<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

For the quarterly period ended June 30, 2003 Commission File No. 333-96119

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

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

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

    13-4066536                                  13-3603780
    (I.R.S. Employer Identification            (I.R.S. Employer Identification
    Number)                                     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)
                             7372
                             13-4066535
                             (I.R.S. Employer Identification Number)

WRC MEDIA INC.               WEEKLY READER CORPORATION     COMPASSLEARNING, INC.
512 7th AVENUE,              512 7th AVENUE,               512 7th AVENUE,
22nd FLOOR                   22nd FLOOR                    22nd FLOOR
NEW YORK, NY 10018           NEW YORK, NY 10018            NEW YORK, NY 10018
(212) 768-1150               (212) 768-1150                (212) 768-1150


          (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 by check mark whether the registrant is an accelerated filer (as
defined in rule 12b-2) of the Exchange Act.
        |_| Yes                         |X| No

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

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


<PAGE>


PART 1.
ITEM 1. FINANCIAL STATEMENTS















                                                                               3
<PAGE>


                         WRC MEDIA INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                    (dollars in thousands, except share data)


                                                      December 31,   June 30,
                                                         2002          2003
                                                      -----------   -----------
                                                                    (unaudited)
ASSETS
Current Assets:
   Cash and cash equivalents                         $     9,095    $   12,481
   Accounts receivable, net                               38,373        38,169
   Inventories, net                                       15,287        14,653
   Prepaid expenses                                        3,200         3,712
   Other current assets                                    1,797         1,460
                                                     -----------    ----------
       Total current assets                               67,752        70,475

Property and equipment, net                                6,299         5,698
Purchased software, net                                    4,970         5,515
Goodwill                                                 163,349       163,271
Deferred financing costs, net                              6,165         5,698
Other intangible assets, net                             100,499        94,155
Other assets and investments                              25,218        31,083
                                                     -----------    ----------
   Total Assets                                      $   374,252    $  375,895
                                                     ===========    ==========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
   Accounts payable                                  $    20,869    $   13,249
   Accrued payroll, commissions and benefits               8,693         9,226
   Current portion of deferred revenue                    39,840        38,812
   Other accrued                                          23,285        21,027
   liabilities
   Current portion of long-term debt                       7,721         8,477
                                                     -----------    ----------
       Total current liabilities                         100,408        90,791

Deferred revenue, net of current portion                   1,167         1,033
Deferred tax liability                                    10,700        11,700
Due to related party                                       2,160         2,160
Long-term debt                                           266,219       285,736
                                                     -----------    ----------
   Total liabilities                                     380,654       391,420
                                                     -----------    ----------
Commitments and contingencies
15% Series B preferred stock subject to redemption,
including accrued dividends and accretion of
warrant value
(Liquidation preference of $75,000 plus accrued
dividends)                                               109,966       119,518
                                                     -----------    ----------
Warrants on preferred stock                               11,751        11,751
                                                     -----------    ----------
Common stock subject to redemption                           965           940
                                                     -----------    ----------
Stockholders' deficit:
  Common stock, ($.01 par value, 20,000,000 shares
  authorized; and 7,009,750 shares outstanding)               70            70
  Preferred stock, ($.01 par value, 750,000 shares
  authorized, 501,800 outstanding)                        18,381        20,072
  Additional paid-in capital                             132,464       132,464
  Accumulated comprehensive loss                          (3,357)       (3,357)
  Accumulated deficit                                   (276,642)     (296,983)
                                                     -----------    ----------
   Total stockholders' deficit                          (129,084)     (147,734)
                                                     -----------    ----------
   Total liabilities and stockholders' deficit       $   374,252    $  375,895
                                                     ===========    ==========

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





                                                                               4
<PAGE>


                         WRC MEDIA INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                       FOR THE THREE MONTHS ENDED JUNE 30,
                                   (Unaudited)
                             (Dollars in thousands)

                                                       2002           2003
                                                    ---------      ---------
Revenue, net                                        $  43,810      $ 43,493

Cost of goods sold                                     12,652        12,542
                                                    ---------      --------

Gross profit                                           31,158        30,951
                                                    ---------      --------

Costs and expenses:
   Sales and marketing                                 11,593        10,051
   Research and development                               560           213
   Distribution, circulation and fulfillment            2,826         2,905
   Editorial                                            2,063         2,565
   General and administrative                           4,831         5,614
   Restructuring costs                                      -         1,001
   Depreciation                                           809           591
   Amortization of intangible assets                    4,827         4,691
                                                    ---------      --------

   Total operating costs and expenses                  27,509        27,631
                                                    ---------      --------

Income from operations                                  3,649         3,320

Interest expense, including amortization
of deferred financing costs                            (7,473)       (7,188)
Loss on investment                                       (884)            -
Other expense, net                                        (57)         (388)
                                                    ---------      --------

Loss before income tax provision                       (4,765)       (4,256)

Income tax provision                                      544           454
                                                    ---------      --------

Net loss                                            $  (5,309)     $ (4,710)
                                                    =========      ========


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



                                                                               5
<PAGE>


                         WRC MEDIA INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                        FOR THE SIX MONTHS ENDED JUNE 30,
                                   (Unaudited)
                             (Dollars in thousands)

                                                            2002        2003
                                                         ---------    --------
Revenue, net                                             $  90,597    $ 90,470

Cost of goods sold                                          26,026      25,276
                                                         ---------    --------

Gross profit                                                64,571      65,194
                                                         ---------    --------

Costs and expenses:
   Sales and marketing                                      24,942      21,532
   Research and development                                    956         924
   Distribution, circulation and fulfillment                 5,997       6,415
   Editorial                                                 4,870       5,144
   General and administrative                               10,494      12,334
   Restructuring costs and other non-recurring expenses          -       1,481
   Depreciation                                              1,591       1,207
   Amortization of intangible assets                         9,654       9,324
                                                         ---------    --------

   Total operating costs and expenses                       58,504      58,361
                                                         ---------    --------

Income from operations                                       6,067       6,833

Interest expense, including amortization
  of deferred financing costs                              (14,804)    (14,270)
Loss on investment                                          (1,137)          -
Other expense, net                                            (282)       (619)
                                                         ---------    --------

Loss before income tax provision                           (10,156)     (8,056)

Income tax provision                                         9,883       1,042
                                                         ---------    --------

Loss before cumulative effect of change
   in accounting principle                                 (20,039)     (9,098)

Cumulative effect of change in accounting principle        (72,022)          -
                                                         ---------    --------

Net loss                                                 $ (92,061)   $ (9,098)
                                                         =========    ========


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


                                                                               6
<PAGE>
                         WRC MEDIA INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                        FOR THE SIX MONTHS ENDED JUNE 30,
                                   (Unaudited)
                             (dollars in thousands)

                                                      2002            2003
                                                    ---------      ---------
Cash flows from operating activities:

Net loss                                            $ (92,061)     $  (9,098)

Adjustments to reconcile net loss to net cash
used in operating activities:
       Cumulative effect of change in accounting
         principle                                     72,022              -
       Deferred income tax provision                    9,700          1,000
       Depreciation and amortization                   11,245         11,123
       Loss on investments                              1,137              -
       Gain from hedging transactions                    (207)             -
       Gain (loss) on disposition of property and
         equipment                                         43             (1)
       Interest expense-accretion of debt discount        191            218
       Amortization of deferred financing costs           563            627
Changes in operating assets and liabilities:
       (Increase) decrease in accounts receivable        (696)           204
       Decrease in inventories                          1,000            634
       Decrease (increase) in prepaid expenses and      2,088           (175)
       other current assets
       Increase in other noncurrent assets             (4,926)        (8,153)
       Decrease in accounts payable                    (2,437)        (7,620)
       Increase (decrease) in deferred revenue          3,409           (927)
       Decrease in accrued liabilities                (14,515)        (1,644)
                                                    ---------      ---------

Net cash used in operating activities                 (13,444)       (13,812)
                                                    ---------      ---------

Cash flows from investing activities:
Purchase of property and equipment                       (752)          (610)
Software development costs                             (2,263)        (2,066)
Proceeds from disposition of property & equipment         578              4
                                                    ---------      ---------

Net cash used in investing activities                  (2,437)        (2,672)
                                                    ---------      ---------

Cash flows from financing activities:

Proceeds from revolving line of credit                 23,000         27,000
Repayments of revolving line of credit                 (8,000)        (3,000)
Retirement of senior bank debt                         (2,891)        (3,945)
Increase in deferred financing fees                         -           (160)
Proceeds from issuance of common stock                    150              -
Purchase of common stock subject to redemption           (463)           (25)
                                                    ---------      ---------

Net cash provided by financing activities              11,796         19,870
                                                    ---------      ---------

(Decrease) increase in cash and cash equivalents       (4,085)         3,386

Cash and cash equivalents, beginning of period          8,919          9,095
                                                    ---------      ---------

Cash and cash equivalents, end of period            $   4,834      $  12,481
                                                    =========      =========

Supplemental disclosure of cash flow information:
Cash paid during the period for interest            $  13,982      $  13,558
                                                    =========      =========
Cash paid during the period for income taxes        $     199            169
                                                    =========      =========
Preferred stock dividends accrued                   $   9,256      $  10,772
                                                    =========      =========
Accretion of preferred stock                        $     464            471
                                                    =========      =========

The accompanying notes are an integral part of these condensed consolidated
financial statements.
                                                                               7
<PAGE>

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

ORGANIZATION AND DESCRIPTION OF BUSINESS

The accompanying condensed consolidated financial statements include the
accounts of WRC Media Inc. ("WRC Media") and its subsidiaries - Weekly Reader
Corporation ("Weekly Reader"), CompassLearning, Inc. ("CompassLearning") and
ChildU, Inc. ("ChildU"). WRC Media was incorporated on May 14, 1999. The term
"Company" refers to WRC Media and its subsidiaries. All material intercompany
accounts and transactions have been eliminated in consolidation.

