<PAGE>



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

                                    FORM 10-Q
               QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

<TABLE>
<CAPTION>

For the quarterly period ended September 30, 2001                           Commission File No.

                                                                         <c>
         WRC MEDIA INC.                                                     WEEKLY READER CORPORATION
         (Exact name of Registrant as specified in its charter)             (Exact name of Registrant as specified in its charter)

         DELAWARE                                                           DELAWARE
         (State or other jurisdiction of incorporation or organization)     (State or other jurisdiction of incorporation or
                                                                            organization)

         2731                                                               2721
         (Primary Standard Industrial Classification Number)                (Primary Standard Industrial Classification Number)

         13-4066536                                                         13-3603780
         (I.R.S. Employer Identification Number)                            (I.R.S. Employer Identification Number)

         COMPASSLEARNING, INC.
         (Exact name of Registrant as specified in its charter)
         2731

         DELAWARE
         (State or other jurisdiction of incorporation or organization)
         7372

         (Primary Standard Industrial Classification Number)
         13-4066535
         (I.R.S. Employer Identification Number)

         WRC MEDIA INC.                                                     WEEKLY READER CORPORATION
         512 7th AVENUE, 23RD FLOOR                                         512 7th AVENUE, 23RD FLOOR
         NEW YORK, NY 10018                                                 NEW YORK, NY 10018
         (212) 768-1150                                                     (212) 768-1150

         COMPASSLEARNING, INC.
         512 7th AVENUE, 23RD FLOOR
         NEW YORK, NY 10018
         (212) 768-1150
</TABLE>

(Address, including zip code, and telephone number, including area code, of each
                    Registrant's principal executive offices)

--------------------------------------------------------------------------------

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.
       /X/      Yes                 / /     No

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

<PAGE>

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
TITLE OF CLASS                              |       NAME OF EACH EXCHANGE ON WHICH REGISTERED
------------------------------------------------------------------------------------------------------------
<S>                                                 <C>
12 3/4% Senior Subordinated Notes due 2009  |       OVER-THE-COUNTER MARKET
------------------------------------------------------------------------------------------------------------
</TABLE>

                                                                               3
<PAGE>



PART 1.

ITEM 1.  FINANCIAL STATEMENTS

                         WRC MEDIA INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                             (dollars in thousands)


<TABLE>
<CAPTION>

                                                                       December 31,  September 30,
                                                                           2000           2001
                                                                     --------------  -------------
                                                                              (Unaudited)
<S>                                                                   <C>              <C>
ASSETS
Current Assets:

Cash and cash equivalents                                              $   2,968       $   9,271
Accounts receivable, net                                                  42,930          59,628
Inventories, net                                                          14,605          15,733
Prepaid expenses                                                           3,454           4,139
Other current assets                                                      17,409          15,080
                                                                       ---------       ---------
                             Total current assets                         81,366         103,851

Property and equipment, net                                                8,105           8,961
Purchased software, net                                                    4,709           3,316
Goodwill, net                                                            229,498         234,437
Deferred financing costs, net                                              6,693           6,926
Identified intangible assets, net                                        174,068         145,758
Other assets and investments                                                  25           2,310
                                                                       ---------       ---------
                                 Total Assets                          $ 504,464       $ 505,559
                                                                       =========       =========

LIABILITIES AND STOCKHOLDERS EQUITY
Current liabilities:

Accounts payable                                                       $  19,767       $  20,012
Accrued payroll, commissions and benefits                                  8,495           8,229
Current portion of deferred revenue                                       36,455          51,209
Other accrued liabilities                                                 39,991          37,964
Current portion of long-term debt                                          4,488           5,783
                                                                       ---------       ---------
                           Total current liabilities                     109,196         123,197

Deferred revenue, net of current portion                                   1,868           1,787
Due to related party                                                       2,946           2,258
Long-term debt                                                           269,469         282,286
                                                                       ---------       ---------
Total liabilities                                                        383,479         409,528

15% Series B preferred stock subject to redemption,
Including accrued dividends and accretion of warrant value                77,796          88,822
                                                                       ---------       ---------

Warrants on preferred stock                                               11,751          11,751
                                                                       ---------       ---------

Common stock subject to redemption                                         1,190           1,180
                                                                       ---------       ---------
Stockholders equity:
Common stock, ($.01 par value, 20,000,000 shares authorized;
and 7,014,321 shares outstanding)                                             69              70
Preferred Stock, (18% junior participating cumulative convertible
preferred stock including accrued dividends)                                --            14,750
Aditional paid-in capital                                                126,072         132,571
Accumulated deficit                                                      (95,893)       (153,113)
                                                                       ---------       ---------

Total stockholders equity                                                 30,248          (5,722)
                                                                       ---------       ---------

Total liabilities and stockholders equity                              $ 504,464       $ 505,559
                                                                       =========       =========

</TABLE>

 The accompanying notes to condensed consolidated financial statements are an
         integral part of these condensed consolidated balance sheets.
                                                                               4
<PAGE>

                         WRC MEDIA INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                     For the three months ended September 30
                                    Unaudited
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                                    2000          2001
                                                                  --------      ---------
<S>                                                               <C>            <C>
Sales, net                                                        $ 56,920       $ 60,237

Cost of goods sold                                                  16,896         16,554
                                                                  --------       --------
Gross profit                                                        40,024         43,683
Costs and expenses:
Sales and marketing                                                 11,763         14,356
Research and development                                               199          1,353
Distribution, circulation and fulfillment                            3,356          3,677
Editorial                                                            2,415          2,295
General and administrative                                           6,299          6,519
Depreciation                                                           735            813
                                                                  --------       --------
                                                                    24,767         29,013
                                                                  --------       --------
Income before amortization of goodwill and intangible assets        15,257         14,670

Amortization of goodwill and intangible assets                      28,017         17,178
                                                                  --------       --------
Loss from operations                                               (12,760)        (2,508)
Interest expense, including amortization
of deferred financing costs                                         (9,124)        (8,243)
Loss on Investments                                                   --             (282)
Other, net                                                              85           (162)
                                                                  --------       --------
Loss before income tax provision                                   (21,799)       (11,195)

Income tax provision                                                  (552)           223
                                                                  --------       --------
Net loss                                                          $(21,247)      $(11,418)
                                                                  ========       ========
</TABLE>

 The accompanying notes to condensed consolidated financial statements are an
         integral part of these condensed consolidated balance sheets.
                                                                               5
<PAGE>

                         WRC MEDIA INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                     For the nine months ended September 30
                                    Unaudited
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                                    2000            2001
                                                                  ---------       ----------
<S>                                                               <C>             <C>
Sales, net                                                        $ 157,552       $ 161,131

Cost of goods sold                                                   49,384          45,327
                                                                  ---------       ---------
Gross profit                                                        108,168         115,804

Costs and expenses:
Sales and marketing                                                  34,647          39,483
Research and development                                              4,339           3,803
Distribution, circulation and fulfillment                             8,691           9,417
Editorial                                                             7,320           7,901
General and administrative                                           20,213          19,767
Depreciation                                                          2,030           2,419
                                                                  ---------       ---------
                                                                     77,240          82,790
                                                                  ---------       ---------
Income before amortization of goodwill and intangible assets         30,928          33,014

Amortization of goodwill and intangible assets                       56,697          51,261
                                                                  ---------       ---------
Loss from operations                                                (25,769)        (18,247)
Interest expense, including amortization
of deferred financing costs                                         (26,360)        (25,530)
Loss on Investments                                                    --              (411)
Other, net                                                              185            (504)
                                                                  ---------       ---------
Loss before income tax provision                                    (51,944)        (44,692)

Income tax provision                                                    199             503
                                                                  ---------       ---------
Net loss                                                          $ (52,143)      $ (45,195)
                                                                  =========       =========
</TABLE>

  The accompanying notes to condensed consolidated financial statements are an
         integral part of these condensed consolidated balance sheets.
                                                                               6

<PAGE>

                         WRC MEDIA INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                     For the nine months ended September 30
                                    Unaudited
                             (dollars in thousands)

<TABLE>
<CAPTION>

                                                                         2000          2001
                                                                      ---------      ---------
<S>                                                                   <C>            <C>
Cash flows from operating activities:

Net loss                                                              $(52,143)      $(45,195)
Adjustments to reconcile net loss to net cash
used in operating activities-
Depreciation and amortization                                           58,727         53,680
Loss on investments                                                       --              411
(Gain) loss on disposition of marketable securities                        (16)             3
Interest expense-accretion of discounts                                    224            254
Amortization of deferred financing fees                                    744            760
Changes in assets and liabilities-
Increase in accounts receivable                                        (10,477)       (16,620)
Increase in inventories                                                 (1,106)        (1,129)
(Increase) decrease in prepaid expenses and other current assets        (1,839)         1,646
Increase in goodwill and other intangibles                             (20,577)        (7,885)
Decrease in other noncurrent assets                                         38              3
Decrease (increase) in accounts payable                                 (5,455)           194
Increase in deferred revenue                                            10,471         14,633
Increase (decrease) in accrued liabilities                              10,900         (4,687)
                                                                      --------       --------
Net cash used in operating activities                                  (10,509)        (3,932)
                                                                      --------       --------

Cash flows from investing activities:

Purchase of acquired business                                             --          (18,286)
Capital expenditures                                                    (2,375)        (2,880)
Investments                                                                 16         (2,698)
                                                                      --------       --------
Net cash used in investing activities                                   (2,359)       (23,864)
                                                                      --------       --------

Cash flows from financing activities:

Net proceeds from revolving line of credit                               7,500          7,000
Retirement of senior bank debt                                          (1,913)        (3,141)
Proceeds from term loans                                                  --           10,000
Proceeds from issuance of preferred stock                                 --           13,750
Proceeds from issuance of common stock                                    --            6,500
Purchase of common stock subject to redemption                            --              (10)
                                                                      --------       --------
Net cash provided by financing activities                                5,587         34,099
                                                                      --------       --------

Decrease in cash and cash equivalents                                   (7,281)         6,303

Cash and cash equivalents, beginning of period                          15,521          2,968
                                                                      --------       --------
Cash and cash equivalents, end of period                              $  8,240       $  9,271
                                                                      ========       ========
Supplemental disclosure of cash flow information:
Cash paid during the period for interest                              $ 19,724       $ 19,408
                                                                      ========       ========
Cash paid during the period for income taxes                          $    616       $    344
                                                                      ========       ========
</TABLE>

  The accompanying notes to condensed consolidated financial statements are an
         integral part of these condensed consolidated balance sheets.

                                                                               7
<PAGE>


                        WRC MEDIA, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)
                (Dollars in thousands, except per share amounts)

1. ORGANIZATION AND DESCRIPTION OF BUSINESS ORGANIZATION

         The accompanying condensed consolidated financial statements include
the accounts of WRC Media, Inc. ("WRC") and its subsidiaries- Weekly Reader
Corporation, CompassLearning, Inc. and ChildU, Inc. The term "Company" refers to
WRC and its subsidiaries.

         WRC was incorporated on May 14, 1999. On July 14, 1999, WRC acquired
CompassLearning in a business combination accounted for as a purchase.

         On November 17, 1999, WRC completed the recapitalization and purchase
of Weekly Reader and its subsidiaries. As a result of these transactions, WRC
owns 94.9% and PRIMEDIA INC. owns 5.1% of the common stock of the Weekly Reader
Corporation.

         On May 9, 2001, WRC entered into an Agreement and Plan of Merger with
ChildU, Inc. ("ChildU"). Pursuant to the agreement, each issued share of
ChildU's common and preferred stock not directly or indirectly owned by the
ChildU was converted into a contingent right to receive a number of shares of
WRC Media Inc. common stock. Following the merger, the WRC agreed to provide
funding to ChildU for up to $5,871,907 of ChildU's existing or committed
obligations and liabilities. Concurrent with the merger, WRC and all holders of
ChildU's Group One Notes have entered into an exchange agreement pursuant to
which WRC exchanged 162,500 shares of WRC Media common stock for all the
outstanding Group One Notes. The Company issued $13.75 million of 18% Junior
Participating Cumulative Convertible Preferred Stock, the proceeds of which will
fund the operating losses of ChildU and WRC Media's investment in ThinkBox(TM)
(see below). ChildU was incorporated on June 1, 1999 and is a leading provider
of Internet-based educational services to both individual and institutional
consumers.

         On May 18, 2001 WRC Media made a strategic investment in ThinkBox Inc.,
a leading creator of Internet-delivered education programs for the school and
home markets. Key elements of the broad partnership include an investment by WRC
in ThinkBox(TM), WRC's acquisition of distribution rights for ThinkBox(TM)
programs to schools, and the licensing to ThinkBox(TM) of the Weekly Reader(R)
brand names and content for use in its programs.

         The separate financial statements of the Subsidiary Guarantors have not
been included because (i) the Subsidiary Guarantors constitute all of WRC's
direct and indirect subsidiaries, (ii) the Subsidiary Guarantors have fully and
unconditionally guaranteed the Company's obligations on a joint and several
basis; (iii) WRC Media has limited operations and its ability to service its
debt is dependent on the operations of its subsidiaries.

         All significant intercompany balances and transactions have been
eliminated in the accompanying condensed consolidated financial statements.

         In July 2001, a new accounting standard was promulgated whereby the
Company will no longer amortize goodwill after December 31, 2001. Although the
Company has not fully analyzed the effects of this promulgation, management
expects the adoption of this promulgation to be favorable on the reported
results of operations.

         The accompanying condensed consolidated financial statements have been
prepared without audit. In the opinion of management, all adjustments,
consisting of only normal recurring adjustments necessary to present fairly the
financial position, the results of operations and cash flows for the periods
presented, have been made.

         The accompanying condensed consolidated financial statements have been
prepared pursuant to the rules and regulations of the Securities and Exchange
Commission ("SEC"). Accordingly, certain information and note disclosures
normally included in financial statements prepared in conformity with generally
accepted accounting principles have been condensed or omitted. Certain
reclassifications have been made to the prior year amounts in order to be
consistent with the current year's presentation.

                                                                               8
<PAGE>


         These condensed consolidated financial statements should be read in
conjunction with the Company's annual financial statements and related notes for
the year ended December 31, 2000. The operating results for the three-month and
nine-month periods ended September 30, 2000 and 2001 are not necessarily
indicative of the results that may be expected for a full year.

