of operations.

With respect to the acquisition of the Macmillan General Reference business, the
Company does not plan to retain any mission-critical business systems from this
acquisition.

FINANCIAL MARKET RISK

For the nine months ended June 30, 1999, there were no material changes in the
Company's exposure to financial market risks, including changes in interest
rates and foreign currency exchange rates.

FORWARD-LOOKING STATEMENTS

In addition to historical information, this Quarterly Report contains
forward-looking statements. The forward-looking statements are subject to
certain risks and uncertainties that could cause actual results to differ
materially from those reflected in such forward-looking statements. Readers are
cautioned not to place undue reliance on these forward-looking statements, which
reflect management's opinion only as of the date hereof. The Company undertakes
no obligation to revise or publicly release the results of any revision to these
forward-looking statements. Readers should carefully review the risk factors
described in other documents the Company files from time to time with the SEC,
including the Company's Registration Statement on Form S-1 (file no. 333-53433)
filed in connection with the Company's initial public offering, and Form 10-K as
of and for the year ended September 30, 1998.

                                      -15-
<PAGE>   16
PART II -- OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

     (a) Exhibits

          10  - Credit Agreement among IDG Books Worldwide, Inc., as borrower,
                and a group of lending banks, dated July 30, 1999.

          27  - Financial Data Schedule

     (b) Reports on Form 8-K; none

ITEMS 1, 2, 3, 4 AND 5 ARE NOT APPLICABLE AND HAVE BEEN OMITTED.


                                      -16-
<PAGE>   17
                                    SIGNATURE

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

                               IDG BOOKS WORLDWIDE, INC.

Date:   August 10, 1999           By: /s/ James A. Doehrman
                                      ---------------------------------

                                  James A. Doehrman,
                                  Vice President and Chief Financial Officer
                                  (Principal Accounting Officer
                                    and Duly Authorized Officer)


                                      -17-
<PAGE>   18

                                 EXHIBIT INDEX

Exhibit
  No.                               Document
-------                             --------

   10     Credit Agreement among IDG Books Worldwide, Inc., as borrower,
                and a group of lending banks, dated July 30, 1999.

   27     Financial Data Schedule