The Company is in the business of developing, publishing and marketing print and
electronic supplemental education materials. Certain of the Company's products
have been sold in the education marketplace for as long as 100 years. The
Company's customers are primarily concentrated within the United States.

On July 14, 1999, WRC Media acquired CompassLearning in a business combination
accounted for as a purchase.

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

On May 9, 2001, WRC Media entered into an Agreement and Plan of Merger with
ChildU. The Company issued $13.75 million of 18% Junior Participating Cumulative
Convertible Preferred Stock, the proceeds funded the operating losses of ChildU
and WRC Media's investment in ThinkBox(TM).

Concurrent with the ChildU acquisition, on May 9, 2001, a subsidiary of the
Company acquired the assets of Lindy Enterprises, Inc. ("Lindy").

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. This investment is accounted for under the equity method of accounting.
The investment of ThinkBox was fully reserved as of December 31, 2002.

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.

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, 2002. The operating results for the six month period ended
June 30, 2002 and 2003 are not necessarily indicative of the results that may be
expected for a full year. Certain reclassifications have been made to the prior
year's consolidated financial statements to conform with current year's
presentation.

Recent Accounting Pronouncements

In November 2002, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others" ("FIN 45").
FIN 45 elaborates on the disclosures to be made by a guarantor in its interim
and annual financial statements about its obligations under certain guarantees
that it has issued. FIN 45 requires a guarantor to recognize, at the inception
of a guarantee, a liability for the fair value of the obligations undertaken in
issuing the guarantee. The disclosure provisions of FIN 45 are effective for
financial statements of periods ending after December 15, 2002. The Company has
adopted the disclosure provisions. Additionally, the recognition of a
guarantor's obligation should be applied on a perspective basis to guarantees
issued after December 31, 2002. The recognition provisions of FIN 45 did not
have any effect on the Company's consolidated financial statements.

In January 2003, the FASB issued FASB Interpretation No. 46, "Consolidation of
Variables Interest Entities ("FIN 46"). FIN 46 clarifies the application of
Accounting Research Bulletin No. 51, "Consolidated Financial Statements" to
certain entities in which equity investors do not have the characteristics of a
controlling financial interest or do not have sufficient equity at risk for the
entity to finance its activities without additional subordinated financial
support from other parties. The Company is required to adopt the provisions of
FIN 46 for variable interest entities created after January 31, 2003. The
adoption of FIN 46 did not have any impact on the Company's consolidated
financial statements.


                                                                               8
<PAGE>

In August 2001, the FASB issued Statement of Financial Accounting
Standards("SFAS") No. 143 "Accounting for Asset Retirement Obligations"("SFAS
143") which requires entities to record the fair value of a liability for an
asset retirement obligation in the period in which it is incurred. When the
liability is initially recorded, the entity capitalizes a cost by increasing the
carrying amount of the related long-lived asset. Over time, the liability is
accreted to its present value each period, and the capitalized cost is
depreciated over the useful life of the related asset. Upon settlement of the
liability, an entity either settles the obligation for its recorded amount or
incurs a gain or loss upon settlement. The standard is effective for the Company
beginning January 1, 2003. The adoption of SFAS 143 did not have any impact on
the Company's consolidated financial statements.

In August 2001, the FASB issued SFAS No. 144 "Accounting for Impairment or
Disposal of Long-Lived Assets" ("SFAS 144") which superseded SFAS No. 121
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of" ("SFAS 121"). SFAS 144 also superseded the accounting and
reporting provisions of Accounting Principles Board Opinion ("APB") No. 30,
"Reporting the Results of Operations - Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions"("ABP 30"), relating to the disposal of a segment of a
business. SFAS 121 did not address the accounting for a segment of a business
accounted for as a discontinued operation under APB 30 and, therefore, two
accounting models existed for long-lived assets to be disposed of. SFAS 144
established one accounting model for long-lived assets to be held and used,
long-lived assets (including those accounted for as a discontinued operation) to
be disposed of by sale and long-lived assets to be disposed of other than by
sale. The Company adopted SFAS 144 on January 1, 2002, and the adoption did not
have a material effect on the Company's consolidated financial statements.

In July 2001, the FASB issued SFAS No.142, "Goodwill and Other Intangible
Assets" ("SFAS 142"). SFAS 142 specifies the financial accounting and reporting
for acquired goodwill and other intangible assets. Goodwill and intangible
assets that have indefinite useful lives will not be amortized but rather be
tested at least annually for impairment. SFAS 142 requires that the useful lives
of intangible assets acquired on or before June 30, 2001 be reassessed and the
remaining amortization periods adjusted accordingly. Previously recognized
intangible assets deemed to have indefinite lives should be tested for
impairment as well. Goodwill recognized on or before June 30, 2001 has been
assigned to various reporting units and has been tested for impairment during
the six months ending June 30, 2002, the period in which SFAS 142 is initially
applied in its entirety. On January 1, 2002, the Company adopted SFAS 142 for
its goodwill and identifiable intangible assets. Upon adoption, the Company
ceased the amortization of goodwill and other indefinite lived intangible
assets, which consist of trademarks. As required by this statement, the Company
reviewed its indefinite lived intangibles (trademarks) for impairment as of
January 1, 2002.

The Company completed the transitional impairment tests on its goodwill and
indefinite lived intangibles during the second quarter ended June 30, 2002. The
Company has five reporting units with goodwill. Goodwill was tested for
impairment at the reporting unit level. The Company's measurement of fair value
was based on an evaluation of future discounted cash flows. As a result, the
Company recorded a transitional goodwill and indefinite lived intangible asset
impairment charge of $72,022 at American Guidance Service, Inc., a subsidiary of
Weekly Reader Corporation. This charge is reported as a cumulative effect of
accounting change, as of January 1, 2002, in the Consolidated Statements of
Operations. The Company is required to perform impairment tests on an annual
basis, or between yearly tests under certain circumstances for goodwill and
indefinite lived intangibles. The Company performed the required impairment
tests during the fourth quarter of 2002. No further impairment of goodwill and
indefinite lived intangibles was noted. There can be no assurance that future
impairment tests will not result in a charge to earnings.


                                                                               9
<PAGE>

The Company also recorded non-cash deferred income tax expense of $8,700 on
January 1, 2002, related to the adoption of SFAS 142 and, $1,000 of non-cash
deferred income tax expense during the six months ended June 30, 2002 and 2003,
respectively. The non-cash charge of $8,700 on January 1, 2002 was recorded to
increase the valuation allowance related to the deferred tax asset associated
with the Company's net operating losses. Historically, the Company did not need
a valuation allowance for the portion of their net operating loss equal to the
excess of tax over book amortization on tax-deductible goodwill and trademarks
since the liability was expected to reverse during the carryforward period of
the net operating losses. As a result of the adoption of SFAS 142, the timing of
the reversal of this liability is indefinite and can no longer be offset by the
Company's net operating loss carryforwards. While book amortization of
tax-deductible goodwill and trademarks ceased on January 1, 2002, the Company
continues to amortize these assets for tax purposes. As a result, the Company
will have deferred tax liabilities that will arise each quarter as the taxable
temporary differences related to the amortization of these assets will not
reverse prior to the expiration period of the Company's deductible temporary
differences unless the related assets are sold or an impairment of the assets is
recorded. Accordingly, the Company also recorded non-cash deferred income tax
expense of $1,000 for the six months ended June 30, 2002 and 2003. The Company
expects that it will record an additional $1,000 of deferred tax provisions
during the remaining six months of 2003.

FASB Statement of Financial Standards No. 149 "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities" ("SFAS 149") was issued in April
2003. SFAS 149 contains amendments relating to FASB Concepts Statement No. 7,
"Using Cash Flow Information and Present Value in Accounting Measurements", and
FASB Statements No. 65, "Accounting for Certain Mortgage Banking Activities",
No. 91, "Accounting for Nonrefundable Fees and Costs Associated with Originating
or Acquiring Loans and Initial Direct Costs of Leases", No. 95, "Statement of
Cash Flows", and No. 126, "Exemption from Certain Required Disclosures about
Financial Instruments for Certain Nonpublic Entities". The Company will adopt
SFAS 149 in July 2003 and the adoption is not expected to have any effect on the
Company's consolidated financial statements.

Pursuant to the terms of the Amended and Restated Credit Agreement, the Company
is required to enter into and maintain interest rate protection agreements
(interest rate swaps, caps, collars or similar agreements) in a notional amount
equal to at least 50% of the aggregate principal amount of the senior secured
term loans. On November 15, 2002, the Company entered into a one year interest
rate cap agreement with a notional of $64.8 million, which caps the LIBOR based
rate, as defined, on those loans at 2.5%. The interest rate protection agreement
did not qualify for hedge accounting treatment and as such the Company marks to
market the contract at the end of each period. The fair value of the interest
rate cap at June 30, 2003 is de-minimus.

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity" ("SFAS 150").
SFAS 150 establishes standards for classification and measurement of mandatorily
redeemable financial instruments, obligations to repurchase the issuer's equity
shares by transferring assets, and certain obligations to issue a variable
number of shares. SFAS 150 is effective on July 1, 2003 for financial
instruments created or modified after May 31, 2003. The Company does not expect
the adoption of SFAS 150 to have a material effect on its consolidated financial
statements.

Restructuring costs and other non-recurring expenses

In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities" ("SFAS 146"). SFAS 146 addresses financial
accounting and reporting for costs associated with exit or disposal activities
and supercedes Emerging Issues Task Force Issue No. 94-3, "Liability Recognition
for Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring)". SFAS 146 requires that a
liability for a cost associated with an exit or disposal activity be recognized
when the liability is incurred rather than the date an entity commits to an exit
plan. SFAS 146 also establishes that fair value is the objective for initial
measurement of the liability. The provisions of SFAS 146 are effective for exit
or disposal activities that are initiated after December 31, 2002 with earlier
adoption encouraged. The Company adopted SFAS 146 in December 2002.