                                                                               9

<PAGE>

                   WEEKLY READER CORPORATION AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                             (dollars in thousands)

<TABLE>
<CAPTION>

                                                                   December 31,   September 30,
                                                                       2000           2001
                                                                  -------------   ------------
                                                                                   (Unaudited)
<S>                                                                <C>             <C>
ASSETS
Current Assets:

Cash                                                               $   2,914       $   4,811
Accounts receivable, net                                              26,758          41,810
Inventories, net                                                      14,124          14,561
Due from related party, net                                            4,632           5,765
Prepaid expenses                                                       3,219           3,060
Other current assets                                                  17,409          15,080
                                                                   ---------       ---------

                             Total current assets                     69,056          85,087

Property and equipment, net                                            5,729           7,089
Goodwill, net                                                        104,881         102,704
Deferred financing costs, net                                           --               918
Identified intangible assets, net                                     41,282          48,951
Other assets                                                              25              22
                                                                   ---------       ---------
                                 Total Assets                      $ 220,973       $ 244,771
                                                                   =========       =========

LIABILITIES AND STOCKHOLDERS EQUITY
Current liabilities:
Accounts payable                                                   $  17,382       $  17,802
Deferred revenue                                                      20,119          31,355
Accrued expenses and other                                            29,592          26,784
Current portion of long-term debt                                      4,488           5,783
                                                                   ---------       ---------

                           Total current liabilities                  71,581          81,724

Long-term debt                                                       269,469         282,286

Commitments and contingencies
Redeemable preferred stock, plus accrued dividends                    88,528          98,865

Stockholders deficit:
Common stock, ($.01 par value, 20,000,000 shares authorized;
2,830,000 shares issued)                                                  28              28
Class A non-voting common stock ($.01 par value,
1,000,000 shares authorized, no shares issued or outstanding)           --              --
Class B non-voting common stock ($.01 par value,
1,000,000 shares authorized, no shares issued or outstanding)           --              --
Aditional paid-in capital                                              9,133           9,133
Due from parent                                                      (69,374)        (63,072)
Accumulated deficit                                                 (148,392)       (164,193)
                                                                   ---------       ---------
Total stockholders deficit                                          (208,605)       (218,104)
                                                                   ---------       ---------
Total liabilities and stockholders deficit                         $ 220,973       $ 244,771
                                                                   =========       =========

</TABLE>

  The accompanying notes to condensed consolidated financial statements are an
         integral part of these condensed consolidated balance sheets.

                                                                              10
<PAGE>

                   WEEKLY READER CORPORATION AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                     For the three months ended September 30
                                    Unaudited
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                                     2000          2001
                                                                  --------       --------
<S>                                                               <C>            <C>
Sales, net                                                        $ 43,483       $ 45,676
Cost of goods sold                                                  11,541         11,471
                                                                  --------       --------
Gross profit                                                        31,942         34,205

Costs and expenses:
Marketing and selling                                                7,222          8,767
Distribution, circulation and fulfillment                            3,356          3,677
Editorial                                                            2,415          2,295
General and administrative                                           5,231          4,511
Depreciation                                                           485            495
                                                                  --------       --------
                                                                    18,709         19,745
                                                                  --------       --------
Income before amortization of goodwill and intangible assets        13,233         14,460
Amortization of goodwill and intangible assets                       2,766          3,015
                                                                  --------       --------
Income from operations                                              10,467         11,445
Other income (expense) :
Interest expense                                                    (8,841)        (8,136)
Other, net                                                              69             26
                                                                  --------       --------
Income before income tax provision                                   1,695          3,335
Income tax provision                                                  (552)           215
                                                                  --------       --------
Net income                                                        $  2,247       $  3,120
                                                                  ========       ========
</TABLE>

  The accompanying notes to condensed consolidated financial statements are an
         integral part of these condensed consolidated balance sheets.

                                                                              11
<PAGE>


                   WEEKLY READER CORPORATION AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                     For the nine months ended September 30
                                    Unaudited
                             (Dollars in thousands)
<TABLE>
<CAPTION>

                                                                     2000           2001
                                                                  ---------       ---------
<S>                                                               <C>             <C>
Sales, net                                                        $ 108,460       $ 111,967
Cost of goods sold                                                   29,607          29,517
                                                                  ---------       ---------
Gross profit                                                         78,853          82,450

Costs and expenses:
Marketing and selling                                                18,229          21,188
Distribution, circulation and fulfillment                             8,691           9,417
Editorial                                                             7,320           7,901
General and administrative                                           15,379          14,006
Depreciation                                                          1,445           1,501
                                                                  ---------       ---------
                                                                     51,064          54,013
                                                                  ---------       ---------
Income before amortization of goodwill and intangible assets         27,789          28,437
Amortization of goodwill and intangible assets                        9,240           8,869
                                                                  ---------       ---------
Income from operations                                               18,549          19,568
Other income (expense):
Interest expense, including amortization
of deferred financing costs                                         (25,621)        (24,853)
Other, net                                                              155             145
                                                                  ---------       ---------
Loss before income tax provision                                     (6,917)         (5,140)
Income tax provision                                                    199             324
                                                                  ---------       ---------
Net loss                                                          $  (7,116)      $  (5,464)
                                                                  =========       =========

</TABLE>

  The accompanying notes to condensed consolidated financial statements are an
         integral part of these condensed consolidated balance sheets.

                                                                              12
<PAGE>

                   WEEKLY READER CORPORATION AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                     For the nine months ended September 30
                                    Unaudited
                             (dollars in thousands)


<TABLE>
<CAPTION>
                                                               2000             2001
                                                           ---------          ---------
<S>                                                        <C>                <C>
Cash flows from operating activities:
Net loss                                                   $ (7,116)          $ (5,464)
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation and amortization                                10,685             10,370
Amortization of deferred financing fees                        --                   75
Loss on disposition of marketable securities                   --                    3
Interest expense-accretion of discounts and stock               224                254
Changes in operating assets and liabilities:
(Increase) decrease in-
Accounts receivable                                         (14,035)           (15,052)
Inventories                                                  (1,014)              (437)
Prepaid expenses and other assets                            (6,143)            (5,394)
Accounts payable                                             (4,544)               420
Deferred revenue                                             13,583             11,236
Accrued expenses and other liabilities                       (1,257)            (3,324)
                                                           --------           --------
Net cash used in operating activities                        (9,617)            (7,313)
                                                           --------           --------
Cash flows used in investing activities:
Payments for businesses acquired                                --              (7,043)
Capital expenditures                                           (851)            (2,775)
                                                           --------           --------
Net cash used in investing activities                          (851)            (9,818)
                                                           --------           --------

Cash flows from financing activities:

Net proceeds from revolving line of credit                    7,500              7,000
Retirement of senior bank debt                               (1,913)            (3,141)
Proceeds from term loans                                       --               10,000
(Increase) decrease in due from parent, net                   3,967              6,302
(Increase) decrease in due from related party                (5,160)            (1,133)
                                                           --------           --------
Net cash provided by financing activities                     4,394             19,028
                                                           --------           --------
Increase (decrease) in cash and cash equivalents             (6,074)             1,897
Cash, beginning of period                                    14,143              2,914
                                                           --------           --------
Cash, end of period                                        $  8,069           $  4,811
                                                           ========           ========
Supplemental disclosure of cash flow information:
Cash paid during the period for interest                   $ 19,724           $ 19,408
                                                           ========           ========
Cash paid during the period for income taxes               $    600           $    142
                                                           ========           ========

</TABLE>

  The accompanying notes to condensed consolidated financial statements are an
         integral part of these condensed consolidated balance sheets.

                                                                              13
<PAGE>

                   WEEKLY READER CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)
                (Dollars in thousands, except per share amounts)

1.       ORGANIZATION AND DESCRIPTION OF BUSINESS ORGANIZATION

         Weekly Reader Corporation ("WRC" or the "Company"), PRIMEDIA Reference,
Inc. ("PRI") and American Guidance Services, Inc. ("American Guidance") were
wholly owned subsidiaries of PRIMEDIA Inc. ("PRIMEDIA"). On August 13, 1999,
PRIMEDIA entered into a Redemption, Stock Purchase and Recapitalization
Agreement (as amended as of October 6, 1999, the "Recapitalization Agreement")
with WRC Media Inc., formerly EAC II Inc. ("WRC Media"). The terms of the
Recapitalization Agreement required that all of the outstanding capital stock of
PRI and American Guidance be contributed to WRC prior to WRC Media's purchase of
majority interest in WRC for a purchase price of $395,000. The presentation of
these financial statements reflects the capital contribution made by PRIMEDIA to
WRC of all the PRI and American Guidance shares at their historical carrying
values. In addition, on October 5, 1999, the authorized capital of WRC was
amended to consist of 20,000,000 shares of common stock, par value $.01/share,
and WRC declared a 10,000-for-one stock split effective on October 5, 1999. On
November 17, 1999 WRC Media completed its recapitalization of WRC. The
consolidated financial statements include the accounts of WRC and its
subsidiary, Lifetime Learning System, Inc. ("Lifetime Learning"), PRI and its
subsidiaries, Funk & Wagnalls Yearbook Corporation and Gareth Stevens, Inc.
("Gareth Stevens"), and American Guidance and its subsidiary, AGS International
Sales, Inc. (collectively referred to as "Weekly Reader"). As a result of the
recapitalization, WRC owns 94.9% and PRIMEDIA 5.1% of the common stock of Weekly
Reader. On November 17, 1999 PRI legally changed its name to World Almanac
Education Group ("WAE"). On May 9, 2001 American Guidance acquired through a
subsidiary all of the operating assets of Lindy Enterprises, Inc. The
transaction was accounted for as an asset purchase. Lindy Enterprises develops
curriculum-based skills assessment and test preparation products that correlate
to national and state curriculum.

         All significant intercompany balances and transactions have been
eliminated in the accompanying condensed consolidated financial statements.

         In July 2001, a new accounting standard was promulgated whereby the
Company will no longer amortize goodwill after December 31, 2001. Although the
Company has not fully analyzed the effects of this promulgation, management
expects the adoption of this promulgation to be favorable on the reported
results of operations.

         The accompanying condensed consolidated financial statements have been
prepared without audit. In the opinion of management, all adjustments,
consisting of only normal recurring adjustments necessary to present fairly the
financial position, the results of operations and cash flows for the periods
presented, have been made.

         The accompanying condensed consolidated financial statements have been
prepared pursuant to the rules and regulations of the Securities and Exchange
Commission ("SEC"). Accordingly, certain information and note disclosures
normally included in financial statements prepared in conformity with generally
accepted accounting principles have been condensed or omitted. Certain
reclassifications have been made to the prior year amounts in order to be
consistent with the current year's presentation.

         These condensed consolidated financial statements should be read in
conjunction with Weekly Reader Corporation and Subsidiaries annual financial
statements and related notes for the year ended December 31, 2000. The operating
results for the three-month and nine-month periods ended September 30, 2000 and
2001 are not necessarily indicative of the results that may be expected for a
full year.

                                                                              14

<PAGE>
                              COMPASSLEARNING, INC.
                            CONDENSED BALANCE SHEETS
                             (dollars in thousands)

<TABLE>
<CAPTION>

                                                       December 31,       September 30,
                                                           2000                2001
                                                       ------------       -------------
                                                                           (Unaudited)
<S>                                                     <C>                 <C>
ASSETS
Current Assets:
Cash                                                    $      54           $      64
Accounts receivable, net                                   15,410              17,645
Inventories, net                                              481               1,172
Prepaid expenses                                              233               1,059
                                                        ---------           ---------
                        Total current assets               16,178              19,940
Property and equipment, net                                 2,376               1,592
Purchased software, net                                     4,709               3,316
Goodwill, net                                              21,424              18,521
Identified intangible assets, net                          18,147              14,792
                                                        ---------           ---------
                            Total Assets                $  62,834           $  58,161
                                                        =========           =========
LIABILITIES AND STOCKHOLDERS EQUITY
Current liabilities:
Accounts payable                                        $   2,385           $   2,208
Due to related party                                        4,630               5,816
Accrued expenses                                            6,942               5,780
Current portion of deferred revenue                        16,336              19,553
Current portion of long-term debt                           4,488               5,783
                                                        ---------           ---------
                     Total current liabilities             34,781              39,140
Deferred revenue, net of current portion                    1,868               1,783
Long-term debt                                            269,469             282,286
Due to related party                                        2,160               2,160
                                                        ---------           ---------
Total liabilities                                         308,278             325,369

Stockholders deficit:
Preferred stock, ($.01 par value, 10,000,000
shares authorized, no shares issued
and outstanding)                                              --                  --
Class A common stock, ($.01 par value,
20,000 shares authorized,
10,000 shares issued and outstanding)                         --                  --
Additional paid-in capital                                 31,316              31,316
Accumulated deficit                                       (59,240)            (85,532)
Due from parent                                          (217,520)           (212,992)
                                                        ---------           ---------
Total stockholders deficit                               (245,444)           (267,208)
                                                        ---------           ---------
Total liabilities and stockholders deficit              $  62,834           $  58,161
                                                        =========           =========
</TABLE>

  The accompanying notes to condensed consolidated financial statements are an
         integral part of these condensed consolidated balance sheets.

                                                                              15
<PAGE>


                              COMPASSLEARNING, INC.
                       CONDENSED STATEMENTS OF OPERATIONS
                     For the three months ended September 30
                                    Unaudited
                             (Dollars in thousands)
<TABLE>
<CAPTION>

                                                                        2000               2001
                                                                      --------          ----------
<S>                                                                   <C>                <C>
Sales, net                                                            $ 13,438           $ 14,218
Cost of goods sold                                                       5,356              5,030
                                                                      --------           --------
Gross profit                                                             8,082              9,188
Costs and expenses:
Sales and marketing                                                      4,541              5,465
Research and development                                                   200                805
General and administrative                                               1,067              1,499
Depreciation                                                               250                299
                                                                      --------           --------
                                                                         6,058              8,068
                                                                      --------           --------
Income before amortization of goodwill and intangible assets             2,024              1,120
Amortization of goodwill and intangible assets                           2,615              2,550
                                                                      --------           --------
Loss from operations                                                      (591)            (1,430)
Other income (expense):
Interest expense                                                        (8,837)            (8,079)
Other, net                                                                  16                 11
                                                                      --------           --------
Loss before income tax provision                                        (9,412)            (9,498)
Income tax benefit                                                          --                 --
                                                                      --------           --------
Net loss                                                              $ (9,412)          $ (9,498)
                                                                      ========           ========
</TABLE>

  The accompanying notes to condensed consolidated financial statements are an
         integral part of these condensed consolidated balance sheets.