During the six months ended June 30, 2003, the Company reviewed the
restructuring reserve established in 2002 and adjusted the reserve for
additional severance in the amount of $0.3 million related to an executive
severed in 2002 and $1.0 million due to updating the assumptions used in
determining the fair value of the remaining lease obligations associated with
the facilities vacated during 2002. The $1.0 million restructuring costs
adjustment related to the vacated facilities includes $0.4 million of interest
accretion expense.


                                                                              10
<PAGE>

An additional charge of $0.2 million was recorded in the six months ended June
30, 2003 and is included in the consolidated statement of operation's
restructuring costs and other non-recurring expenses line relating to failed
acquisition due diligence costs that did not result in or is not expected to
result in a completed transaction.

Of the remaining restructuring costs and other non-recurring expense reserve
totaling approximately $6.3 million, approximately $2.3 million was spent in the
first six months of 2003. The remaining $5.3 million is expected to be spent as
follows: remaining six months of 2003 - $1.7 million and 2004 and beyond - $3.6
million and is included in other accrued liabilities on the condensed
consolidated balance sheet.

Components of the company's restructuring plan initiated in the fourth quarter
of 2002 are shown in the following table.

<TABLE>
<CAPTION>
                                 Balance at       Additional                       Balance at
(000's)                       December 31, 2002     Charges        Amount Paid    June 30, 2003
                              -----------------     -------        -----------    -------------
<S>                                <C>              <C>             <C>             <C>
Severance and other benefits       $ 1,337          $   309         $(1,189)        $    457
Lease terminations                   4,915              980          (1,079)           4,816
                                   -------          -------         -------          -------
Total                              $ 6,252          $ 1,289         $(2,268)         $ 5,273
                                   =======          =======         =======          =======
</TABLE>

Stock-Based Compensation


SFAS No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123") requires
that an entity account for employee stock-based compensation under a fair value
based method. However, SFAS 123 also allows an entity to continue to measure
compensation cost for employee stock-based compensation arrangements using the
intrinsic value based method of accounting prescribed by Accounting Principles
Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees." The
Company continues to account for employee stock-based compensation using the
intrinsic value based method and is required to make pro forma disclosures of
net income (loss) and related per share amounts as if the fair value based
method of accounting under SFAS 123 had been applied.

In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation-Transition and Disclosure" ("SFAS 148"). SFAS 148 amends SFAS 123
to provide alternative methods of transition for a voluntary change to the fair
value based method of accounting for stock-based employee compensation. In
addition, SFAS 148 amends the disclosure requirements of SFAS 123 to require
prominent disclosures in both annual and interim financial statements about the
method of accounting for stock based employee compensation and the effect of the
method used on reported results. The provisions of SFAS 148 are effective for
financial statements for fiscal years and interim periods ending after December
15, 2002. SFAS 148 did not require the Company to change to the fair value based
method of accounting for stock-based compensation. The Company adopted the
disclosure provisions of SFAS 148 in 2002.

At June 30, 2002 and 2003, the Company had one stock-based employee compensation
plan. The Company accounts for the plan under the recognition and measurement
principles of APB Opinion No. 25, Accounting for Stock Issued to Employees, and
related Interpretations. No stock-based employee compensation costs is reflected
in net loss, as all options granted under those plans had an exercise price
equal to the market value of the underlying common stock on the date of grant.

The following table details the effect on net loss had compensation expense for
the Stock Option Plan been recorded based on the fair value method under SFAS
123, as amended.


                                                                              11
<PAGE>

                                                    Six months ended June 30,
                                                 ------------------------------
                                                      2002              2003
                                                 ------------      ------------
Net loss, as reported                            $    (92,061)     $     (9,098)
Deduct:  Total stock-based employee
compensation expense determined under fair
value based method for all awards, net of
related tax effects                                      (199)             (199)
                                                 ------------      ------------
Pro forma net loss                               $    (92,260)     $     (9,297)
                                                 ============      ============


Since options vest over several years and additional option grants are expected
to be made in future years, the pro forma impact on the results of operations
for the six months ended June 30, 2002 and 2003, respectively, is not
necessarily representative of the pro forma effects on the results of operations
for future periods.

Debt

As of June 30, 2003, there were $24.0 million in outstanding advances under the
Company's $30.0 million revolving credit facility, which bear interest at
approximately 4.7% at June 30, 2003. In addition, there is an annually renewable
stand-by letter of credit in the amount of $2.0 million in connection with a
real estate lease entered into by the Company. While this letter of credit is in
effect, the Company's available borrowing under the revolving credit facility is
reduced by $2.0 million.

Inventories

Inventories are comprised of the following:

                                                   December        June 30,
                                                   31, 2002          2003
                                                   --------        --------
Finished goods                                     $ 18,178        $ 17,259
Raw materials                                           181             462
Less - allowance for obsolescence                    (3,072)         (3,068)
                                                   --------        --------
                                                   $ 15,287        $ 14,653
                                                   ========        ========

Goodwill and  intangibles

Changes in Goodwill are as follows:

                                December 31,          Other         June 30,
                                   2002             Adjustment        2003
--------------                  -------------       ----------      ---------
Goodwill                        $    163,349        $     (78)      $ 163,271
                                =============       ==========      =========


In the above table, other adjustment represent $78 of acquisition reserves that
were reversed against goodwill. These were related to differences in actual
costs incurred from initial estimates in implementing staffing integrations that
arose as a result of WRC Media's ChildU acquisition. As a result of this
adjustment, reserves related to the acquisition were reversed and recorded as a
reduction in goodwill.


                                                                              12
<PAGE>

The gross carrying amount and accumulated amortization of the Company's
intangible assets other than goodwill and indefinite lived intangible assets are
as follows:

<TABLE>
<CAPTION>
                                               December 31, 2002                    June 30, 2003
                                      ----------------------------------   --------------------------------
                                                  Accumulated                       Accumulated
                       Useful Lives    Gross      Amortization      Net     Gross    Amortization      Net
                       ------------   --------    ------------  --------   --------  ------------   --------
<S>                      <C>         <C>          <C>            <C>       <C>       <C>             <C>
Customer Lists           7-9 yrs     $  62,911    $  (21,456)    $ 41,455  $ 62,911  $  (24,731)     $38,180
Copyrights               8 yrs          21,053        (8,139)      12,914    21,053      (9,696)      11,357
Product Titles           7 yrs          13,475       (10,256)       3,219    13,475     (11,083)       2,392
Trade name               5 yrs           3,520        (3,049)         471     3,520      (3,491)          29
Workforce in place       3 yrs           2,980        (2,980)           -     2,980      (2,980)           -
Non-compete agreements   2 yr           77,334       (77,334)           -    77,334     (77,334)           -
Databases                4-10 yrs          560          (551)           9       560        (560)           -
Other                    1-5 yrs           677          (396)         281       443        (396)          47
                                     ---------    ----------     --------  --------   ---------     --------
Total:                               $ 182,510    $ (124,161)    $ 58,349  $182,276   $(130,271)    $ 52,005
                                     ---------    ----------     --------  --------   ---------     --------
</TABLE>


For trademarks not subject to amortization, which are included in other
intangible assets, the total carrying amount was $42,150 as of December 31, 2002
and June 30, 2003, respectively. The intangible amortization was $3,568 and
$3,039 for the three months ended June 30, 2002 and 2003, respectively. The
intangible amortization expense recorded was $7,137 and $6,110 for the six
months ended June 30, 2002 and 2003, respectively.

The estimated amortization expense for intangible assets still subject to
amortization for the following periods is as follows:

Six months ended 2003            ..........    $   5,036
Year ended 2004                  ..........    $   8,865
Year ended 2005                  ..........    $   7,424
Year ended 2006                  ..........    $   5,673
Year ended 2007 and thereafter   ..... ....    $  25,007

Litigation

The Company is a party to litigation arising in the normal course of business.
Management regularly analyzes current information and, as necessary, provides
accruals for probable liabilities on the eventual disposition of these matters.
Management believes that the effect on its results of operations and financial
position, if any, for the disposition of these matters, will not be material.

Notes Offering and Guarantor and Non-Guarantor Financial Information

In connection with the recapitalization and purchase of Weekly Reader during
November 1999, the Company, Weekly Reader and Compass as co-issuers, completed
an offering of $152.0 million 12 3/4% Senior Subordinated Notes due 2009 (the
"Old Notes"). In June 2000, the Old Notes were exchanged in full for $152.0
million of new 12 3/4% Senior Subordinated Notes due 2009 (the "Notes"), which
have terms that are substantially identical to the Old Notes except that the
Notes were registered with the Securities and Exchange Commission. Interest on
the Notes is payable semi-annually, on May 15 and November 15 of each year. The
Notes are jointly, severally, fully and unconditionally guaranteed by certain
subsidiaries of the Company, including CompassLearning, a 100% wholly owned
subsidiary and Weekly Reader, a non-wholly owned subsidiary of the Company
(collectively, the "Subsidiary Guarantors").

The following tables present condensed consolidating financial information as of
and for the three months ended June 30, 2002 and 2003 for: (1) the Company on a
standalone basis, (2) Weekly Reader Corporation, a non-wholly owned guarantor
subsidiary, (3) CompassLearning, Inc., a wholly owned guarantor subsidiary on a
standalone basis, (4) the non-guarantor subsidiary of the Company (ChildU,
Inc.), and (5) the Company on a consolidated basis.

Separate financial statements for CompassLearning are not presented and it is
not filing a separate report under the Securities Exchange Act of 1934 because
the Company's management has determined that the information contained in such
documents would not be material to investors.


                                                                              13
<PAGE>

<TABLE>
<CAPTION>
                                                  Subsidiary Guarantors
                                              -----------------------------
                                              Weekly Reader CompassLearning  Non-Guarantor                WRC Media Inc.
                              WRC Media Inc.   Corporation        Inc.         Subsidiary    Elimination    Consolidated
                              --------------  ------------  --------------     -----------   ------------  ---------------
                                                            (In thousands)
<S>                            <C>            <C>             <C>               <C>          <C>            <C>
Balance Sheet as of
  June 30, 2003
Current assets                 $     9,426    $ 137,305       $18,359           $   3,73      $(98,346)      $  70,475
Property and equipment, net             -         4,721           776                201             -           5,698
Goodwill and other intangible
  assets, net                      167,046       51,571        25,474             13,335             -         257,426
Other assets                       105,021       47,676         6,258              2,060       (118,719)        42,296
                               -----------    ---------       -------           -------       ---------      ---------
Total assets                   $   281,493     $241,273       $50,867           $ 19,327      $(217,065)     $ 375,895
                               ===========    =========       =======           ========      =========      =========

Current liabilities            $    96,424    $  54,750       $25,700           $ 12,254      $ (98,337)     $  90,791
Long-term debt, less current
  portion                          147,491      121,234        17,011                  -               -       285,736
Other liabilities                   21,131        2,320         3,193                  -              -         26,644
Common stock subject to
  redemption                           940            -             -                  -              -            940
Redeemable preferred stock,
  plus accrued dividends           119,518       75,000             -                  -        (75,000)       119,518
Stockholders equity (deficit):    (104,011)    (140,570)        2,345              7,073         87,429       (147,734)
Interdivisional equity                   -      128,539         2,618                          (131,157)             -
                               -----------    ---------       -------           -------       ---------      ---------
Total liabilities and
  stockholders equity
  (deficit)                    $   281,493    $ 241,273       $50,867           $ 19,327      $(217,065)     $ 375,895
                               ===========    =========       =======           ========      =========      =========
</TABLE>

<TABLE>
<CAPTION>
                                                  Subsidiary Guarantors
                                              -----------------------------
                                               Weekly Reader CompassLearning  Non-Guarantor                WRC Media Inc.
                              WRC Media Inc.   Corporation        Inc.         Subsidiary    Elimination    Consolidated
                              --------------  ------------  --------------     -----------   ------------  ---------------
                                                            (In thousands)
<S>                               <C>              <C>            <C>           <C>           <C>             <C>
Statement of operations for
  three months ended
  June 30, 2003
Revenue, net                      $        -      $   29,296      12,264       $   1,933      $      -         $  43,493
Operating expenses                     1,045          26,053      12,010           1,065             -            40,173
Interest expense, net                  5,233           6,911           -               -        (4,956)            7,188
Other expense                            174             214           -               -             -               388
Provision for income taxes               382              49          23               -             -               454
                                  ----------      ----------     -------       ---------      --------         ---------
Net income (loss)                 $   (6,834)     $   (3,931)        231       $     868      $  4,956         $  (4,710)
                                  ==========      ==========     =======        ========      ========         =========

Statement of operations for
  the six months
  ended June 30, 2003

Revenue, net                      $        -       $  64,054      23,510       $   2,906             -         $  90,470
Operating expenses                     2,569          54,124      24,936           2,008             -            83,637
Interest expense, net                 10,445          13,733           -               -        (9,908)           14,270
Other expense                            411             208           -               -             -               619
Provision for income taxes               780             224          38               -             -             1,042
                                  ----------      ----------     -------       ---------      --------         ---------
Net income (loss)                 $  (14,205)         (4,235)     (1,464)      $     898      $  9,908         $  (9,098)
                                  ==========      ==========     =======        ========      ========         =========

Cash flow for the six months
  ended June 30, 2003

Cash flow provided by (used
  in) operations                  $  (11,456)        (14,145)        806       $   1,293      $  9,690         $ (13,812)
Cash flow used in investing
  activities                               -            (179)     (1,546)           (947)            -            (2,672)
Cash flow provided by (used
  in) financing activities            10,507          18,546         740            (233)       (9,690)           19,870
Cash at beginning of period            1,154           7,819           4             118             -             9,095
                                  ----------      ----------     -------       ---------      --------         ---------
Cash at end of period             $      205        $ 12,041           4         $   231      $      -         $  12,481
                                  ==========      ==========     =======        ========      ========         =========
</TABLE>

<TABLE>
<CAPTION>
                                                  Subsidiary Guarantors
                                              -----------------------------
                                               Weekly Reader CompassLearning  Non-Guarantor                WRC Media Inc.
                              WRC Media Inc.   Corporation        Inc.         Subsidiary    Elimination    Consolidated
                              --------------  ------------  --------------     -----------   ------------  ---------------
                                                            (In thousands)
<S>                               <C>              <C>            <C>           <C>           <C>             <C>
Statement of operations for
  three months ended
  June 30, 2002
Revenue, net                      $       -        $  30,595      12,737        $    478      $      -        $   43,810
Operating expenses                     1,030          26,368      11,251           1,512             -            40,161
Interest expense, net                  5,179           7,230           5               1        (4,942)            7,473
Other (income) expense                 1,155            (217)          3               -             -               941
Provision for income taxes               342             183          19               -             -               544
                                  ----------      ----------     -------       ---------      --------         ---------
Net income (loss)                 $   (7,706)      $  (2,969)      1,459        $ (1,035)      $ 4,942         $  (5,309)
                                  ==========      ==========     =======        ========      ========         =========

Statement of operations for
  the six months
  ended June 30, 2002

Revenue, net                      $        -       $  64,603      25,265       $     729       $     -         $  90,597
Operating expenses                     2,088          54,456      25,889           2,097             -            84,530
Interest expense, net                 10,354          14,321           9               1        (9,881)           14,804
Other (income) expense                 1,641            (228)          6               -          -                1,419
Provision for income taxes             8,050           1,797          36               -          -                9,883
Cumulative effect of                       -          72,022           -               -          -               72,022
                                  ----------      ----------     -------       ---------      --------         ---------
accounting change
Net income (loss)                 $  (22,133)       $(77,765)       (675)       $ (1,369)     $  9,881         $ (92,061)
                                  ==========      ==========     =======        ========      ========         =========

Cash flow for the six months
  ended June 30, 2002

Cash flow provided by (used
  in) operations                  $  (13,786)       $(10,046)      2,981        $ (2,280)     $  9,687         $ (13,444)
Cash flow used in investing
  activities                               -              51      (1,574)           (914)         -               (2,437)
Cash flow provided by (used
  in) financing activities            12,850           6,903      (1,397)          3,127        (9,687)           11,796
Cash at beginning of period            2,643           5,691         394             191             -             8,919
                                  ----------      ----------     -------        --------      --------         ---------
Cash at end of period             $    1,7$7           2,599         404        $    124      $      -         $   4,834
                                  ==========      ==========     =======        ========      ========         =========
</TABLE>


                                                                              14


<PAGE>


                   WEEKLY READER CORPORATION AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                    (dollars in thousands, except share data)



                                                       December 31,    June 30,
                                                          2002           2003
                                                      ------------  ------------
                                                                     (unaudited)
ASSETS
Current Assets:
   Cash                                               $     7,819   $    12,041
   Accounts receivable, net                                22,881        25,551
   Inventories, net                                        14,210        13,439
   Due from related party                                   9,438        12,164
   Prepaid expenses                                         2,957         3,168
   Other current assets                                     1,797         1,460
                                                      -----------   -----------
     Total current assets                                  59,102        67,823

Property and equipment, net                                 5,409         4,721
Goodwill                                                   35,018        35,018
Deferred financing costs, net                                 692           602
Other intangible assets, net                               18,833        16,553
Other assets and investments                               25,033        30,898
                                                      -----------   -----------
     Total Assets                                     $   144,087   $   155,615
                                                      ===========   ===========

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
   Accounts payable                                   $    18,883   $    11,666
   Deferred revenue                                        20,369        22,158
   Accrued expenses and other current liabilities          18,706        18,087
   Current portion of long-term debt                        7,721         8,477
                                                      -----------   -----------
     Total current liabilities                             65,679        60,388

Deferred tax liability                                      2,000         2,320
Long-term debt                                            266,219       285,736
                                                      -----------   -----------
     Total liabilities                                    333,898       348,444
                                                      -----------   -----------

Commitments and contingencies
Redeemable preferred stock, plus accrued dividends
  (Liquidation preference of $75,000 plus
  accrued dividends)                                      118,846       127,927

Stockholders' deficit:
   Common stock, ($.01 par value, 20,000,000 shares
     authorized;
   2,830,000 shares issued & outstanding)                      28            28
   Additional paid-in capital                               9,133         9,133
   Due from parent                                        (63,464)      (62,247)
   Accumulated comprehensive loss                          (3,357)       (3,357)
   Accumulated deficit                                   (250,997)     (264,313)
                                                      -----------   -----------
     Total stockholders' deficit                         (308,657)     (320,756)
                                                      -----------   -----------
     Total liabilities and stockholders' deficit      $   144,087   $   155,615
                                                      ===========   ===========

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



                                                                              15
<PAGE>



                   WEEKLY READER CORPORATION AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                       FOR THE THREE MONTHS ENDED JUNE 30,
                                   (Unaudited)
                             (Dollars in thousands)
                                                         2002          2003
                                                      ----------    ----------
Revenue, net                                           $ 30,595     $  29,296

Cost of goods sold                                        8,522         7,828
                                                      ---------     ---------

Gross profit                                             22,073        21,468
                                                      ---------     ---------

Costs and expenses:
     Sales and marketing                                  6,267         5,605
     Distribution, circulation and fulfillment            2,826         2,905
     Editorial                                            2,063         2,565
     General and administrative                           4,024         4,284
     Restructuring costs                                      -           126
     Depreciation                                           467           428
     Amortization of intangible assets                    2,199         2,312
                                                      ---------     ---------