                                                                              16
<PAGE>


                              COMPASSLEARNING, INC.
                       CONDENSED STATEMENTS OF OPERATIONS
                     For the nine months ended September 30
                                    Unaudited
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                                         2000              2001
                                                                      --------           ---------
<S>                                                                   <C>                <C>
Sales, net                                                            $ 49,092           $ 48,747
Cost of goods sold                                                      19,777             15,731
                                                                      --------           --------
Gross profit                                                            29,315             33,016
Costs and expenses:
Sales and marketing                                                     16,418             17,967
Research and development                                                 4,339              2,914
General and administrative                                               4,833              5,136
Depreciation                                                               585                886
                                                                      --------           --------
                                                                        26,175             26,903
                                                                      --------           --------
Income before amortization of goodwill and intangible assets             3,140              6,113

Amortization of goodwill and intangible assets                           7,831              7,651
                                                                      --------           --------
Loss from operations                                                    (4,691)            (1,538)
Other income (expense) :
Interest expense                                                       (25,616)           (24,763)
Other, net                                                                  29                 11
                                                                      --------           --------
Loss before income tax provision                                       (30,278)           (26,290)

Income tax provision                                                      --                    2
                                                                      --------           --------
Net loss                                                              $(30,278)          $(26,292)
                                                                      ========           ========

</TABLE>


  The accompanying notes to condensed consolidated financial statements are an
         integral part of these condensed consolidated balance sheets.

                                                                              17

<PAGE>

                              COMPASSLEARNING, INC.
                       CONDENSED STATEMENTS OF CASH FLOWS
                     For the nine months ended September 30
                                    Unaudited
                             (Dollars in thousands)
<TABLE>
<CAPTION>

                                                                         2000              2001
                                                                      ---------          ---------
<S>                                                                   <C>                <C>
Cash flows from operating activities:
Net loss                                                              $(30,278)          $(26,292)
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation and amortization                                            8,416              8,537
Gain on disposition of marketable securities                               (16)              --
Interest expense-accretion of discounts and stock                          224                254
Changes in assets and liabilities:
Decrease (increase) in accounts receivable                               3,558             (2,235)
Increase in inventories                                                    (92)              (691)
Decrease (increase) in prepaid expenses and other assets                   953               (826)
Decrease in accounts payable                                              (911)              (177)
Decrease (increase) in deferred revenue                                 (3,112)             3,132
Decrease in accrued expenses and other long-term liabilities            (4,979)            (1,163)
                                                                      --------           --------
Net cash used in operating activities                                  (26,237)           (19,461)
                                                                      --------           --------

Cash flows from investing activities:
Capital expenditures                                                    (1,524)              (102)
Proceeds from disposition of marketable securities                          16               --
                                                                      --------           --------
Net cash used in investing activities                                   (1,508)              (102)
                                                                      --------           --------
Cash flows from financing activities:
Borrowings under revolving line of credit, net                           7,500              7,000
Retirement of senior bank debt                                          (1,913)            (3,141)
Proceeds from term loans                                                  --               10,000
Increase (decrease) in due to related party                              5,160              1,186
(Increase) decrease in due from parent, net                             17,067              4,528
                                                                      --------           --------
Net cash provided by financing activities                               27,814             19,573
                                                                      --------           --------
Change in Cash                                                              69                 10
Cash, beginning of period                                                  102                 54
                                                                      --------           --------
Cash, end of period                                                   $    171           $     64
                                                                      ========           ========
Supplemental disclosure of cash flow information:
Cash paid during the period for interest                              $ 19,724           $ 19,408
                                                                      ========           ========
Cash paid during the period for income taxes                          $     30           $     25
                                                                      ========           ========

</TABLE>

  The accompanying notes to condensed consolidated financial statements are an
         integral part of these condensed consolidated balance sheets.

                                                                              18
<PAGE>

                              COMPASSLEARNING, INC.
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (Unaudited)
                (Dollars in thousands, except per share amounts)

1.       ORGANIZATION AND DESCRIPTION OF BUSINESS ORGANIZATION

         CompassLearning, Inc. (formerly, JLC Learning Corporation and formerly
EAC I Inc.) (the "Company") is a leading provider of technology-based
educational programs to schools and school districts for kindergarten through
twelfth grade. Prior to July 14, 1999, the Company's predecessor (the
"Predecessor") was a wholly owned subsidiary of Software Systems Corporation
("SSC"), a wholly owned subsidiary of JLC Learning Holdings, Inc. ("Holdings").

         The Predecessor was acquired by WRC Media, Inc. on July 14, 1999 (the
"Purchase Date"). The Securities and Exchange Commission ("SEC") deems an
acquired business to be a predecessor when the acquirer is in substantially the
same business of the entity acquired and the acquirer's own operations prior to
the acquisition appear insignificant relative to the business acquired. The
purchase method of accounting was used to record the assets acquired and
liabilities assumed by the Company. Such accounting generally results in the
acquirer recording the assets purchased and liabilities assumed at fair value,
which results in increased amortization and depreciation reported in future
periods.

         In July 2001, a new accounting standard was promulgated whereby the
Company will no longer amortize goodwill after December 31, 2001. Although the
Company has not fully analyzed the effects of this promulgation, management
expects the adoption of this promulgation to be favorable on the reported
results of operations.

         The accompanying condensed consolidated financial statements have been
prepared without audit. In the opinion of management, all adjustments,
consisting of only normal recurring adjustments necessary to present fairly the
financial position, the results of operations and cash flows for the periods
presented, have been made.

         The accompanying condensed consolidated financial statements have been
prepared pursuant to the rules and regulations of the SEC. Accordingly, certain
information and note disclosures normally included in financial statements
prepared in conformity with generally accepted accounting principles have been
condensed or omitted. Certain reclassifications have been made to the prior year
amounts in order to be consistent with the current year's presentation.

         These condensed consolidated financial statements should be read in
conjunction with CompassLearning, Inc.'s financial statements and related notes
for the period ended December 31, 2000. The operating results for the
three-month and nine-month periods ended September 30, 2000 and 2001 are not
necessarily indicative of the results that may be expected for a full year.


                                                                              19
<PAGE>



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS


The following discussion is intended to assist in understanding the financial
condition as of September 30, 2001 of WRC Media Inc. ("WRC Media") and its
subsidiaries and their results of operations for the three-month and nine-month
periods ended September 30, 2000 and 2001. You should read the following
discussion in conjunction with the financial statements of WRC Media, Weekly
Reader Corporation ("Weekly Reader") and CompassLearning, Inc.
("CompassLearning,") attached to this discussion and analysis. Unless the
context otherwise requires, references to "Weekly Reader" herein are to Weekly
Reader and its subsidiaries, including American Guidance Service, Inc. ("AGS" or
"American Guidance") and World Almanac Education Group, Inc. ("World Almanac").
Unless the context otherwise requires, the terms "we," "our," and "us" refer to
WRC Media and its subsidiaries after giving effect to the transactions related
to the acquisition of CompassLearning and recapitalization of Weekly Reader
effectuated on July 14, 1999 and November 17, 1999, respectively (the
"Acquisition and Recapitalization"). This discussion and analysis contains
forward-looking statements. Although we believe that our plans, intentions and
expectations reflected in or suggested by these forward-looking statements are
reasonable, we cannot assure you that these plans, intentions or expectations
will be achieved. These forward-looking statements are subject to risks,
uncertainties and assumptions about us.

Results of Operations for the three months ended September 30, 2001-- WRC Media
Inc. and Subsidiaries

The results of operations of WRC Media and its subsidiaries encompass the
operations of Weekly Reader and its subsidiaries, including AGS and World
Almanac, CompassLearning, and ChildU, Inc. ("ChildU"). Additionally, the
acquisitions of Lindy Enterprises, Inc. ("Lindy") and ChildU were completed on
May 9, 2001 and operating results for these acquisitions are included in WRC
Media's results from May 9, 2001 forward. The results of operations of WRC Media
and its subsidiaries should be read together with the separate discussions of
the results of operations of Weekly Reader and CompassLearning.

In analyzing WRC Media's results for the three months ended September 30, 2000
and 2001, respectively, the seasonal nature of WRC Media's business should be
considered. As a result of seasonality, approximately 23% of WRC Media's
publication and related service revenues usually result in its first quarter,
23% in its second quarter, and 54% in the third and fourth quarters combined.
However, unlike this revenue stream, many of WRC Media's expenses are incurred
evenly throughout the year.

WRC Media analyzes its revenues, expenses and operating results on a percentage
of sales basis. The following table sets forth, for the periods indicated,
combined statements of operations data for WRC Media and its subsidiaries,
expressed in millions of dollars and as a percentage of net sales.


                                                                              20
<PAGE>

<TABLE>
<CAPTION>
                                                                             Three Months Ended September 30
                                                                         2000(a)                          2001
                                                              ------------------------------  ------------------------------
                                                                  Amount     % of Net Sales      Amount      % of Net Sales
                                                              ------------  ----------------  ------------  ----------------
                                                                                                (Dollars in millions)

<S>                                                              <C>              <C>            <C>              <C>
Sales, net                                                       $  56.9          100.0%         $  60.2          100.0%
Cost of goods sold                                                  16.8           29.5%            16.5           27.4%
                                                                 -------        -------          -------          -----
Gross profit                                                     $  40.1           70.5%         $  43.7           72.6%
Costs and expenses:
       Sales and marketing                                          11.7           20.7%            14.4           24.0%
       Research and development                                      0.2            0.4%             1.3            2.2%
       Distribution, circulation and fulfillment                     3.4            6.0%             3.7            6.1%
       Editorial                                                     2.4            4.2%             2.3            3.8%
       General and administrative                                    6.4           11.2%             6.5           10.8%
       Depreciation                                                  0.7            1.2%             0.8            1.3%
                                                                 -------        -------          -------          -----
                                                                    24.8           43.7%            29.0           48.2%
                                                                 -------        -------          -------          -----

Income before amortization of goodwill and intangible assets,
    interest expense, income taxes and other, net                   15.3           26.9%            14.7           24.4%
Amortization of goodwill and intangible assets                      28.0           49.2%            17.2           28.6%
                                                                 -------        -------          -------          -----
Loss from operations                                               (12.7)         (22.3%)           (2.5)          (4.2%)
Interest expense, including amortization
of deferred financing costs                                         (9.2)         (16.2%)           (8.2)         (13.6%)
Loss on investments                                               --                0.0%            (0.3)          (0.5%)
Other, net                                                           0.1            0.2%            (0.2)          (0.3%)
                                                                 -------        -------          -------          -----
Loss before income tax provision                                   (21.8)         (38.3%)          (11.2)         (18.6%)
Income tax provision (benefit)                                      (0.6)          (1.1%)            0.2            0.3%
                                                                 -------        -------          -------          -----
Net loss                                                         $ (21.2)         (37.2%)        $ (11.4)         (18.9%)
                                                                 =======        =======          =======          =====

       EBITDA(b)                                                 $  16.1           28.3%         $  17.9           29.7%
                                                                 =======        =======          =======          =====
</TABLE>

(a) Certain reclassifications have been made to the prior year in order to be
consistent with the current year presentation.

(b) EBITDA is defined as income (loss) before interest expense, income taxes,
depreciation and amortization not including WRC Media's unrestricted
subsidiaries. EBITDA data is included because we understand that this
information may be considered by investors as an additional basis on which to
evaluate WRC Media's ability to pay interest, repay debt and make capital
expenditures. Because all companies do not calculate EBITDA identically, the
presentation of EBITDA in this report is not necessarily comparable to similarly
titled measures of other companies. EBITDA does not represent and should not be
considered more meaningful than, or an alternative to, measures of operating
performance determined in accordance with generally accepted accounting
principles.
Given the projected near-term financial performance of ChildU and ThinkBox, WRC
Media designated ChildU and ThinkBox. "Unrestricted Subsidiaries" under its
Credit Agreement so as to: (i) exclude them from all the negative covenants in
the Credit Agreement, including the financial covenants, and from agreed upon
affirmative covenants, representations and warranties and events of default; and
(ii) Permit additional investments in ChildU and ThinkBox by WRC Media and its
subsidiaries in excess of the acquisition funding requirements to fund
operations, if necessary. As a result of the above-mentioned designation, ChildU
and ThinkBox performance will not be in any covenant calculations. Accordingly,
Consolidated EBITDA (before unrestricted subsidiaries) is defined as WRC Media
consolidated EBITDA excluding the $1.1 million EBITDA loss contributed by its
unrestricted subsidiaries - ChildU and its investment in ThinkBox.


Three Months Ended September 30, 2001 Compared to Three Months Ended September
30, 2000

Sales, net. For the three months ended September 30, 2001, net sales increased
$3.3 million, or 5.8%, to $60.2 million from $56.9 million for the same period
in 2000. This increase was primarily the result of a $1.4 million or 7.6%
increase at WRC Media's AGS operating unit combined with a $0.8 million or 6.3%
increase at World Almanac; $0.8 million or 5.8% increase at CompassLearning and
$0.3 million of revenue contributed by ChildU.

Net revenue for the third quarter of 2001 - excluding non-core business lines of
hardware and Funk & Wagnalls Yearbooks (see footnote 1 below), increased $3.7
million, or 6.7%, to $59.1 million from $55.4 million for the same period in
2000.

                                                                              21
<PAGE>

<TABLE>
<CAPTION>
 ($000)                                                                    Variance to
                                                Q3         Q3               Q3 2000
                                                                    -----------------------
 Net Revenue                                   2001       2000           $           %
------------------------------------------  ---------- -----------  -----------  ----------

<S>                                         <C>        <C>          <C>          <C>
 Weekly Reader                                 13,664      13,587           77        0.6%
 AGS                                           19,312      17,954        1,358        7.6%
 World Almanac                                 12,700      11,942          758        6.3%
 Compass                                       14,218      13,438          780        5.8%
 Child U                                          343           -          343         N/A
                                            ---------- -----------  -----------  ----------
 WRC Media - Consolidated                      60,237      56,921        3,316        5.8%
                                            ---------- -----------  -----------  ----------
 Non-core revenue:
   Compass Hardware sales                         481         834         (353)     (42.3%)
   World Almanac's Funk & Wagnall's
      Yearbook sales (1)                          660         708          (48)      (6.8%)
                                            ---------- -----------  -----------  ----------
 WRC Media - Core business                     59,096      55,379        3,717        6.7%
                                            ========== ===========  ===========  ==========

</TABLE>

1    World Almanac is no longer soliciting new subscribers for its Yearbooks
     since the print edition of the Funk & Wagnalls Encyclopedia was
     discontinued. Accordingly, Funk & Wagnalls sales of Yearbooks are naturally
     declining year-over-year, as it is entirely dependent upon sales orders
     from existing customers via renewals.