     Total operating costs and expenses                  17,846        18,225
                                                      ---------     ---------

Income from operations                                    4,227         3,243

Other income (expense):
Interest expense, including amortization
  of deferred financing costs                            (7,230)       (6,911)
Other income (expense), net                                 217          (214)
                                                      ---------     ---------

Loss before income tax provision                         (2,786)       (3,882)

Income tax provision                                        183            49
                                                      ---------     ---------

Net loss                                              $  (2,969)    $  (3,931)
                                                      =========     =========

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



                                                                              16
<PAGE>


                   WEEKLY READER CORPORATION AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                        FOR THE SIX MONTHS ENDED JUNE 30,
                                   (Unaudited)
                             (Dollars in thousands)

                                                             2002        2003
                                                          ---------   ---------
Revenue, net                                              $  64,603   $  64,054

Cost of goods sold                                           16,902      16,193
                                                          ---------    --------

Gross profit                                                 47,701      47,861
                                                          ---------    --------

Costs and expenses:
     Sales and marketing                                     13,511      11,932
     Distribution, circulation and fulfillment                5,997       6,415
     Editorial                                                4,870       5,144
     General and administrative                               7,842       8,881
     Restructuring costs                                          -         126
     Depreciation                                               934         867
     Amortization of intangible assets                        4,400       4,566
                                                          ---------    --------

     Total operating costs and expenses                      37,554      37,931
                                                          ---------    --------

     Income from operations                                  10,147       9,930

     Other income (expense) :
     Interest expense, including amortization
       of deferred financing costs                          (14,321)    (13,733)
     Other income (expense), net                                228        (208)
                                                          ---------    --------

     Loss before income tax provision                        (3,946)     (4,011)

     Income tax provision                                     1,797         224
                                                          ---------    --------

     Net loss before cumulative effect of change
       in accounting principle                               (5,743)     (4,235)

     Cumulative effect of change in accounting principle    (72,022)          -
                                                          ---------    --------

     Net loss                                             $ (77,765)   $ (4,235)
                                                          =========    ========

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


                                                                              17

<PAGE>

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                        FOR THE SIX MONTHS ENDED JUNE 30,
                                   (Unaudited)
                             (dollars in thousands)


                                                            2002        2003
                                                         ---------   ---------
Cash flows from operating activities:

Net loss                                                 $(77,765)     $ (4,235)

Adjustments to reconcile net loss to net cash
  used in operating activities:
   Cumulative effect of change in accounting principle     72,022             -
   Deferred income tax provision                            1,680           320
   Depreciation and amortization                            5,334         5,433
   Unrealized gain from hedging transactions                 (207)            -
   Amortization of deferred financing costs                    91            90
   Gain (loss) on disposition of property and
     equipment                                                 43            (1)
   Interest expense-accretion of debt discount                191           218
Changes in operating assets and liabilities:
   Increase in accounts receivable                         (7,775)       (2,670)
   Decrease in inventories                                  1,303           771
   Increase in prepaid expenses and other assets           (2,374)       (8,027)
   Decrease in accounts payable                            (1,983)       (7,217)
   Increase in deferred revenue                             7,508         1,789
   Decrease in accrued expenses and other liabilities      (8,114)         (616)
                                                        ---------      --------

   Net cash used in operating activities                  (10,046)      (14,145)
                                                        ---------      --------

   Cash flows from investing activities:

   Purchase of property and equipment                        (527)         (183)
   Proceeds from disposition of property and equipment        578             4
                                                        ---------      --------

   Net cash provided by (used in) investing
     activities                                                51          (179)
                                                        ---------      --------

   Cash flows from financing activities:

   Proceeds from revolving line of credit                  23,000        27,000
   Repayments of revolving line of credit                  (8,000)       (3,000)
   Retirement of senior bank debt                          (2,891)       (3,945)
   Decrease (increase) in due from parent, net                (97)        1,217
   Increase in due from related party                      (5,109)       (2,726)
                                                        ---------      --------

   Net cash provided by financing activities                6,903        18,546
                                                        ---------      --------

   (Decrease) increase in cash and cash equivalents        (3,092)        4,222

   Cash, beginning of period                                5,691         7,819
                                                        ---------      --------

   Cash, end of period                                  $   2,599     $  12,041
                                                        =========     =========

   Supplemental disclosure of cash flow
     information:
   Cash paid during the period for interest             $  13,982     $  13,558
                                                        =========     =========
   Cash paid during the period for income taxes         $     162     $      31
                                                        =========     =========
   Preferred stock dividends accrued                    $   7,837     $   9,081
                                                        =========     =========

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


                                                                              18
<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

Weekly Reader Corporation ("WRC"), 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. ("WRC
Media"). 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 Media 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.
("Lindy") for approximately $7,500. The transaction was accounted for as an
asset purchase. Lindy develops curriculum-based skills assessment and test
preparation products that correlate to national and state curriculum.

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.

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, 2002. The operating results for
the six month periods ended June 30, 2002 and 2003 are not necessarily
indicative of the results that may be expected for a full year. Certain
reclassifications have been made to the prior year's consolidated financial
statements to conform them with current year's presentation.

Recent Accounting Pronouncements

In November 2002, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation ("FIN") No. 45, "Guarantor's Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of
Others"("FIN 45"). FIN 45 elaborates on the disclosures to be made by a
guarantor in its interim and annual financial statements about its obligations
under certain guarantees that it has issued. FIN 45 requires a guarantor to
recognize, at the inception of a guarantee, a liability for the fair value of
the obligations undertaken in issuing the guarantee. The disclosure provisions
of FIN 45 are effective for financial statements of periods ending after
December 15, 2002. The Company has adopted the disclosure provisions.
Additionally, the recognition of a guarantor's obligation should be applied on a
perspective basis to guarantees issued after December 31, 2002. The recognition
provisions of FIN 45 did not have any effect on the Company's consolidated
financial statements.

In January 2003, the FASB issued FASB Interpretation No. 46, "Consolidation of
Variables Interest Entities" ("FIN 46"). FIN 46 clarifies the application of
Accounting Research Bulletin No. 51, "Consolidated Financial Statements" to
certain entities in which equity investors do not have the characteristics of a
controlling financial interest or do not have sufficient equity at risk for the
entity to finance its activities without additional subordinated financial
support from other parties. The Company is required to adopt the provisions of
FIN 46 for variable interest entities created after January 31, 2003. The
adoption of FIN 46 did not have any impact on the Company's consolidated
financial statements.

In August 2001, the FASB issued Statement of Financial Accounting Standards
("SFAS") 143, "Accounting for Asset Retirement Obligations"("SFAS 143"), which
requires entities to record the fair value of a liability for an asset
retirement obligation in the period in which it is incurred. When the liability
is initially recorded, the entity capitalizes a cost by increasing the carrying
amount of the related long-lived asset. Over time, the liability is accreted to
its present value each period, and the capitalized cost is depreciated over the
useful life of the related asset. Upon settlement of the liability, an entity
either settles the obligation for its recorded amount or incurs a gain or loss
upon settlement. The standard is effective for the Company beginning January 1,
2003. The adoption of SFAS 143 did not have any impact on the Company's
consolidated financial statements.


                                                                              19
<PAGE>

In August 2001, the FASB issued SFAS No. 144, "Accounting for Impairment of
Disposal of Long-Lived Assets" ("SFAS 144"), which superseded SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of"("SFAS 121"). SFAS 144 also superseded the accounting and
reporting provisions of Accounting Principles Board Opinion No. 30, "Reporting
the Results of Operations - Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions"("APB 30"), relating to the disposal of a segment of a business.
SFAS 121 did not address the accounting for a segment of a business accounted
for as a discontinued operation under APB 30 and, therefore, two accounting
models existed for long-lived assets to be disposed of. SFAS 144 established one
accounting model for long-lived assets to be held and used, long-lived assets
(including those accounted for as a discontinued operation) to be disposed of by
sale and long-lived assets to be disposed of other than by sale. The Company
adopted SFAS 144 on January 1, 2002, and it did not have a material effect on
the Company's consolidated financial statements.

In July 2001, the FASB issued SFAS No.142, "Goodwill and Other Intangible
Assets" ("SFAS 142"). SFAS 142 specifies the financial accounting and reporting
for acquired goodwill and other intangible assets. Goodwill and intangible
assets that have indefinite useful lives will not be amortized but rather be
tested at least annually for impairment. SFAS 142 requires that the useful lives
of intangible assets acquired on or before June 30, 2001 be reassessed and the
remaining amortization periods adjusted accordingly. Previously recognized
intangible assets deemed to have indefinite lives should be tested for
impairment as well. Goodwill recognized on or before June 30, 2001 has been
assigned to various reporting units and has been tested for impairment during
the six months ending June 30, 2002, the period in which SFAS 142 is initially
applied in its entirety. On January 1, 2002, WRC adopted SFAS 142 for its
goodwill and identifiable intangible assets. Upon adoption, WRC ceased the
amortization of goodwill and other indefinite lived intangible assets, which
consist of trademarks. As required by this statement, WRC reviewed its
indefinite lived intangibles (trademarks) for impairment as of January 1, 2002.

WRC completed the transitional impairment tests on its goodwill and
indefinite-lived intangibles during the second quarter ended June 30, 2002. WRC
has three reporting units with goodwill. Goodwill was tested for impairment at
the reporting unit level. As a result, WRC recorded a transitional goodwill and
indefinite lived intangible asset impairment charge of $72,022 at its
subsidiary, American Guidance Service, Inc. This charge was reported as
cumulative effect of accounting change, as of January 1, 2002, in the Condensed
Consolidated Statement of Operations. WRC is required to perform impairment
tests on an annual basis, or between yearly tests under certain circumstances
for goodwill and indefinite lived intangibles. WRC performed the required
impairment tests during the fourth quarter of 2002. No further impairment of
goodwill and indefinite lived intangibles was noted. There can be no assurance
that future impairment tests will not result in a charge to earnings.

WRC also recorded non-cash deferred income tax expense of approximately $1,360
on January 1, 2002 related to the adoption of SFAS 142. The non-cash charge of
$1,360 on January 1, 2002 was recorded to increase the valuation allowance
related to the deferred tax asset associated with WRC's net operating losses.
Historically, WRC did not need a valuation allowance for the portion of their
net operating loss equal to the excess of tax over book amortization on
tax-deductible goodwill and trademarks since the liability was expected to
reverse during the carryforward period of the net operating losses. As a result
of the adoption of SFAS 142, the timing of the reversal of this liability is
indefinite and can no longer be offset by WRC's net operating loss
carryforwards. While book amortization of tax-deductible goodwill and trademarks
ceased on January 1, 2002, WRC will continue to amortize these assets for tax
purposes. As a result, WRC will have deferred tax liabilities that will arise
each quarter because the taxable temporary differences related to the
amortization of these assets will not reverse prior to the expiration period of
WRC's deductible temporary differences unless the related assets are sold or an
impairment of the assets is recorded. Accordingly, WRC recorded non-cash
deferred income tax expense of $320 for the six months ended June 30, 2002 and
2003, respectively. WRC expects that it will record an additional $320 of
deferred tax provisions during the remaining six months of 2003.

FASB SFAS No. 149 "Amendment of Statement 133 on Derivative Instruments and
Hedging Activities"("SFAS 149") was issued in April 2003. SFAS 149 contains
amendments relating to FASB Concepts Statement No. 7, "Using Cash Flow
Information and Present Value in Accounting Measurements", and FASB Statements
No. 65, "Accounting for Certain Mortgage Banking Activities", No. 91,
"Accounting for Nonrefundable Fees and Costs Associated with Originating or
Acquiring Loans and Initial Direct Costs of Leases", No. 95, "Statement of Cash
Flows", and No. 126, "Exemption from Certain Required Disclosures about
Financial Instruments for Certain Nonpublic Entities". WRC will adopt SFAS 149
in July 2003 and the adoption is not expected to have any effect on the
Company's consolidated financial statements.

                                                                              20
<PAGE>

Pursuant to the terms of the Amended and Restated Credit Agreement, the Company
is required to enter into and maintain interest rate protection agreements
(interest rate swaps, caps, collars or similar agreements) in a notional amount
equal to at least 50% of the aggregate principal amount of the senior secured
term loans. On November 15, 2002, the Company entered into a one year interest
rate cap agreement with a notional of $64.8 million, which caps the LIBOR based
rate, as defined, on those loans at 2.5% The interest rate protection agreement
did not qualify for hedge accounting treatment and as such the Company marks to
market the contract at the end of each period. The fair value of the interest
rate cap at June 30, 2003 is de-minimus.

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity." ("SFAS 150")
SFAS 150 establishes standards for classification and measurement of mandatorily
redeemable financial instruments, obligations to repurchase the issuer's equity
shares by transferring assets, and certain obligations to issue a variable
number of shares. SFAS 150 is effective on July 1, 2003 for financial
instruments created or modified after May 31, 2003. The Company does not expect
the adoption of SFAS 150 to have a material effect on its consolidated financial
statements.

Restructuring and other non-recurring expenses

In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities" ("SFAS 146"). SFAS 146 addresses financial
accounting and reporting for costs associated with exit or disposal activities
and nullifies Emerging Issues Task Force Issue No. 94-3, "Liability Recognition
for Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring)". SFAS 146 requires that a
liability for a cost associated with an exit or disposal activity be recognized
when the liability is incurred rather than the date an entity commits to an exit
plan. SFAS 146 establishes that fair value is the objective for initial
measurement of the liability. The provisions of SFAS 146 are effective for exit
or disposal activities that are initiated after December 31, 2002 with earlier
adoption encouraged. The Company adopted SFAS 146 in December 2002.

During the six months ended June 30, 2003, the Company reviewed the
restructuring reserve established in 2002 and adjusted the reserve by $0.1
million due to updating the assumptions used in determining the fair value of
the remaining lease obligations associated with facilities vacated during 2002
and recorded a small charge related to an employee severed in 2002. .The $0.1
million restructuring costs adjustment related to the vacated facilities
includes $0.1 million of interest accretion expense.

Of the remaining restructuring costs and other non-recurring expense reserve
totaling approximately $2.2 million is expected to be spent as follows: 2003 -
remaining six months of 2003 $0.6 million and 2004 and beyond - $1.6 million and
is included in accrued expenses and other current liabilities in the condensed
consolidated balance sheet.

Components of the company's restructuring plan in the fourth quarter of 2002 are
shown in the following table:

<TABLE>
<CAPTION>
(000's)                          Balance at                       Amount      Balance at
                              December 31, 2002   Charges          Paid      June 30, 2003
                              -----------------   --------       --------    -------------
<S>                              <C>              <C>            <C>          <C>
Severance and other benefits     $    649         $    21        $  (435)      $    235
Lease terminations                  2,121             105           (222)         2,004
                                 --------         -------        -------       --------
Total                            $  2,770         $   126        $  (657)      $  2,239
                                 ========         =======        =======       ========
</TABLE>

Debt

                                                                              21
<PAGE>

As of June 30, 2003, there were $24.0 million in outstanding advances under
WRC's $30.0 million revolving credit facility, which bear interest approximating
4.7% at June 30, 2003. In addition, there is an annually renewable stand-by
letter of credit in the amount of $2.0 million in connection with a real estate
lease entered into by the Company. While this letter of credit is in effect,
WRC's available borrowing under the revolving credit facility is reduced by $2.0
million.

Inventories

Inventories are comprised of the following:

                                                   December 31,      June 30,
                                                       2002            2003
                                                   -----------      ----------

    Finished goods                                  $   17,186       $ 16,125
    Raw materials                                           96            382
    Less - allowance for obsolescence                   (3,072)        (3,068)
                                                    ----------       --------
                                                    $   14,210       $ 13,439
                                                    ==========       ========
Intangibles

The gross carrying amount and accumulated amortization of the WRC's intangible
assets other than goodwill and indefinite-lived intangible assets are as
follows:

<TABLE>
<CAPTION>
                                         December 31, 2002                      June 30, 2003
                                ---------------------------------    ---------------------------------
                                            Accumulated                         Accumulated
                                   Gross    Amortization     Net       Gross    Amortization   Net
                                ----------  ------------   -------   --------   -----------    -------

<S>                   <C>         <C>         <C>          <C>       <C>        <C>            <C>
Customer Lists        7-9 yrs     $ 36,748    $(34,001)    $ 2,747   $ 36,748   $ (34,375)     $ 2,373
Copyrights            8 yrs         17,520     (14,666)      2,854     17,520     (15,736)       1,784
Product Titles        7 yrs         22,400     (19,181)      3,219     22,400     (20,008)       2,392
Databases             4-10 yrs       5,812      (5,803)          9      5,812      (5,812)           -
Other                 2-5 yrs          264        (216)         48        264        (216)          48
                                  --------    --------     -------   --------   ---------      -------
                  Total:          $ 99,842    $(90,965)    $ 8,877   $ 99,842   $ (93,245)     $ 6,597
                                  ========    ========     =======   ========   =========      =======
</TABLE>

For trademarks not subject to amortization, which is included in other
intangible assets, the total carrying amount is $9,956 as of December 31, 2002
and June 30, 2003. The intangible amortization expense recorded was $1,405 and
$1,124 for the three months ended June 30, 2002 and 2003, respectively. The
intangible amortization expense recorded was $2,812 and $2,280 for the six
months ended June 30, 2002 and 2003, respectively.

The estimated amortization expense for intangible assets still subject to
amortization for the following periods is as follows:

Six months ended 2003               .............   $   1,617
Year ended 2004                     .............   $   2,087
Year ended 2005                     .............   $     646
Year ended 2006                     .............   $     104
Year ended 2007 and thereafter      .............   $   2,143

Litigation

The Company is a party to litigation arising in the normal course of business.
Management regularly analyzes current information and, as necessary, provides
accruals for probable liabilities on the eventual disposition of these matters.
Management believes that the effect on its results of operations and financial
position, if any, for the disposition of these matters, will not be material.


                                                                              22
<PAGE>


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

The following discussion is intended to assist in understanding the financial
condition as of June 30, 2003 of WRC Media Inc. ("WRC Media") and its
subsidiaries and their results of operations for the three months and six months
ended June 30, 2002 and 2003. You should read the following discussion in
conjunction with the financial statements of WRC Media and Weekly Reader
Corporation ("Weekly Reader") 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, CompassLearning, Inc.
("CompassLearning"), Weekly Reader Corporation and its subsidiaries and ChildU,
Inc. 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 June 30, 2003-- 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"). The results of operations
of WRC Media and its subsidiaries should be read together with the separate
discussion of the results of operations of Weekly Reader.

In analyzing WRC Media's results for the three months ended June 30, 2002 and
2003, respectively, the seasonal nature of WRC Media's business should be
considered. As a result of seasonality, approximately 20% of WRC Media's
publication and related service revenues usually occur in its first quarter, 20%
in its second quarter, and 60% 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 revenue, net basis. The following table sets forth, for the periods
indicated, consolidated statements of operations data for WRC Media and its
subsidiaries, expressed in millions of dollars and as a percentage of net
revenue.