At AGS, sales increased $1.4 million, or 7.6%, to $19.3 million for the third
quarter of 2001 from $17.9 million for the same period in 2000, primarily due to
higher sales of curriculum products related to a new Florida textbook adoption
and sales attributable to the recently completed Lindy acquisition. At Weekly
Reader, sales of $13.7 million for the third quarter of 2001 were $0.1 million
or 0.6% greater than the same period in 2000. This was primarily attributable to
a $0.7 million or 18.0% increase in higher corporate sponsored periodical
revenue from Weekly Reader's subsidiary Lifetime Learning Systems combined with
$0.5 million or 6.7% increase in elementary and secondary periodical revenue
offset by a $1.1 million or 49.1% decrease in Skills book revenue which
historically significantly increases in presidential election years. At World
Almanac Education Group, third quarter sales increased by $0.8 million, or 6.3%,
to $12.7 million from $11.9 million for the same period in 2000, primarily as a
result of continued strength of World Almanac's Facts On File News Services
(FOFN) division and improvement in sales at it's Gareth Stevens division. At
FOFN, the third quarter of 2001 revenue of $1.9 million was $0.3 million or
20.0% greater than the third quarter of 2000 driven by significant growth at the
division's FACTS.com Internet news service. For the third quarter of 2001,
revenue from World Almanac's FACTS.com website - the web authority of fully
integrated, highly respected research and reference materials - grew an
impressive 50.5% compared to the same period in 2000. In addition, sales of
children's library books at World Almanac's Gareth Stevens division which showed
signs of softness in the first half of 2001 grew to $3.7 million in the third
quarter of 2001 which represented a $0.6 million or 21.5% increase compared to
the same period a year ago.

At CompassLearning, total revenue increased $0.8 million, or 5.8%, to $14.2
million for the third quarter of 2001 from $13.4 million for the same period in
2000.


                                                                              22
<PAGE>

Core revenue for the third quarter of 2001, excluding the planned attrition of
hardware sales, increased $1.1 million, or 9.0%, to $13.7 million from $12.6
million for the same period in 2000. New software sales for the third quarter of
2001 increased by $0.5 million or 7.0% to $7.4 million from $6.9 million for the
same period in 2000 and revenue from technical support services increased $0.5
million or 17.2% in third quarter compared to the same period a year ago. (see
analysis below).

<TABLE>
<CAPTION>
 CompassLearning                                                       Variance to 2000
 Net Revenue for the three months           ---------- -----------  -----------------------
 ended September 30,                           2001       2000           $           %
------------------------------------------  ---------- -----------  -----------  ----------
 ($000)
<S>                                         <C>        <C>          <C>          <C>
 Software                                       7,427       6,938          489        7.0%
 Professional Development                       2,595       2,497           98        3.9%
 Technical Support                              3,715       3,169          546       17.2%
 Hardware                                         481         834         (353)     (42.3%)

                                            ---------- -----------  -----------  ----------
 Compass - Consolidated                        14,218      13,438          780        5.8%
                                            ---------- -----------  -----------  ----------
 Non-core revenue:
   Compass Hardware business (a)                  481         834         (353)     (42.3%)
                                            ---------- -----------  -----------  ----------
 Compass - Core business                       13,737      12,604        1,133        9.0%
                                            ========== ===========  ===========  ==========

</TABLE>

Gross profit. For the three months ended September 30, 2001, gross profit
increased by $3.6 million, or 9.0%, to $43.7 million from $40.1 million for the
same period in 2000. This increase was due to an increase in gross profit at
CompassLearning of $1.1 million, or 13.8%, to $9.2 million for the three months
ended September 30, 2001 from $8.1 million for the same period in 2000 combined
with an increase in gross profit at Weekly Reader of $2.2 million, or 6.9%, to
$34.2 million for the three months ended September 30, 2001 from $32.0 million
for the same period in 2000 combined with a gross profit contribution of $0.2
million from ChildU. The increase in gross profit at Weekly Reader was a result
of (1) an increase in gross profit at American Guidance of $1.5 million, or
11.6%, to $14.6 million for the three months ended September 30, 2001 from $13.1
million for the same period in 2000 primarily due to the increased sales
described above; (2) an increase in gross profit at Weekly Reader, not including
World Almanac and American Guidance, of $0.1 million, or 0.8%, to $11.0 million
for the three months ended September 30, 2001 from $10.9 million for the same
period in 2000; and (3) an increase in gross profit at World Almanac of $0.6
million, or 8.2 % to $8.5 million for the three months ended September 30, 2001
from $7.9 million for the same period in 2000 due to the $0.8 million increase
in sales described above. CompassLearning gross profit increased $1.1 million,
or 13.8%, for the third quarter of 2001 compared to the same period in 2000,
primarily due to the increased revenues from high margin software.
CompassLearning's gross profit margin improved to 64.8% for the third quarter -
from 60.1% for the same period in 2000 as a result of the change in sales mix.
At CompassLearning, it is our strategy to grow our core business, which is the
high margin electronic courseware business and the related professional
development services that emanate from that business, and continue to
de-emphasize the significantly lower margin hardware revenues, as well as the
technical support service revenue streams which have a declining service life
cycle.

                                                                              23
<PAGE>

WRC Media's gross profit as a percentage of sales increased to 72.6% for the
three months ended September 30, 2001 from 70.5% for the same period in 2000,
primarily due to change in sales mix previously noted.

Costs and expenses. For the three months ended September 30, 2001, costs and
expenses increased by $4.2 million, or 16.9%, to $29.0 million from $24.8
million for the same period in 2000. This was primarily attributable to
increased sales and marketing expenses of $2.7 million for the three months
ended September 30, 2001, or 23.1%, to $14.4 million from $11.7 million for the
same period in 2000 combined with a $1.1 million increase in research and
development (R&D) expenses at CompassLearning ($0.6 million) and ChildU ($0.5
million), respectively. In the prior year, CompassLearning significantly cut
back on R&D expense as a reaction to the confusion in its marketplace in order
to protect its bottom line.

Income before amortization of goodwill and intangible assets, interest expense,
income taxes and other, net. For the three months ended September 30, 2001,
income before amortization of goodwill and intangible assets, interest expense,
income taxes and other, net decreased by $0.6 million, or 3.9%, to $14.7 million
from $15.3 million for the same period in 2000. This decrease was primarily due
to the inclusion of ChildU's operating loss of $0.6 million in the consolidated
results for WRC Media. The Company issued $13.75 million of 18% Junior
Participating Cumulative Convertible Preferred Stock, the proceeds of which are
funding the operating losses of ChildU (see footnotes to financial statements).

Amortization of goodwill and intangible assets. For the three months ended
September 30, 2001, amortization of goodwill and intangible assets decreased by
$10.8 million, or 38.6%, to $17.2 million from $28.0 million for the same period
in 2000. This decrease was primarily due to a decrease in amortization of a
non-compete agreement, which ends in November 2001.

Loss from operations. For the three months ended September 30, 2001, loss from
operations decreased $10.2 million, or 80.3%, to $2.5 million from $12.7 million
for the same period in 2000. This decrease was primarily due to lower
amortization of goodwill and intangible assets of $10.8 million described above.

Interest expense, including amortization of deferred financing costs. For the
three months ended September 30, 2001, interest expense decreased by $1.0
million, or 10.9%, to $8.2 million from $9.2 million for the same period in 2000
and interest expense as a percentage of sales decreased to 13.6% from 16.2% for
the same period in 2000. Interest expense for the three months ended September
30, 2001 and 2000 relates to debt and amortization of deferred financing costs
associated with the Acquisition and Recapitalization and the acquisition of
Lindy on May 9, 2001.

Loss on investments. For the three months ended September 30, 2001, loss on
investments increased $0.3 million to $0.3 million from $0.0 for the same period
in 2000. This increase was primarily due to $0.3 million loss on investments
recognized during the three-month period related to WRC Media's minority
investment in ThinkBox, Inc. (see footnotes to financial statements).



                                                                              24
<PAGE>

Other, net. For the three months ended September 30, 2001, other, net decreased
$0.3 million to an expense of $0.2 million from income of $0.1 million for the
same period in 2000. This decrease was primarily due to a management fee
incurred from a shareholder, which was not charged in 2000.

Income tax provision (benefit). For the three months ended September 30, 2001,
provision for income taxes increased by $0.8 million or 133.3% due to an income
tax provision of $0.2 million up from an income tax benefit of $0.6 million for
the same period in 2000.

Net loss. For the three months ended September 30, 2001, net loss decreased by
$9.8 million, or 46.2%, to $11.4 million from $21.2 million for the same period
in 2000 primarily as a result of the lower loss from operations of $10.2 million
described above. Net loss as a percentage of net sales decreased to negative
18.9% for the three months ended September 30, 2001 from negative 37.2% for the
same period in 2000.

EBITDA (excluding ChildU and ThinkBox). For the three months ended September 30,
2001, EBITDA was constant at $16.1 million. We have excluded the operating
results of ChildU and WRC Media's investment in ThinkBox because these
operations are defined as unrestricted subsidiaries under the Company's Credit
Agreement and as such, their operating results do not impact the Company's
ability to pay interest, repay debt or make capital expenditures. As discussed
above, ChildU's operations and WRC Media's investment in ThinkBox are entirely
funded from the proceeds of the 18% Junior Participating Cumulative Convertible
Preferred Stock.
                                                                              25
<PAGE>

Results of Operations for the three months ended September 30, 2001 -- Weekly
Reader Corporation and Subsidiaries

The following table sets forth, for the periods indicated, combined statements
of operations data for Weekly Reader and its subsidiaries expressed in millions
of dollars and as a percentage of net sales.

<TABLE>
<CAPTION>
                                                                              Three Months Ended September 30
                                                                            2000                         2001
                                                                -----------------------------   -----------------------------
                                                                  Amount      % of Net Sales      Amount      % of Net Sales
                                                                ------------  ---------------   -----------   ---------------
                                                                                   (Dollars in millions)
<S>                                                             <C>           <C>               <C>           <C>
Sales, net                                                           $ 43.5           100.0%        $ 45.7            100.0%
Cost of goods sold                                                     11.5            26.4%          11.5             25.2%
                                                                ------------  ---------------   -----------   ---------------
Gross profit                                                         $ 32.0            73.6%        $ 34.2             74.8%
Costs and expenses:
      Sales and marketing                                               7.2            16.6%           8.8             19.3%
      Distribution, circulation and fulfillment                         3.4             7.8%           3.6              7.9%
      Editorial                                                         2.4             5.5%           2.3              5.0%
      General and administrative                                        5.3            12.2%           4.5              9.8%
      Depreciation                                                      0.4             0.9%           0.5              1.1%
                                                                ------------  ---------------   -----------   ---------------
                                                                       18.7            43.0%          19.7             43.1%
                                                                ------------  ---------------   -----------   ---------------
Income before amortization of goodwill and intangible assets,
interest expense, income taxes and other, net                          13.3            30.6%          14.5             31.7%
Amortization of goodwill and intangible assets                          2.8             6.4%           3.0              6.6%
                                                                ------------  ---------------   -----------   ---------------
Income from operations                                                 10.5            24.2%          11.5             25.1%
Interest Expense                                                       (8.8)          (20.3%)         (8.2)           (17.9%)
Other, net                                                                -                -             -                 -
                                                                ------------  ---------------   -----------   ---------------
Income before income tax provision                                      1.7             3.9%           3.3              7.2%
Income tax provision (benefit)                                         (0.6)           (1.4%)          0.2              0.4%
                                                                ------------  ---------------   -----------   ---------------
Net income                                                            $ 2.3             5.3%         $ 3.1              6.8%
                                                                ============  ===============   ===========   ===============

      EBITDA(a)                                                      $ 13.8            31.7%        $ 15.0             32.8%
                                                                ============  ===============   ===========   ===============
</TABLE>

(a) EBITDA is defined as income (loss) before interest expense, income taxes,
depreciation and amortization. EBITDA data is included because we understand
that this information may be considered by investors as an additional basis on
which to evaluate Weekly Reader Corporation's ability to pay interest, repay
debt and make capital expenditures. Because all companies do not calculate
EBITDA identically, the presentation of EBITDA in this report is not necessarily
comparable to similarly titled measures of other companies. EBITDA does not
represent and should not be considered more meaningful than, or an alternative
to, measures of operating performance determined in accordance with generally
accepted accounting principles.


Three Months Ended September 30, 2001 Compared to Three Months Ended September
30, 2000

Sales, net. For the three months ended September 30, 2001, net sales increased
$2.2 million, or 5.1%, to $45.7 million from $43.5 million for the same period
in 2000. This increase in sales was primarily the result of a $1.4 million or
7.6% increase at AGS combined with a $0.8 million or 6.3% increase at World
Almanac.

At AGS sales increased $1.4 million, or 7.6%, to $19.3 million for the third
quarter of 2001 from $17.9 million for the same period in 2000, primarily due to
higher sales of curriculum products related to new revisions of textbooks and
sales attributable to the recently completed Lindy acquisition.

                                                                              26
<PAGE>

At Weekly Reader, not including AGS and World Almanac, sales of $13.7 million
for the third quarter of 2001 were $0.1 million or 0.6% greater than the same
period in 2000. This was primarily attributable to a $0.7 million or 18.0%
increase in higher corporate sponsored periodical revenue from Weekly Reader's
subsidiary Lifetime Learning Systems combined with $0.5 million or 6.7% increase
in elementary and secondary periodical revenue offset by a $1.1 million or 49.1%
decrease in Skills book revenue which historically significantly increases in
presidential election years.