                                                                              23
<PAGE>

<TABLE>
<CAPTION>
                                                                             Three Ended June Months 30,
                                                                   2002                                   2003
                                                      -----------------------------           ----------------------------
                                                      Amount       % of Net Revenue           Amount      % of Net Revenue
                                                      ------       ----------------           ------      ----------------
                                                                          (Dollars in millions)

<S>                                                 <C>                  <C>                <C>                  <C>
Revenue, net                                        $   43.8             100.0%             $   43.5             100.0%
Cost of goods sold                                      12.7              29.0%                 12.6              29.0%
                                                    --------             -----              --------             -----
Gross profit                                            31.1              71.0%                 30.9              71.0%
Costs and expenses:
   Sales and marketing                                  11.6              26.5%                 10.1              23.2%
   Research and development                              0.6               1.4%                  0.2               0.5%
   Distribution, circulation and fulfillment             2.8               6.4%                  2.9               6.7%
   Editorial                                             2.1               4.8%                  2.5               5.7%
   General and administrative                            4.8              11.0%                  5.6              12.9%
   Restructuring costs                                     -               0.0%                  1.0               2.3%
   Depreciation                                          0.8               1.8%                  0.6               1.4%
   Amortization of intangible assets                     4.8              11.0%                  4.7              10.8%
                                                    --------             -----              --------             -----
                                                        27.5              62.9%                 27.6              63.5%
                                                    --------             -----              --------             -----

Income from operations                                   3.6               8.1%                  3.3               7.5%
                                                    --------             -----              --------             -----
Interest expense, including amortization
  of deferred financing costs                          (7.5)            (17.1%)                (7.2)            (16.6%)
Loss on investments                                    (0.9)             (2.1%)                    -               0.0%
Other expense, net                                         -               0.0%                (0.4)             (0.9%)
                                                    --------             -----              --------             -----
Loss before income tax provision                       (4.8)            (11.1%)                (4.3)            (10.0%)
Income tax provision                                    0.5               1.1%                  0.4               0.9%
                                                    --------             -----              --------             -----
Net loss                                            $  (5.3)            (12.2%)             $  (4.7)            (10.9%)
                                                    =======             =====               =======             =====

   Adjusted EBITDA (a)                              $   8.1              18.5%              $   9.5              21.8%
                                                    =======             =====               =======             =====

   Restricted EBITDA(b)                             $  10.0              22.8%              $   8.5              19.5%
                                                    =======             =====               =======             =====
</TABLE>

(a) Adjusted EBITDA is defined as income (loss) before interest expense, taxes,
    depreciation, amortization and other (income) charges excluding unrealized
    hedge gain of ($207) for the three months ended June 30, 2002 and
    restructuring costs of $1,001 for the three months ended June 30, 2003.
    Adjusted EBITDA data is a non-GAAP measure and is included in our discussion
    because we believe that this information may be considered by investors as
    an additional basis on which to evaluate WRC Media's performance. Because
    all companies do not calculate Adjusted EBITDA identically, the presentation
    of Adjusted EBITDA in this report is not necessarily comparable to similarly
    titled measures of other companies. Adjusted EBITDA is not intended to
    represent cash flow from operating activities and should not be considered
    an alternative to net income or loss (as determined in conformity with GAAP)
    as an indicator of the Company's operating performance or to cash flow as a
    measure of liquidity. It is presented herein as the Company evaluates and
    measures each business' performance based on their Adjusted EBITDA results.
    Adjusted EBITDA may not be available for the Company's discretionary use as
    there are requirements to repay debt, among other payments.

(b) Restricted EBITDA is defined as Adjusted EBITDA excluding WRC Media's
    unrestricted subsidiaries. Given the projected near-term financial
    performance of ChildU and ThinkBox, WRC Media designated ChildU and ThinkBox
    as "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 financial performance will not be included in any
    covenant calculations or in any measures of Adjusted EBITDA. Accordingly,
    Restricted EBITDA is defined as WRC Media consolidated Adjusted EBITDA
    excluding the $1.0 million EBITDA income in three months ended June 30, 2003
    and the $1.9 million EBITDA loss in the three months ended June 30, 2002
    contributed by its unrestricted subsidiaries - ChildU and ThinkBox. As of
    June 30, 2003, there were $122.7 million senior secured term loans under the
    senior credit facilities, of which Adjusted EBITDA as defined in the credit
    agreement is utilized in both financial covenants. If the covenant were to
    be violated, the debt would become callable which could adversely affect the
    Company's financial condition and liquidity. The current minimum ratio for
    the leverage ratio is no greater than 5.75 to 1 and for the fixed charge
    ratio is no less than 1.05 to 1.


                                                                              24
<PAGE>

Three Months Ended June 30, 2003 Compared to Three Months Ended June 30, 2002

Revenue, net. For the three months ended June 30, 2003, revenue, net decreased
$0.3 million, or 0.7%, to $43.5 million from $43.8 million for the same period
in 2002. This decrease was primarily due to a decrease in revenue, net at Weekly
Reader Corporation of $1.3 million, or 4.3%, to $29.3 million from $30.6 million
for the same period in 2002 combined with a decrease in revenue, net at
CompassLearning of $0.4 million, or 3.1%, to $12.3 million from $12.7 million
for the same period in 2002 partially offset by an increase in revenue, net at
ChildU of $1.4 million, or 280.0%, to $1.9 million from $0.5 million for the
same period in 2002.

Weekly Reader, not including AGS and World Almanac, revenue, net increased $0.7
million, or 15.2%, to $5.3 million from $4.6 million for the same period in
2002. This was attributable to higher custom publishing shipments by Weekly
Reader's subsidiary Lifetime Learning Systems and greater licensing revenue.
Lifetime Learning revenue was $0.5 million, or approximately 104.0% greater than
the second quarter of 2002 and licensing revenue was up $0.3 million or 28.0%
for the three months ending June 30, 2003 driven by higher sales through it's
QVC sales channel.

AGS revenue, net decreased $0.7 million, or 4.9%, to $13.5 million from $14.2
million for the same period in 2002, primarily due a $0.9 million decrease in
backlisted curriculum products, partially offset by growth in core curriculum
and assessment products of $0.2.

World Almanac revenue, net decreased by $1.3 million, or 11.0%, to $10.5 million
from $11.8 million for the same period in 2002. This decrease was primarily due
to lower net revenue at WAE Library Services due to the continuing weak
environment for school library funding partially offset by higher revenue at
Gareth Stevens.

CompassLearning revenue, net decreased $0.4 million, or 3.1%, to $12.3 million
from $12.7 million for the same period in 2002. This decrease was primarily due
to (1) a decrease in service revenue from technical support of $0.2 million, or
6.1%, to $3.1 million in 2003 from $3.3 million for the same period in 2002, and
(2) a decrease in professional development revenue of $0.2 million, or 8.7%, to
$2.1 million from $2.3 million for the same period in 2002. Software revenue
from sales of CompassLearning LAN/WAN product line remained flat at $6.8 million
for the three months ended June 30, 2003 and 2002, respectively.

At ChildU, WRC's unrestricted subsidiary, revenue, net increased $1.4 million or
280.0% to $1.9 million from $0.5 million for the same period in 2002 driven by
sales of its web-enabled curriculum products. ChildU achieved an important
milestone in, the period ended June 30, 2003, by becoming EBITDA positive ($0.8
million) on a trailing twelve month basis.

The K-12 funding environment continues to be impacted by growing state budget
deficits, which have been causing reductions in state and local educational
spending, including spending on supplemental educational materials. While we
believe WRC Media will benefit from numerous provisions in the Federal No Child
Left Behind Act (the "NCLB Act"), most of this Federal educational funding will
not be available until later in 2003. Although we expect that Federal
educational funding will increase in the second half of 2003 as a result of the
NCLB Act, we do not believe this funding improvement will be sufficient to
offset cuts in state and local education funding. We expect these cuts and
delayed purchases will negatively affect our top-line revenue, net in the third
quarter and may continue to affect our top-line revenue beyond the third
quarter. The uncertainty in the current operating environment makes it difficult
to forecast future results.


                                                                              25
<PAGE>

Gross profit. For the three months ended June 30, 2003, gross profit decreased
by $0.2 million, or 0.6%, to $30.9 million from $31.1 million for the same
period in 2002. This decrease was primarily attributable to $0.9 lower software
margin at Compass and $0.6 lower margin at Weekly Reader, partially offset by
higher software margin at ChildU of $1.4 million. WRC Media's gross profit as a
percentage of revenue, net remained constant at 71.0% for the three months ended
June 30, 2003 and 2002, respectively.

Costs and expenses. For the three months ended June 30, 2003, costs and expenses
increased by $0.1 million, or 0.4%, to $27.6 million from $27.5 million for the
same period in 2002. This was primarily attributable to increased restructuring
costs of $1.0 million, or 100%, increased general and administrative expenses of
$0.8 million, or 16.7%, partially offset by a decrease in sales and marketing
expense of $1.5 million, or 12.9%, and lower depreciation costs of $0.2 million,
or 25.0%. The restructuring cost adjustment of $1.0 million was recorded in the
three months ended June 30, 2003 relating to the Company's update of its
assumptions used in determining the fair value of the remaining lease
obligations associated with the facilities vacated during 2002 in accordance
with SFAS 146. The $1.0 million restructuring costs adjustment related to the
vacated facilities includes $0.4 million or interest accretion expense. This
adjustment relates to the reserve established in 2002.

Income from operations. For the three months ended June 30, 2003, income from
operations decreased $0.3 million or 8.3%, to $3.3 million from $3.6 million for
the same period in 2002. This decrease was primarily due to the factors
described above.

Interest expense, including amortization of deferred financing costs. For the
three months ended June 30, 2003, interest expense decreased by $0.3 million, or
4.0%, to $7.2 million from $7.5 million for the same period in 2002 and interest
expense as a percentage of revenue, net decreased to 16.6% from 17.1% for the
same period in 2002.

Loss on investments. For the three months ended June 30, 2003, loss on
investments decreased $0.9 million to $0.0 compared to the same period in 2002.
The loss in the prior period related to a writedown of WRC Media's minority
investment in ThinkBox, Inc.