At World Almanac Education Group, third quarter sales increased by $0.8 million,
or 6.3%, to $12.7 million from $11.9 million for the same period in 2000,
primarily as a result of continued strength of World Almanac's Facts On File
News Services (FOFN) division and improvement in sales at it's Gareth Stevens
division. At FOFN, the third quarter of 2001 revenue of $1.9 million was $0.3
million or 20.0% greater than the third quarter of 2000 driven by significant
growth at the division's FACTS.com Internet news service. For the third quarter
of 2001, revenue from World Almanac's FACTS.com website - the web authority of
fully integrated, highly respected research and reference materials - grew an
impressive 50.5% compared to the same period in 2000. In addition, sales of
children's library books at World Almanac's Gareth Stevens division which showed
signs of softness in the first half of 2001 grew to $3.7 million in the third
quarter of 2001 which represented a $0.6 million or 21.5% increase compared to
the same period a year ago.

Gross profit. For the three months ended September 30, 2001, gross profit
increased by $2.2 million, or 6.9%, to $34.2 million from $32.0 million for the
same period in 2000. The increase in gross profit at Weekly Reader was a result
of (1) an increase in gross profit at American Guidance of $1.5 million, or
11.6%, to $14.6 million for the three months ended September 30, 2001 from $13.1
million for the same period in 2000 primarily driven by the increased sales
described above and sale mix; (2) an increase in gross profit at Weekly Reader,
not including World Almanac and American Guidance, of $0.1 million, or 0.8%, to
$11.0 million for the three months ended September 30, 2001 from $10.9 million
for the same period in 2000; and 3) an increase in gross profit at World Almanac
of $0.6 million, or 8.2%, to $8.5 million for the three months ended September
30, 2001 from $7.9 million for the same period in 2000 primarily driven by the
increased sales described above. Gross profit as a percentage of sales increased
to 74.8% for the three months ended September 30, 2000 from 73.6% for the same
period in 2000.

Costs and expenses. For the three months ended September 30, 2001, costs and
expenses increased by $1.0 million, or 5.3%, to $19.7 million for the three
months ended September 30, 2001 from $18.7 million for the same period in 2000
primarily due to an increase in sales and marketing expenses of $1.6 million. In
the third quarter ended September 30, 2001 at AGS, sales and marketing expense
increased $0.7 million, or 22.2%, to $3.8 million for the three months ended
September 30, 2001 from $3.1 million in the prior year primarily due to costs
and expenses incurred related to the launch of Lindy products subsequent to the
acquisition on May 9, 2001. In addition, sales and marketing expenses at Weekly
Reader, excluding AGS and World Almanac increased $0.6 million or 22.0% to $3.2
million for the three months ended September 30, 2001 from $2.6 million in the
prior year primarily due to a greater investment in direct mail promotional
expense. Costs and expenses as a percentage of sales increased to 43.1% for the
three months ended September 30, 2001 from 43.0% for the same period in 2000.

                                                                              27
<PAGE>

Income before amortization of goodwill and intangible assets, interest expense,
income taxes and other, net. For the three months ended September 30, 2001,
income before amortization of goodwill and intangible assets, interest expense,
income taxes and other, net increased by $1.2 million, or 9.0%, to $14.5 million
from $13.3 million for the same period in 2000 and, as a percentage of sales,
increased to 31.7% from 30.6% for the same period in 2000. This increase was
primarily due to the factors described above.

Amortization of goodwill and intangible assets. For the three months ended
September 30, 2001, amortization of goodwill and intangible assets increased by
$0.2 million, or 7.1%, to $3.0 million from $2.8 million for the same period in
2000. This increase was primarily due to an increase of $0.3 million of
amortization expense at AGS associated with the Lindy acquisition partially
offset by intangible assets with lower amortization schedules in the later part
of their lives, and intangible assets that have been fully amortized.

Income from operations. For the three months ended September 30, 2001, income
from operations increased by $1.0 million, or 9.5%, to $11.5 million from $10.5
million for the same period in 2000 and, income from operations as a percentage
of sales improved to 25.1% from 24.2% for the same period in 2000. This increase
was primarily due to the factors described above.

Interest expense. For the three months ended September 30, 2001, interest
expense decreased by $0.6 million, or 6.8%, to $8.2 million from $8.8 million
for the same period in 2000 and interest expense as a percentage of sales
decreased to 17.9% from 20.3% for the same period in 2000. The interest expense
for the three months ended September 30, 2001 and 2000 relates to debt
associated with the Acquisition and Recapitalization, and the acquisition of
Lindy on May 9, 2001. Since Weekly Reader is jointly and severally liable for
that debt, the interest expense related to that debt is reflected in the
financial statements of Weekly Reader.

Income tax provision (benefit). For the three months ended September 30, 2001,
provision for income taxes increased by $0.8 million or 133.3% to $0.2 million
from an income tax benefit of $0.6 million for the same period in 2000.

Net Income. For the three months ended September 30, 2001, net income increased
by $0.8 million, or 34.8%, to $3.1 million from $2.3 million for the same period
in 2000. Net income as a percentage of net sales increased to 6.8% for the three
months ended September 30, 2001 from 5.3% for the same period in 2000. This
increase was primarily due to the factors described above.

EBITDA. For the three months ended September 30, 2001, EBITDA increased $1.2
million, or 8.7%, to $15.0 million from $13.8 million for the same period in
2000. This increase is primarily attributable to $2.2 million of increased gross
profit driven by higher sales and product mix, partially offset by $1.0 million
higher costs and expenses for the three months ended September 30, 2001 compared
to the same period in 2000.

                                                                              28
<PAGE>

Results of Operations for the three months ended September 30, 2001 --
CompassLearning, Inc.

The following table sets forth, for the periods indicated, statement of
operations data for CompassLearning, expressed in millions of dollars and as a
percentage of net revenue.

<TABLE>
<CAPTION>
                                                                                   Three Months Ended September 30
                                                                              2000(a)                  2001
                                                                  --------------------------------  --------------------------------
                                                                    Amount       % of Net Sales       Amount       % of Net Sales
                                                                  -----------   ------------------  ------------  ------------------
                                                                                        (Dollars in millions)
<S>                                                               <C>           <C>                 <C>           <C>
Revenue, net                                                          $ 13.4               100.0%        $ 14.2              100.0%
Cost of goods sold                                                       5.3                39.6%           5.0               35.2%
                                                                  -----------   ------------------  ------------  ------------------
Gross profit                                                           $ 8.1                60.4%         $ 9.2               64.8%
Costs and expenses:
      Sales and marketing                                                4.5                33.7%           5.5               38.7%
      Research and development                                           0.2                 1.5%           0.8                5.6%
      General and administrative                                         1.1                 8.2%           1.5               10.6%
      Depreciation                                                       0.3                 2.2%           0.3                2.1%
                                                                  -----------   ------------------  ------------  ------------------
                                                                         6.1                45.5%           8.1               57.0%
                                                                  -----------   ------------------  ------------  ------------------
Income before amortization of goodwill and intangible assets,
interest expense, income taxes and other, net                            2.0                14.9%           1.1                7.8%
Amortization of goodwill and intangible assets                           2.6                19.4%           2.5               17.6%
                                                                  -----------   ------------------  ------------  ------------------
Loss from operations                                                    (0.6)               (4.6%)         (1.4)              (9.8%)
Interest expense                                                        (8.8)              (65.7%)         (8.1)             (57.0%)
Other, net                                                                 -                    -             -                   -
                                                                  -----------   ------------------  ------------  ------------------
Loss before income tax provision                                        (9.4)              (70.2%)         (9.5)             (66.8%)
Income tax provision                                                       -                    -             -                   -
                                                                  -----------   ------------------  ------------  ------------------
Net loss                                                                (9.4)              (70.2%)         (9.5)             (66.8%)
                                                                  ===========   ==================  ============  ==================

                                                                  -----------   ------------------  ------------  ------------------
      EBITDA(b)                                                        $ 2.3                17.2%         $ 1.4                9.9%
                                                                  ===========   ==================  ============  ==================
</TABLE>
(a) Certain reclassifications have been made to the prior year in order to be
consistent with current year presentation .

(b) EBITDA is defined as income (loss) before interest expense, income taxes,
depreciation and amortization. EBITDA data is included because we understand
that this information may be considered by investors as an additional basis on
which to evaluate WRC Media's ability to pay interest, repay debt and make
capital expenditures. Because all companies do not calculate EBITDA identically,
the presentation of EBITDA in this report is not necessarily comparable to
similarly titled measures of other companies. EBITDA does not represent and
should not be considered more meaningful than, or an alternative to, measures of
operating performance determined in accordance with generally accepted
accounting principles.

Three Months Ended September 30, 2001 Compared to Three Months Ended September
30, 2000

Revenue, net. For the three months ended September 30, 2001, net revenue
increased $0.8 million, or 6.0%, to $14.2 million from $13.4 million for the
same period in 2000. This increase was due to (1) an increase in software
revenue of $0.5 million, or 7.0%, to $7.4 million for the period ended September
30, 2001 from $6.9 million in 2000 primarily as a result of higher market
coverage with a more seasoned sales force and reduced market confusion as a
result of numerous smaller startup companies exiting the marketplace due to poor
sales performance or loss of additional financing, (2) an increase in service
revenue from technical support of $0.5 million, or 17.2%, to $3.7 million for
the period ended September 30, 2001 from $3.2 million in 2000, and (3) an
increase in service revenue from professional development services of $0.1
million or 3.9% to $2.6 million for the period ended September 30, 2001 from
$2.5 million in 2000 offset by (4) a planned decrease in hardware revenue of
$0.3 million, or 42.3%, to $0.5 million for the period ended September 30, 2001
from $0.8 million in 2000.
                                                                              29
<PAGE>

<TABLE>
<CAPTION>
 CompassLearning                                                       Variance to 2000
 Net Revenue for the three months                                   -----------------------
 ended September 30,                           2001       2000           $           %
------------------------------------------  ---------- -----------  -----------  ----------
 ($000)
<S>                                         <C>        <C>          <C>          <C>
 Software                                       7,427       6,938          489        7.0%
 Professional Development                       2,595       2,497           98        3.9%
 Technical Support                              3,715       3,169          546       17.2%
 Hardware                                         481         834         (353)     (42.3%)

                                            ---------- -----------  -----------  ----------
 Compass - Consolidated                        14,218      13,438          780        5.8%
                                            ---------- -----------  -----------  ----------
 Non-core revenue:
   Compass Hardware business (a)                  481         834         (353)     (42.3%)
                                            ---------- -----------  -----------  ----------
 Compass - Core business                       13,737      12,604        1,133        9.0%
                                            ========== ===========  ===========  ==========
</TABLE>

(a)  CompassLearning's hardware business revenues are generally derived from
     reselling hardware to customers who request that CompassLearning provide a
     package of software and hardware. In prior years, CompassLearning offered
     hardware to customers as a wholesaler of private label and other products.
     However, because of the less profitable nature of the business compared to
     CompassLearning's other businesses and to reduce the need for inventory and
     the risk of technological change rendering inventory obsolete,
     CompassLearning began discontinuing its wholesale hardware business in the
     mid 1990's. Currently, CompassLearning has arrangements with Apple, IBM,
     Compaq, Gateway, and Dell computers in order to accommodate requests by
     customers for complete hardware and software solutions.

It is our strategy to grow our core business, which is the electronic courseware
and the related professional development services of training our customers in
implementing that electronic courseware most efficiently as well as software
maintenance from technical support services. Revenue from these sources
increased $1.1 million or 9.0% to $13.7 million for the period ended September
30, 2001 compared to $12.6 million in 2000. Gross profit. For the three months
ended September 30, 2001, gross profit increased $1.1 million, or 13.0%, to $9.2
million from $8.1 million in 2000. Gross profit as a percent of revenue
increased to 64.8% from 60.4% for the same period in 2000.

Costs and expenses. For the three months ended September 30, 2001, costs and
expenses increased $2.0 million, or 32.8%, to $8.1 million from $6.1 million in
2000, and costs and expenses as a percentage of revenue increased to 57.0% from
45.5% in 2000. The increase was primarily due to a $1.0 million increase in
sales and marketing expense, $0.6 million increase in research and development
expense, and $0.4 million increase in general and administrative expenses.

Sales and marketing expense increased $1.0 million or 22.2%, to $5.5 million
from $4.5 million and as a percentage of revenue increased to 38.7% from 33.7%
in 2000. Changes included a $0.7 million increase in commissions related to
higher software sales, $0.1 million increase in outside services, and a $0.2
million increase in other operating expenses.

Research and development expense increased $0.6 million, or 300.0%, to $0.8
million from $0.2 million and as a percentage of revenue increased to 5.6% from
1.5% in 2000. The increase was primarily due to adjustments made in 2000
resulting from a change in the company strategy to exit LAN/WAN software
development to pursue new worldwide web strategies.

                                                                              30
<PAGE>

General and administrative expenses increased $0.4 million, or 36.4%, to $1.5
million from $1.1 million, and as a percentage of revenue increased to 10.6% in
2001 from 8.2% in 2000. Changes included $0.7 increase in compensation offset by
$0.3 decrease in other operating expenses.

Income before amortization of goodwill and intangible assets, interest expense,
income taxes and other, net. For the three months ended September 30, 2001,
income before amortization of goodwill and intangible assets, interest expense,
income taxes and other, net decreased $0.9 million, or 45.0%, to $1.1 million
from $2.0 million in 2000 and, as a percentage of net revenue, decreased to 7.8%
from 14.9% in 2000, primarily due to the factors described above.

Amortization of goodwill and intangible assets. For the three months ended
September 30, 2001, amortization of goodwill and intangible assets decreased
$0.1 million or 3.8% to $2.5 million from $2.6 million for the same period in
2000.

Loss from operations. For the three months ended September 30, 2001, loss from
operations increased $0.8 million, or 133.3%, to $1.4 million from $0.6 million
for the same period in 2000, and loss from operations as a percentage of net
revenue increased to a negative 9.8% from a negative 4.6% for the same period in
2000. These increases were primarily due to the factors described above.

Interest expense. For the three months ended September 30, 2001, interest
expense decreased $0.7 million, or 8.0%, to $8.1 million from $8.8 million in
2000. CompassLearning is jointly and severally liable for debt associated with
the Acquisition and Recapitalization and the acquisition of Lindy on May 9,
2001. Therefore, the interest expense related to that debt is reflected in the
financial statements of CompassLearning.

Net loss. For the three months ended September 30, 2001, net loss increased $0.1
million, or 1.1%, to $9.5 million from $9.4 million in 2000, and net loss as a
percentage of net revenue decreased to a negative 66.8% from a negative 70.2% in
2000, primarily due to the factors described above.

EBITDA. For the three months ended September 30, 2001, EBITDA decreased $0.9
million, or 39.1%, to $1.4 million from $2.3 million for the same period in
2000. This decrease is primarily attributable to $1.1 million of greater gross
profit for the third quarter of 2001 compared to the same period in 2000, offset
with $1.0 million of higher sales and marketing expenses, $0.6 million of higher
research and development expenses, and $0.4 of higher general and administrative
expenses.



                                                                              31
<PAGE>

Results of Operations for the nine months ended September 30, 2001-- WRC Media
Inc. and Subsidiaries

The following table sets forth, for the periods indicated, combined statements
of operations data for WRC Media and its subsidiaries, expressed in millions of
dollars and as a percentage of net sales.

<TABLE>
<CAPTION>
                                                                                    Nine Months Ended September 30
                                                                              2000(a)                          2001
                                                                    -----------------------------   -------------------------------
                                                                      Amount      % of Net Sales      Amount       % of Net Sales
                                                                    ------------  ---------------   -----------   -----------------
                                                                                        (Dollars in millions)

<S>                                                                  <C>             <C>            <C>            <C>
Sales, net                                                           $  157.6          100.0%       $  161.1          100.0%
Cost of goods sold                                                       49.4           31.3%           45.3           28.1%
                                                                     --------        -------        --------        -------
Gross profit                                                         $  108.2           68.7%       $  115.8           71.9%
Costs and expenses:
       Sales and marketing                                               34.6           22.0%           39.5           24.5%
       Research and development                                           4.3            2.7%            3.8            2.4%
       Distribution, circulation and fulfillment                          8.7            5.5%            9.4            5.8%
       Editorial                                                          7.3            4.6%            7.9            4.9%
       General and administrative                                        20.3           12.9%           19.8           12.3%
       Depreciation                                                       2.0            1.3%            2.4            1.5%
                                                                     --------        -------        --------        -------
                                                                         77.2           49.0%           82.8           51.4%
                                                                     --------        -------        --------        -------
Income before amortization of goodwill and intangible assets,
interest expense, income taxes and other, net                            31.0           19.7%           33.0           20.5%
Amortization of goodwill and intangible assets                           56.7           36.0%           51.3           31.8%
                                                                     --------        -------        --------        -------
Loss from operations                                                    (25.7)         (16.3%)         (18.3)         (11.3%)
Interest expense, including amortization
of deferred financing costs                                             (26.4)         (16.8%)         (25.5)         (15.8%)
Loss on investments                                                    --             --                (0.4)          (0.2%)
Other, net                                                                0.2            0.1%           (0.5)          (0.3%)
                                                                     --------        -------        --------        -------
Loss before income tax provision                                        (51.9)         (33.0%)         (44.7)         (27.6%)
Income tax provision                                                      0.2            0.1%            0.5            0.3%
                                                                     --------        -------        --------        -------
Net loss                                                             $  (52.1)         (33.1%)      $  (45.2)         (27.9%)
                                                                     ========        =======        ========        =======

       EBITDA(b)                                                     $   33.6           21.3%       $   36.3           22.5%
                                                                     ========        =======        ========        =======
</TABLE>

(a) Certain reclassifications have been made to the prior year in order to be
consistent with current year presentation.

(b) EBITDA is defined as income (loss) before interest expense, income taxes,
depreciation and amortization not including WRC Media's unrestricted
subsidiaries. EBITDA for the nine months ended September 30, 2000 excludes $0.4
million of non-recurring expenses related to changing CompassLearning's name
from its predecessor's name. EBITDA data is included because we understand that
this information may be considered by investors as an additional basis on which
to evaluate WRC Media's ability to pay interest, repay debt and make capital
expenditures. Because all companies do not calculate EBITDA identically, the
presentation of EBITDA in this report is not necessarily comparable to similarly
titled measures of other companies. EBITDA does not represent and should not be
considered more meaningful than, or an alternative to, measures of operating
performance determined in accordance with generally accepted accounting
principles.
Given the projected near-term financial performance of ChildU and ThinkBox, WRC
Media designated ChildU and ThinkBox. "Unrestricted Subsidiaries" under its
Credit Agreement so as to: (i) exclude them from all the negative covenants in
the Credit Agreement, including the financial covenants, and from agreed upon
affirmative covenants, representations and warranties and events of default; and
(ii) Permit additional investments in ChildU and ThinkBox by WRC Media and its
subsidiaries in excess of the acquisition funding requirements to fund
operations, if necessary. As a result of the above-mentioned designation, ChildU
and ThinkBox performance will not be in any covenant calculations. Accordingly,
Consolidated EBITDA (before unrestricted subsidiaries) is defined as WRC Media
consolidated EBITDA excluding the $1.8 million EBITDA loss contributed by its
unrestricted subsidiaries - ChildU and its investment in ThinkBox.



Nine Months Ended September 30, 2001 Compared to Nine Months Ended September 30,
2000

Sales, net. For the nine months ended September 30, 2001, net sales increased
$3.5 million, or 2.2%, to $161.1 million from $157.6 million for the same period
in 2000. This increase was primarily due to a increase in sales at Weekly Reader
of $3.5 million, or 3.2%, to $112.0 million for the nine months ended September
30, 2001 from $108.5 million for the same period in 2000 combined with $0.4
million of sales recorded by ChildU for the period of WRC Media ownership, May
9, 2001 through September 30, 2001, partially offset by a decrease in sales at
CompassLearning of $0.4 million, or 0.8%, to $48.7 million for the nine months
ended September 30, 2001 from $49.1 million for the same period in 2000. The
increase in sales at Weekly Reader was the result of (1) an increase in sales at
AGS of $1.7 million, or 4.0%, to $45.3 million for the nine months ended
September 30, 2001 from $43.6 million for the same period in 2000 as a result of
increases in sales of our curriculum products, primarily textbooks; (2) an
increase in sales at World Almanac of $1.3 million, or 3.6%, to $38.1 million
from $36.8 million for the same period in 2000, as a result of higher licensing
revenue and higher sales at Facts On File News Services and WAE Library Services
partially offset by lower sales at Gareth Stevens. The higher sales at Facts On
File are driven by higher sales of FACTS.com and Issues and Controversies
On-Line. The higher sales at WAE Library Services are driven by higher sales
from its telemarketing and web site channels. The lower sales at Gareth Stevens
are driven by lower sales in its telemarketing and wholesale channels. Excluding
Funk & Wagnalls, net sales increased by $1.6 million, or 4.7% to $35.6 million
from $34.0 million in 2000. World Almanac is no longer soliciting new
subscribers for its Yearbooks since the print edition of the Funk & Wagnalls
Encyclopedia was discontinued. Accordingly, Funk & Wagnalls sales of Yearbooks
are naturally declining year-over-year, as it is entirely dependent upon sales
orders from existing customers via renewals; and (3) an increase in sales at
Weekly Reader, not including World Almanac and American Guidance, of $0.5
million, or 1.6% to $28.6 million from $28.1 million for the same period in
2000. This increase was primarily attributable to higher elementary periodical
revenue, $0.3 million; higher secondary periodical revenue, $0.7 million; higher
licensing revenue, $0.3 million; combined with higher Lifetime Learning Systems
revenue, $0.2 million partially offset by lower Skills books revenue, $1.1
million.

                                                                              32
<PAGE>

At CompassLearning, net revenue decreased $0.4 million, or 0.8%, to $48.7
million from $49.1 million for the same period in 2000. This decrease was due to
(1) a planned decrease in hardware revenue of $3.6 million, or 63.2%, to $2.1
million for the period ended September 30, 2001 from $5.7 million in 2000, (2) a
decrease in service revenue from technical support of $0.5 million, or 4.4%, to
$11.1 million for the period ended September 30, 2001 from $11.6 million in 2000
primarily as a result of decreased hardware maintenance contracts, and (3) a
decrease in service revenue from professional development services of $0.6
million or 6.5% to $7.4 million for the period ended September 30, 2001 from
$8.0 million in 2000, offset by an increase in software revenue of $4.3 million,
or 18.3%, to $28.1 million for the period ended September 30, 2001 from $23.8
million in 2000 primarily as a result of higher market coverage with a seasoned
sales force, customers accelerating buying decisions in order to be ready for
school year, and reduced market confusion as a result of many smaller startup
companies exiting the marketplace due to poor sales performance or loss of
additional financing.



                                                                              33
<PAGE>

Net revenue for the nine months ended September 30, 2001 - excluding
de-emphasized non-core business lines of hardware and Funk & Wagnalls Yearbooks
increased $7.5 million, or 5.0%, to $156.6 million from $149.1 million for the
same period in 2000, shown in the following table:

<TABLE>
<CAPTION>
                                                                           Variance to
  ($000)                                                                   Prior Year
  Net Revenue for the nine months                                   -----------------------
  ended September 30,                          2001       2000           $           %
------------------------------------------  ---------- -----------  -----------  ----------

<S>                                         <C>        <C>          <C>          <C>
 Weekly Reader                                 28,561      28,109          452        1.6%
 AGS                                           45,307      43,578        1,729        4.0%
 World Almanac                                 38,099      36,773        1,326        3.6%
 Compass                                       48,747      49,092         (345)      (0.7%)
 Child U                                          417           -          417      N/A
                                            ---------- -----------  -----------  ----------

 WRC Media - Consolidated                     161,131     157,552        3,579        2.3%
                                            ---------- -----------  -----------  ----------
 Non-core revenue:
   Compass Hardware business                    2,058       5,739       (3,681)     (64.1%)
   World Almanac's Funk & Wagnall's
      Encyclopedia business                     2,473       2,726         (253)      (9.3%)
                                            ---------- -----------  -----------  ----------

 WRC Media - Core business                    156,600     149,087        7,513        5.0%
                                            ========== ===========  ===========  ==========
</TABLE>


Gross profit. For the nine months ended September 30, 2001, gross profit
increased by $7.6 million, or 7.0%, to $115.8 million from $108.2 million for
the same period in 2000. This increase was due to an increase in gross profit at
CompassLearning of $3.7 million, or 12.6%, to $33.0 million from $29.3 million
in 2000 primarily due to higher software revenue combined with an increase in
gross profit at Weekly Reader of $3.6 million, or 4.6%, to $82.5 million for the
nine months ended September 30, 2001 from $78.9 million for the same period in
2000 and $0.3 million of gross profit contributed by ChildU for the period from
inception (May 9, 2001) through September 30, 2001. The increase in gross profit
at Weekly Reader was a result of (1) an increase in gross profit at American
Guidance of $2.3 million, or 7.3%, to $34.0 million for the nine months ended
September 30, 2001 from $31.7 million for the same period in 2000 primarily due
a change in sales mix resulting in a higher gross profit margin combined with
the increased sales described above; (2) an increase in gross profit at Weekly
Reader, not including World Almanac and American Guidance, of $0.3 million, or
1.3%, to $23.0 million for the nine months ended September 30, 2001 from $22.7
million for the same period in 2000 due to higher sales described above; and (3)
an increase in gross profit at World Almanac of $1.0 million, or 4.0 % to $25.4
million for the nine months ended September 30, 2001 from $24.4 million for the
same period in 2000 due to higher sales described above.

WRC Media's gross profit as a percentage of sales increased to 71.9% for the
nine months ended September 30, 2001 from 68.7% for the same period in 2000,
primarily due to change in sales mix at CompassLearning- sales of higher margin
software increased 18.3% for the nine months ended September 30, 2001 compared
to the same period in 2000.

Costs and expenses. For the nine months ended September 30, 2001, costs and
expenses increased by $5.6 million, or 7.3%, to $82.8 million from $77.2 million
for the same period in 2000. This was primarily attributable to increased sales
and marketing expenses, which increased $4.9 million for the nine months ended
September 30, 2001, or 14.2%, to $39.5 million from $34.6 million for the same
period in 2000.

                                                                              34
<PAGE>

Income before amortization of goodwill and intangible assets, interest expense,
income taxes and other, net. For the nine months ended September 30, 2001,
income before amortization of goodwill and intangible assets, interest expense,
income taxes and other, net increased by $2.0 million, or 6.5%, to $33.0 million
from $31.0 million for the same period in 2000, and as a percentage of sales
increased to 20.5% from 19.7% for the same period in 2000. These increases were
primarily due to the increase in gross profit described above, partially offset
by the increase in sales and marketing expense, also described above.

Amortization of goodwill and intangible assets. For the nine months ended
September 30, 2001, amortization of goodwill and intangible assets decreased by
$5.4 million, or 9.5%, to $51.3 million from $56.7 million for the same period
in 2000. This decrease was primarily due to a decrease in amortization of a
non-compete agreement, which ends in November 2001.

Loss from operations. For the nine months ended September 30, 2001, loss from
operations decreased $7.4 million, or 28.8%, to $18.3 million from $25.7 million
for the same period in 2000. This decrease was primarily due to the decrease in
amortization of goodwill and intangible assets of $5.4 million combined with an
increase of $2.0 million in income before amortization of goodwill and
intangible assets, interest expense, income taxes and other, net also described
above.

Interest expense, including amortization of deferred financing costs. For the
nine months ended September 30, 2001, interest expense decreased by $0.9
million, or 3.4%, to $25.5 million from $26.4 million for the same period in
2000 and interest expense as a percentage of sales decreased to 15.8% for the
nine months ended September 30, 2001 from 16.8% for the same period in 2000.
Interest expense for the nine months ended September 30, 2001 and 2000 relates
to debt and amortization of deferred financing costs associated with the
Acquisition and Recapitalization and the acquisition of Lindy on May 9, 2001.

Other, net. For the nine months ended September 30, 2001, other, net decreased
$0.7 million, or 350.0%, to an expense of $0.5 million from income of $0.2
million for the same period in 2000. This decrease was primarily due to a
management fee incurred from a shareholder, which was not charged in 2000.

Income tax provision (benefit). For the nine months ended September 30, 2001,
provision for income taxes increased by $0.3 million or 150.0% due to an income
tax provision of $0.5 million up from a provision for income taxes of $0.2
million for the same period in 2000.

Net loss. For the nine months ended September 30, 2001, net loss decreased by
$6.9 million, or 13.3%, to $45.2 million from $52.1 million for the same period
in 2000 primarily as a result of the $5.4 million decrease in amortization
expenses for intangible assets combined with an increase of $2.0 million in
income before amortization of goodwill and intangible assets, interest expense,
income taxes and other, net also described above. Net loss as a percentage of
net sales decreased to negative 27.9% for the nine months ended September 30,
2001 from negative 33.1% for the same period in 2000.


                                                                              35
<PAGE>

EBITDA. For the nine months ended September 30, 2001, EBITDA increased $2.7
million, or 8.0%, to $36.3 million from $33.6 million for the same period in
2000. This increase is primarily attributable to $7.6 million of greater gross
profit for the nine months ended September 30, 2001 compared to the same period
in 2000, offset by $4.9 million of higher selling, general and administrative
expenses.


                                                                              36
<PAGE>

Results of Operations for the nine months ended September 30, 2001 -- Weekly
Reader Corporation and Subsidiaries

The following table sets forth, for the periods indicated, combined statements
of operations data for Weekly Reader and its subsidiaries expressed in millions
of dollars and as a percentage of net sales.

<TABLE>
<CAPTION>
                                                                                       Nine Months Ended September 30
                                                                           2000                             2001
                                                                      ---------------------------------  ---------------------------
                                                                          Amount   % of Net Sales      Amount      % of Net Sales
                                                                      -----------  ----------------  ------------  ----------------
                                                                                          (Dollars in millions)

<S>                                                                    <C>         <C>               <C>           <C>
Sales, net                                                             $  108.5          100.0%         $  112.0            100.0%
Cost of goods sold                                                         29.6           27.3%             29.5             26.3%
                                                                       --------        -------          --------          -------
Gross profit                                                           $   78.9           72.7%         $   82.5             73.7%
Costs and expenses:
       Sales and marketing                                                 18.2           16.8%             21.2             19.0%
       Distribution, circulation and fulfillment                            8.7            8.0%              9.4              8.4%
       Editorial                                                            7.3            6.7%              7.9              7.1%
       General and administrative                                          15.4           14.2%             14.0             12.5%
       Depreciation                                                         1.4            1.3%              1.5              1.3%
                                                                       --------        -------          --------          -------
                                                                           51.0           47.0%             54.0             48.3%
                                                                       --------        -------          --------          -------
Income before amortization of goodwill and intangible assets,
  interest expense, income taxes and other, net                            27.9           25.7%             28.5             25.4%
Amortization of goodwill and intangible assets                              9.3            8.6%              8.9              7.9%
                                                                       --------        -------          --------          -------
Income from operations                                                     18.6           17.1%             19.6             17.5%
Interest Expense                                                          (25.6)         (23.6%)           (24.9)           (22.2%)
Other, net                                                                  0.1            0.1%              0.1              0.1%
                                                                       --------        -------          --------          -------
Loss before income tax provision                                           (6.9)          (6.4%)            (5.2)            (4.6%)
Income tax provision                                                        0.2            0.2%              0.3              0.3%
                                                                       --------        -------          --------          -------
Net loss                                                               $   (7.1)          (6.6%)        $   (5.5)            (4.9%)
                                                                       ========        =======          ========          =======

       EBITDA(a)                                                       $   29.4           27.1%         $   30.1             26.9%
                                                                       ========        =======          ========          =======
</TABLE>

(a) EBITDA is defined as income (loss) before interest expense, income taxes,
depreciation and amortization. EBITDA data is included because we understand
that this information may be considered by investors as an additional basis on
which to evaluate Weekly Reader Corporation's ability to pay interest, repay
debt and make capital expenditures. Because all companies do not calculate
EBITDA identically, the presentation of EBITDA in this report is not necessarily
comparable to similarly titled measures of other companies. EBITDA does not
represent and should not be considered more meaningful than, or an alternative
to, measures of operating performance determined in accordance with generally
accepted accounting principles.


Nine Months Ended September 30, 2001 Compared to Nine Months Ended September 30,
2000

Sales, net. For the nine months ended September 30, 2001, net sales increased
$3.5 million, or 3.2% to $112.0 million for the nine months ended September 30,
2001 from $108.5 million for the same period in 2000. The increase in sales was
the result of (1) an increase in sales at AGS of $1.7 million, or 4.0%, to $45.3
million for the nine months ended September 30, 2001 from $43.6 million for the
same period in 2000 as a result of increases in sales of our curriculum
products, primarily textbooks; (2) an increase in sales at World Almanac of $1.3
million, or 3.6%, to $38.1 million from $36.8 million for the same period in
2000, as a result of higher licensing revenue and higher sales at Facts On File
News Services and WAE Library Services partially offset by lower sales at Gareth
Stevens. The higher sales at Facts On File are driven by higher sales of
FACTS.com and Issues and Controversies On-Line. The higher sales at WAE Library
Services are driven by higher sales from its telemarketing and web site
channels. The lower sales at Gareth Stevens are driven by lower sales in its
telemarketing and wholesale channels. Excluding Funk & Wagnalls, net sales
increased by $1.6 million, or 4.7% to $35.6 million from $34.0 million in 2000.
World Almanac is no longer soliciting new subscribers for its Yearbooks since
the print edition of the Funk & Wagnalls Encyclopedia was discontinued.
Accordingly, Funk & Wagnalls sales of Yearbooks are naturally declining
year-over-year, as it is entirely dependent upon sales orders from existing
customers via renewals; and (3) an increase in sales at Weekly Reader, not
including World Almanac and American Guidance, of $0.5 million, or 1.6% to $28.6
million from $28.1 million for the same period in 2000. This increase was
primarily attributable to higher elementary periodical revenue, $0.3 million;
higher secondary periodical revenue, $0.7 million; higher licensing revenue,
$0.3 million; combined with higher Lifetime Learning Systems revenue, $0.2
million partially offset by lower Skills books revenue, $1.1 million. The drop
in Skills book revenue is attributable to the year 2001 not representing a
presidential election year, which was the case in the prior year. Skills book
revenue significantly increases in presidential election years.

                                                                              37
<PAGE>

Gross profit. For the nine months ended September 30, 2001, gross profit
increased by $3.6 million, or 4.6%, to $82.5 million from $78.9 million for the
same period in 2000. The increase in gross profit was a result of (1) an
increase in gross profit at American Guidance of $2.3 million, or 7.3%, to $34.0
million for the nine months ended September 30, 2001 from $31.7 million for the
same period in 2000 primarily due a change in sales mix resulting in a higher
gross profit margin combined with the increased sales described above; (2) an
increase in gross profit at Weekly Reader, not including World Almanac and
American Guidance, of $0.3 million, or 1.3%, to $23.0 million for the nine
months ended September 30, 2001 from $22.7 million for the same period in 2000
due to higher sales described above; and (3) an increase in gross profit at
World Almanac of $1.0 million, or 4.0 % to $25.4 million for the nine months
ended September 30, 2001 from $24.4 million for the same period in 2000 due to
higher sales described above.

Costs and expenses. For the nine months ended September 30, 2001, costs and
expenses increased by $3.0 million, or 5.9%, to $54.0 million for the nine
months ended September 30, 2001 from $51.0 million for the same period in 2000,
primarily due to an increase in sales and marketing expenses. At AGS, sales and
marketing expense increased $1.6 million to $9.7 million for the nine months
ended September 30, 2001 from $8.1 million in the prior year primarily due to
costs and expenses incurred related to the launch of its new GRADE product as
well as the launch of its Lindy products subsequent to the acquisition on May 9,
2001. At World Almanac, sales and marketing costs increased $0.6 million or
13.5% primarily WAE Library Services. At Weekly Reader, sales and marketing
costs increased $0.8 million or 13.8% primarily driven by higher direct mail
costs associated with the promotion of it elementary and secondary periodicals
business. Costs and expenses as a percentage of sales increased to 48.3% for the
nine months ended September 30, 2001 from 47.0% for the same period in 2000.

Income before amortization of goodwill and intangible assets, interest expense,
income taxes and other, net. For the nine months ended September 30, 2001,
income before amortization of goodwill and intangible assets, interest expense,
income taxes and other, net increased by $0.6 million, or 2.2%, to $28.5 million
from $27.9 million for the same period in 2000 and, as a percentage of sales,
decreased to 25.4% from 25.7% for the same period in 2000.

                                                                              38
<PAGE>

Amortization of goodwill and intangible assets. For the nine months ended
September 30, 2001, amortization of goodwill and intangible assets decreased by
$0.4 million, or 4.3%, to $8.9 million from $9.3 million for the same period in
2000. This decrease was primarily due to intangible assets with lower
amortization schedules in the later part of their lives, and intangible assets
that have been fully amortized.

Income from operations. For the nine months ended September 30, 2001, income
from operations increased $1.0 million or 5.4% to $19.6 million from $18.6
million for the same period in 2000 and, income from operations as a percentage
of sales increased to 17.5% from 17.1% for the same period in 2000. These
increases were primarily due to the factors described above.

Interest expense. For the nine months ended September 30, 2001, interest expense
decreased by $0.7 million, or 2.7%, to $24.9 million from $25.6 million for the
same period in 2000 and interest expense as a percentage of sales decreased to
22.2% from 23.6% for the same period in 2000. The interest expense for the nine
months ended September 30, 2001 and 2000 primarily relates to debt associated
with the Acquisition and Recapitalization and the acquisition of Lindy on May 9,
2001. Since Weekly Reader is jointly and severally liable for that debt, the
interest expense related to that debt is reflected in the financial statements
of Weekly Reader.

Income tax provision. For the nine months ended September 30, 2001, provision
for income taxes increased by $0.1 million or 50.0% to $0.3 from a provision for
income taxes of $0.2 million for the same period in 2000.

Net loss. For the nine months ended September 30, 2001, net loss decreased by
$1.6 million, or 22.5%, to $5.5 million from $7.1 million for the same period in
2000. Net loss as a percentage of net sales decreased to 4.9% for the nine
months ended September 30, 2001 from 6.6% for the same period in 2000. This
decrease was primarily due to the factors described above.

EBITDA. For the nine months ended September 30, 2001, EBITDA increased $0.7
million, or 2.4%, to $30.1 million from $29.4 million for the same period in
2000. This increase is primarily driven by $3.6 million of higher gross profit
from greater sales partially offset by $2.9 million higher selling, distribution
and editorial expenses increased expenses for the nine months ended September
30, 2001 compared to the same period in 2000.


                                                                              39
<PAGE>


Results of Operations for the nine months ended September 30, 2001 --
CompassLearning, Inc.

The following table sets forth, for the periods indicated, statement of
operations data for CompassLearning, expressed in millions of dollars and as a
percentage of net revenue.
<TABLE>
<CAPTION>

                                                                                    Nine Months Ended September 30
                                                                                 2000(a)                        2001
                                                                   --------------------------------  -----------------------------
                                                                        Amount     % of Net Sales       Amount    % of Net Sales
                                                                   -------------   ----------------  ----------   ----------------
                                                                                             (Dollars in millions)

<S>                                                                <C>             <C>              <C>           <C>
Revenue, net                                                          $  49.1         100.0%         $  48.7            100.0%
Cost of goods sold                                                       19.8          40.3%            15.7             32.2%
                                                                      -------       -------          -------          -------
Gross profit                                                          $  29.3          59.7%         $  33.0             67.8%
Costs and expenses:
      Sales and marketing                                                16.4          33.4%            18.0             37.0%
      Research and development                                            4.3           8.8%             2.9              6.0%
      General and administrative                                          4.9          10.0%             5.1             10.5%
      Depreciation                                                        0.6           1.2%             0.9              1.8%
                                                                      -------       -------          -------          -------
                                                                         26.2          53.4%            26.9             55.3%
                                                                      -------       -------          -------          -------
Income before amortization of goodwill and intangible assets,
interest expense, income taxes and other, net                             3.1           6.3%             6.1             12.5%
Amortization of goodwill and intangible assets                            7.8          15.9%             7.6             15.6%
                                                                      -------       -------          -------          -------
Loss from operations                                                     (4.7)         (9.6%)           (1.5)            (3.1%)
Interest expense                                                        (25.6)        (52.1%)          (24.8)           (50.9%)
Other, net                                                                --            --               --               --
                                                                      -------       -------          -------          -------
Loss before income tax provision                                        (30.3)        (61.7%)          (26.3)           (54.0%)
Income tax provision                                                      --            --               --               --
                                                                      -------       -------          -------          -------
Net loss                                                              $ (30.3)        (61.7%)        $ (26.3)           (54.0%)
                                                                      =======       =======          =======          =======

                                                                      -------       -------          -------          -------
      EBITDA(b)                                                       $   4.2           8.6%         $   7.0             14.4%
                                                                      =======       =======          =======          =======
</TABLE>


(a) Certain reclassifications have been made to the prior year in order to be
consistent with current year presentation.

(b) EBITDA is defined as income (loss) before interest expense, income taxes,
depreciation and amortization. EBITDA for the nine months ended September 30,
2000 excludes $0.4 million of non-recurring expenses related to changing
CompassLearning's name from its predecessor's name. EBITDA data is included
because we understand that this information may be considered by investors as an
additional basis on which to evaluate WRC Media's ability to pay interest, repay
debt and make capital expenditures. Because all companies do not calculate
EBITDA identically, the presentation of EBITDA in this report is not necessarily
comparable to similarly titled measures of other companies. EBITDA does not
represent and should not be considered more meaningful than, or an alternative
to, measures of operating performance determined in accordance with generally
accepted accounting principles.


Nine months Ended September 30, 2001 Compared to Nine months Ended September 30,
2000

Revenue, net. For the nine months ended September 30, 2001, net revenue
decreased $0.4 million, or 0.8%, to $48.7 million from $49.1 million for the
same period in 2000. This decrease was due to (1) a planned decrease in hardware
revenue of $3.6 million, or 64.1%, to $2.1 million for the period ended
September 30, 2001 from $5.7 million in 2000, (2) a decrease in service revenue
from technical support of $0.5 million, or 4.4%, to $11.1 million for the period
ended September 30, 2001 from $11.6 million in 2000 primarily as a result of
decreased hardware maintenance contracts, and (3) a decrease in service revenue
from professional development services of $0.6 million or 6.5% to $7.4 million
for the period ended September 30, 2001 from $8.0 million in 2000, offset by an
increase in software revenue of $4.3 million, or 18.3%, to $28.1 million for the
period ended September 30, 2001 from $23.8 million in 2000 primarily as a result
of higher market coverage with a seasoned sales force, customers accelerating
buying decisions in order to be ready for school year, and reduced market
confusion as a result of many smaller startup companies exiting the marketplace
due to poor sales performance or loss of additional financing.

                                                                              40
<PAGE>

<TABLE>
<CAPTION>

 ($000)                                                                 Variance to 2000
 Net Revenue for the nine months            ---------- -----------  -----------------------
   ended September 30,                         2001       2000           $           %
------------------------------------------  ---------- -----------  -----------  ----------

<S>                                         <C>        <C>          <C>          <C>
 Software                                      28,133      23,773        4,360       18.3%
 Professional Development                       7,429       7,945         (516)      (6.5%)
 Technical Support                             11,127      11,635         (508)      (4.4%)
 Hardware                                       2,058       5,739       (3,681)     (64.1%)

                                            ---------- -----------  -----------  ----------
 Compass - Consolidated                        48,747      49,092         (345)      -0.7%
                                            ---------- -----------  -----------  ----------
 Non-core revenue:
 Hardware (a)                                   2,058       5,739       (3,681)     (64.1%)
                                            ---------- -----------  -----------  ----------
 Compass - Core business                       46,689      43,353        3,336        7.7%
                                            ========== ===========  ===========  ==========
</TABLE>

(a) CompassLearning's hardware business revenues are generally derived from
reselling hardware to customers who request that CompassLearning provide a
package of software and hardware. In prior years, CompassLearning offered
hardware to customers as a wholesaler of private label and other products.
However, because of the less profitable nature of the business compared to
CompassLearning's other businesses and to reduce the need for inventory and the
risk of technological change rendering inventory obsolete, CompassLearning began
discontinuing its wholesale hardware business in the mid 1990's. Currently,
CompassLearning has arrangements with Apple, IBM, Compaq, Gateway, and Dell
computers in order to accommodate requests by customers for complete hardware
and software solutions.

It is our strategy to grow our core business, which is the electronic courseware
and the related professional development services of training our customers in
implementing that electronic courseware most efficiently as well as software
maintenance from technical support services. Revenue from these sources
increased $3.3 million or 7.7% to $46.7 million for the period ended September
30, 2001 compared to $43.4 million in 2000.

Gross profit. For the nine months ended September 30, 2001, gross profit
increased $3.7 million, or 12.6%, to $33.0 million from $29.3 million in 2000
primarily due to higher software revenue. Gross profit as a percent of revenue
increased to 67.8% from 59.7% for the same period in 2000.

Costs and expenses. For the nine months ended September 30, 2001, costs and
expenses increased $0.7 million, or 2.7%, to $26.9 million from $26.2 million in
2000, and costs and expenses as a percentage of revenue increased to 55.3% from
53.4% in 2000. The increase was primarily due to $1.6 million increase in sales
and marketing expense, $0.2 million increase in general and administrative
expenses, and $0.3 million increase in depreciation expense, offset by $1.4
million decrease in research and development expense.

Sales and marketing expense increased $1.6 million, or 9.8% to $18.0 million
from $16.4 million and as a percentage of revenue increased to 37.0% from 33.4%
in 2000. Changes included $1.2 million increase in compensation and commissions,
$0.2 million increase in outside services and training, and $0.2 million
increase in other operating expenses.

                                                                              41
<PAGE>

Research and development expense decreased $1.4 million, or 32.6%, to $2.9
million from $4.3 million and as a percentage of revenue decreased to 6.0% in
2001 from 8.8% in 2000. The decrease was primarily due to a decrease in expenses
resulting from a change in the company strategy to exit LAN/WAN software
development to pursue new worldwide web strategies.

General and administrative expense increased $0.2 million, or 4.1%, to $5.1
million from $4.9 million, and as a percentage of revenue increased to 10.5% in
2001 from 10.0% in 2000. Changes included a $0.5 million increase in
compensation and recruiting, offset by a $0.2 million decrease in outside
services and training, and $0.1 million decrease in other operating expenses.

Income before amortization of goodwill and intangible assets, interest expense,
income taxes and other, net. For the nine months ended September 30, 2001,
income before amortization of goodwill and intangible assets, interest expense,
income taxes and other, net increased $3.0 million, or 96.8%, to $6.1 million
from $3.1 million in 2000 and, as a percentage of net revenue, increased to
12.5% from 6.3% in 2000, primarily due to the factors described above.

Amortization of goodwill and intangible assets. For the nine months ended
September 30, 2001, amortization of goodwill and intangible assets decreased
$0.2 million, or 2.6%, to $7.6 million from $7.8 million for the same period in
2000.

Loss from operations. For the nine months ended September 30, 2001, loss from
operations decreased $3.2 million, or 68.1%, to $1.5 million from $4.7 million
for the same period in 2000, and loss from operations as a percentage of net
revenue decreased to a negative 3.1% from a negative 9.6% for the same period in
2000. These decreases were primarily due to the factors described above.

Interest expense. For the nine months ended September 30, 2001, interest expense
decreased $0.8 million, or 3.1%, to $24.8 million from $25.6 million in 2000.
CompassLearning is jointly and severally liable for debt associated with the
Acquisition and Recapitalization and the Lindy acquisition on May 9, 2001;
therefore, the interest expense related to that debt is reflected in the
financial statements of CompassLearning.

Net loss. For the nine months ended September 30, 2001, net loss decreased $4.0
million, or 13.2%, to $26.3 million from $30.3 million in 2000, and net loss as
a percentage of net revenue decreased to a negative 54.0% from a negative 61.7%
in 2000, primarily due to the factors described above.

EBITDA. For the nine months ended September 30, 2001, EBITDA increased $2.8
million, or 66.7%, to $7.0 million from $4.2 million for the same period in
2000. This increase is primarily attributable to $3.7 million of greater gross
profit for the first nine months of 2001 compared to the same period in 2000,
combined with $1.4 million of lower research and development expenses, partially
offset by $1.6 million in higher sales and marketing expenses. CompassLearning
gross profit increased $3.7 million, or 12.6%, for the first nine months of 2001
compared to the same period in 2000, primarily due to the replacement of $0.3
million of hardware and service gross margin with $4.0 million of higher
software gross margin attributable to higher software sales. CompassLearning's
gross profit margin improved to 67.8% for the first nine months - from 59.7% for
the same period in 2000.

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<PAGE>

Liquidity and Capital Resources

WRC Media's sources of cash are its operating subsidiaries, Weekly Reader
Corporation and CompassLearning, Inc. and a $30.0 million revolving credit
facility. As of September 30, 2001, $7.0 million of the revolving credit
facility has been drawn. Additionally, a stand-by letter of credit in the amount
of $2.0 million is outstanding in connection with a real estate lease. While
this letter of credit is in effect, it reduces available borrowing under the
revolving credit facility by $2.0 million. These sources of cash are considered
adequate for the Company's needs for the foreseeable future.

For the January through June time period, WRC Media and its subsidiaries usually
experience negative cash flow due to the seasonality of its business. As a
result of this business cycle, borrowings usually increase during the period
January through June, and borrowings generally will be at its lowest point in
October. WRC Media's cash and cash equivalents was $9.3 million at September 30,
2001. Included in cash is approximately $4.4 million of restricted monies which
represent the remaining proceeds from the issuance of $13.7 million 18% Junior
Cumulative Convertible Preferred Stock on May 9, 2001 used to purchase and fund
ChildU and its minority investment in ThinkBox. The $4.4 million in funds cannot
be commingled with WRC Media's cash from operations or borrowings under its
revolving credit facility. Similarly, the Company cannot use cash from
operations or borrowings under its revolving credit facility to fund ChildU's
operation or WRC Media's investment in ThinkBox.

WRC Media and its subsidiaries' principal uses of cash are for debt service,
capital expenditures, working capital and acquisitions. For the nine months
ended September 30, 2001, WRC Media and its subsidiaries' operations used $3.9
million in cash in operating activities.

For the nine months ended September 30, 2001, WRC Media and its subsidiaries'
investing activities included: the acquisition of ChildU for $11.3 million, the
acquisition of Lindy for $7.0 million, capital expenditures of $2.9 million and
investment in ThinkBox of $2.7 million. Weekly Reader's capital expenditures,
which consisted primarily of expenditures for property and equipment, were $2.8
million for the nine months ended for September 30, 2001. CompassLearning's
capital expenditures, which consisted primarily of purchases of computer
equipment, were $0.1 million for the nine months ended September 30, 2001.

WRC Media and its subsidiaries' financing activities consist of making drawings
from, and repayments to, our revolving credit facility and retiring amounts due
under our senior secured term loans. For the nine months ended September 30,
2001, financing activities provided cash of $34.1 million, which resulted from
proceeds from the issuance of preferred stock of $13.7 million, proceeds from
issuance of common stock of $6.5 million, proceeds from term loans of $10.0
million and borrowings of $7.0 million under the revolving credit facility and a
repayment of $3.1 million of the senior secured term loans. The proceeds from
the issuance of the preferred stock and common stock were used to acquire ChildU
and allow WRC Media to make its strategic investment in ThinkBox. The $10.0
million in proceeds from term loans was used to acquire Lindy for $7.0 million
an the $3.0 million excess funds from the proceeds from term loans were used for
general corporate purposes, primarily repayment of revolving credit advances.

                                                                              43
<PAGE>

Working Capital

As of September 30, 2001, WRC Media and its subsidiaries had a working capital
deficit of $19.3 million. Weekly Reader subscriptions are recorded as deferred
revenue when received and recognized as income over the term of the
subscription. Excluding Weekly Reader deferred revenue of $25.8 million as of
September 30, 2001 related to 2001-2002 school year subscriptions results in
positive working capital of $6.5 million. There are no unusual registrant or
industry practices or requirements relating to working capital items.

Seasonality

Operating results have varied and are expected to continue to vary from quarter
to quarter as a result of seasonal patterns. Weekly Reader and CompassLearning's
sales are significantly affected by the school year. Weekly Reader's sales in
the third, and to a lesser extent the fourth, quarter are generally the
strongest as products are shipped for delivery during the school year.
CompassLearning's sales are generally strongest in the second quarter, and to a
lesser extent the fourth quarter. CompassLearning's sales are strong in the
second quarter generally because schools frequently combine funds from two
budget years, which typically end on June 30 of each year, to make significant
purchases, such as purchases of CompassLearning's electronic courseware, and
because by purchasing in the second quarter, schools are able to have the
software products purchased installed over the summer and ready to train
teachers when they return from summer vacation. CompassLearning's fourth quarter
sales are strong as a result of sales patterns driven in part by its
commissioned sales force seeking to meet year-end sales goals as well as by
schools purchasing software to be installed in time for teachers to be trained
prior to the end of the school year in June.

Events of September 11, 2001

Operating results were impacted in the days and weeks immediately after the
tragic events of September 11, 2001. The events of September 11th resulted in
canceled school board meetings, additional pressure on library spending and
re-directed advertising spending from our corporate sponsored periodicals to WTC
relief efforts. We hope this phenomenon is short-term and that most of the
business affected was not necessarily lost but deferred. The canceled school
board meetings in late September resulted in lower CompassLearning(TM) software
sales than originally expected in the third quarter of 2001. However, our
CompassLearning(TM) pipeline remains strong, up significantly over 2000, and we
have made significant investments in revenue opportunities at all of our units
which should continue to positively impact operating results in the months
ahead. At WRC's other operating units, sales presentations and conferences were
canceled (AGS Violence Conference with 40 top school districts was canceled),
September mail delayed for at least one week due to airlines not flying
resulting in schools especially in the Northeast not accepting packages
affecting WRC's telemarketing and catalog businesses and continued telephone
outages in New York have disrupted our World Almanac telemarketing operations.

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<PAGE>

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

WRC is exposed to market risk. Market risk, with respect to the business, is the
potential loss arising from adverse changes in interest rates. Exposure to this
market risk is managed through regular operating and financing activities and,
when deemed appropriate, through the use of derivatives. Derivatives are used as
risk management tools and not for trading purposes.

WRC is subject to market risk exposure related to changes in interest rates on
the $141.3 million (as of September 30, 2001) senior secured term loans under
the senior credit facilities. Interest on borrowings under the senior credit
facilities will bear interest at a rate per annum equal to:

        (1)   For the revolving credit facility maturing in six years and the
              $36.3 million senior secured term loan A facility maturing in six
              years, the LIBO rate as defined in the credit agreement plus 3.50%
              or the alternate base rate as defined in the credit agreement plus
              2.50% subject to performance-based step downs; and
        (2)   For the $98.0 million senior secured term loan B facility maturing
              in seven years, the LIBO rate plus 4.25% or the alternate base
              rate plus 3.25%.

The senior credit facilities require WRC to obtain interest rate protection for
at least 50% of the senior secured term loans for the duration of the senior
credit facilities. On May 3, 2000, WRC entered into an arrangement with a
notional value of $65.0 million, which terminates on November 17, 2001 and
requires payment of a floating rate of interest based on the three-month LIBO
rate as defined in that arrangement with a cap rate of 8.0%.


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PART II

ITEM 6.       EXHIBITS AND REPORTS ON FORM 8-K

On April 2, 2001, registrant reported, on Form 8-K, the results for the fiscal
year ended December 31, 2000.

On April 9, 2001, registrant reported, on Form 8-K, a statement issued by the
President of registrant.

On April 26, 2001, registrant reported, on Form 8-K, the results for the fiscal
quarter ended March 30, 2001.

On July 30, 2001, registrant reported, on Form 8-K, the results for the fiscal
quarter ended June 30, 2001.




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<PAGE>


                                   SIGNATURES

In accordance with 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.


/s/ Martin E. Kenney, Jr.
------------------------------------------------------
Martin E. Kenney, Jr.
Director: WRC Media, Weekly Reader and CompassLearning;
Chief Executive Officer: WRC Media and CompassLearning;
President: CompassLearning; and
Executive Vice President, Weekly Reader


/s/ Robert S. Lynch
------------------------------------------------------
Robert S. Lynch
Director: WRC Media, Weekly Reader and CompassLearning;
Executive Vice President, Chief Operating Officer:
WRC Media and CompassLearning; and
Treasurer: WRC Media, Weekly Reader and CompassLearning


/s/ Richard Nota
------------------------------------------------------
Richard Nota
Vice President, Finance: WRC Media


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