Income tax provision. For the three months ended June 30, 2003, the provision
for income taxes decreased $0.1 million, or 20.0%, to $0.4 million from $0.5
million compared to the same period in 2002. The decrease in the income tax
provision relates to a tax refund of $0.1 million received in 2003. The Company
recorded non-cash deferred income tax expense of $0.5 million during the three
months ended June 30, 2002 and 2003, which would not have been required prior to
the adoption of SFAS 142. As a result of the adoption of SFAS 142, book
amortization will no longer occur during the carry-forward period of the
operating losses. In addition, since book amortization of tax-deductible
goodwill and trademarks ceased on January 1, 2002, the Company will have
deferred tax liabilities that will arise each year because the taxable temporary
differences related to the amortization of these assets will not reverse prior
to the expiration period of the Company's deductible temporary differences
unless the related assets are sold or an impairment of the assets is recorded.


                                                                              26
<PAGE>

Net loss. For the three months ended June 30, 2003, net loss decreased by $0.6
million, or 11.3%, to $4.7 million from $5.3 million for the same period in 2002
primarily due to the factors described above.

ADJUSTED EBITDA / RESTRICTED EBITDA. For the three months ended June 30, 2003,
Adjusted EBITDA increased $1.4 million or 17.3% to $9.5 million from $8.1
million for the same period in 2002. The increase was primarily attributable to
the lower operating expenses excluding restructuring costs. Adjusted EBITDA is
defined as income (loss) before interest expense, income taxes, depreciation,
amortization, and other (income) charges excluding unrealized hedge gain of
($207) for the three months ended June 30, 2002 and restructuring costs of
$1,001 for the three months ended June 30, 2003. Restricted EBITDA is defined as
Adjusted EBITDA excluding WRC Media's unrestricted subsidiaries. Adjusted EBITDA
data is a non-GAAP measure and is included in our discussion because we believe
that this information may be considered by investors as an additional basis on
which to evaluate WRC Media's performance. Because all companies do not
calculate Adjusted EBITDA identically, the presentation of Adjusted EBITDA in
this report is not necessarily comparable to similarly titled measures of other
companies. Adjusted EBITDA is not intended to represent cash flow from operating
activities and should not be considered an alternative to net income or loss (as
determined in conformity with GAAP) as an indicator of the Company's operating
performance or to cash flow as a measure of liquidity. It is presented herein as
the Company evaluates and measures each business' performance based on their
Adjusted EBITDA results. Adjusted EBITDA may not be available for the Company's
discretionary use as there are requirements to repay debt, among other payments.
Given the projected near-term financial performance of ChildU and ThinkBox, WRC
Media designated ChildU and ThinkBox as "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 included in any covenant calculations and
in any measures of Adjusted EBITDA. Accordingly, Restricted EBITDA is defined as
WRC Media consolidated Adjusted EBITDA excluding the $1.0 million EBITDA income
in 2003 and the $1.9 million EBITDA loss in 2002 contributed by its unrestricted
subsidiaries - ChildU and ThinkBox. As of June 30, 2003, there were $122.7
million senior secured term loans under the senior credit facilities, of which
Adjusted EBITDA as defined in the credit agreement is utilized in both financial
covenants. If the covenant were to be violated, the debt would become callable
which could adversely affect the Company's financial condition and liquidity.
The current minimum ratio for the leverage ratio is no greater than 5.75 to 1
and for the fixed charge ratio is no less than 1.05 to 1. See Adjusted EBITDA /
Restricted EBITDA reconciliation to net loss below ($ in 000's):


                                                                              27
<PAGE>
<TABLE>
<CAPTION>

                                                                 For the three months ended June 30,
Adjusted EBITDA / Restricted EBITDA reconciliation to Net Loss          2002         2003
                                                                    ----------    ----------
<S>                                                                <C>              <C>
     Net Loss                                                      $ (5,309)       $ (4,710)
     Depreciation and amortization of intangibles**                   5,636           5,615
     Income taxes                                                       544             454
     Interest expense                                                 7,473           7,188
     Unrealized hedge gain                                             (207)              -
     Restructuring costs                                                -             1,001
                                                                   --------        --------
Adjusted EBITDA                                                       8,137           9,548
     Add: ChildU EBITDA (income)loss                                  1,018          (1,004)
     Add: Thinkbox EBITDA loss                                          884               -
                                                                   --------        --------
Restricted EBITDA                                                  $ 10,039        $  8,544
                                                                   ========        ========
</TABLE>

** 2003 Amount includes amortization of capitalized software costs
   of $333 which are included in operating costs and expenses above.



                                                                              28
<PAGE>

Results of Operations for the Three Months Ended June 30, 2003 -- 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 revenue.
<TABLE>
<CAPTION>

                                                           Three Ended June Months 30,
                                                      2002                                  2003
                                           -----------------------------        --------------------------
                                             Amount    % of Net Revenue          Amount   % of Net Revenue
                                           ---------    ----------------        --------- ----------------
                                                              (Dollars in millions)

<S>                                        <C>               <C>                <C>            <C>
Revenue, net                               $  30.6           100.0%             $   29.3       100.0%
Cost of goods sold                             8.5            27.8%                  7.8        26.6%
                                           -------            ----              --------       -----
Gross profit                                  22.1            72.2%                 21.5        73.4%
Costs and expenses:
   Sales and marketing                         6.3            20.6%                  5.7        19.5%
   Distribution, circulation and               2.8             9.2%                  2.9         9.9%
   fulfillment
   Editorial                                   2.1             6.9%                  2.6         8.9%
   General and administrative                  4.0            13.1%                  4.3        14.7%
   Restructuring costs                           -             0.0%                  0.1         0.3%
   Depreciation                                0.5             1.6%                  0.4         1.4%
   Amortization of intangible assets           2.2             7.2%                  2.3         7.8%
                                           -------            ----              --------       -----
                                              17.9            58.6%                 18.3        62.5%
                                           -------            ----              --------       -----

Income from operations                         4.2            13.6%                  3.2        10.9%

Interest expense                              (7.2)          (23.5%)                (6.9)      (23.5%)
Other income (expense), net                    0.2             0.7%                 (0.2)       (0.7%)
                                           -------            ----              --------       -----
Loss before income tax provision              (2.8)           (9.2%)                (3.9)      (13.3%)
Income tax provision                           0.2             0.7%                    -         0.0%
                                           -------            ----              --------       -----
                                           -------            ----              --------       -----
Net loss                                   $  (3.0)           (9.9%)            $   (3.9)      (13.3%)
                                           =======            ====              ========       =====

   Adjusted EBITDA(a)                      $   6.9            22.5%             $    5.9        20.1%
                                           =======            ====              ========       =====
</TABLE>

(a) Adjusted EBITDA is defined as income (loss) before interest expense, income
    taxes, depreciation, amortization, other (income) charges excluding
    unrealized hedge gain of ($207) for three months ended June 30, 2002 and
    restructuring costs of $126 for the three months ended June 30, 2003.
    Adjusted EBITDA data is a non-GAAP measure and is included in our discussion
    because we believe that this information may be considered by investors as
    an additional basis on which to evaluate Weekly Reader's performance.
    Because all companies do not calculate Adjusted EBITDA identically, the
    presentation of Adjusted EBITDA in this report is not necessarily comparable
    to similarly titled measures of other companies. Adjusted EBITDA is not
    intended to represent cash flow from operating activities and should not be
    considered an alternative to net income or loss (as determined in conformity
    with GAAP) as an indicator of the Company's operating performance or to cash
    flow as a measure of liquidity. It is presented herein as the Company
    evaluates and measures each business' performance based on their Adjusted
    EBITDA results. Adjusted EBITDA may not be available for the Company's
    discretionary use as there are requirements to repay debt, among other
    payments.


Three Months Ended June 30, 2003 Compared to Three Months Ended June 30, 2002

Revenue, net. For the three months ended June 30, 2003, revenue, net decreased
$1.3 million or 4.2% to $29.3 million from $30.6 million for the same period in
2002. Weekly Reader, not including AGS and World Almanac, revenue, net increased
$0.7 million, or 15.2%, to $5.3 million from $4.6 million for the same period in
2002. This was primarily attributable to higher custom publishing shipments by
Weekly Reader's subsidiary Lifetime Learning Systems.

Weekly Reader, not including AGS and World Almanac, revenue, net increased $0.7
million, or 15.2%, to $5.3 million from $4.6 million for the same period in
2002. This was attributable to higher custom publishing shipments by Weekly
Reader's subsidiary Lifetime Learning Systems and greater licensing revenue.
Lifetime Learning revenue was $0.5 million, or approximately 104.0% greater than
the second quarter of 2002 and licensing revenue was up $0.3 million or 28.0%
for the three months ending June 30, 2003 driven by higher sales through it's
QVC channel.

                                                                              29
<PAGE>

AGS revenue, net decreased $0.7 million, or 4.9%, to $13.5 million from $14.2
million for the same period in 2002, primarily due a $0.9 million decrease in
backlisted curriculum products, partially offset by growth in core curriculum
and assessment products of $0.2 million.

World Almanac revenue, net decreased by $1.3 million, or 11.0%, to $10.5 million
from $11.8 million for the same period in 2002. This decrease was primarily due
to lower net revenue at WAE Library Services due to the continuing weak
environmental for school library funding partially offset by higher revenue at
Gareth Stevens.

Gross profit. For the three months ended June 30, 2003, gross profit decreased
$0.6 million, or 2.7% to $21.5 million from $22.1 million for the same period in
2002. Gross profit as a percentage of revenue, net increased to 73.4% for the
three months ended June 30, 2003 from 72.2% for the same period in 2002.

Costs and expenses. For the three months ended June 30, 2003, costs and expenses
increased $0.4 million, or 2.2% to $18.3 million from $17.9 million for the same
period in 2002, and costs and expenses as a percentage of revenue, net increased
to 62.5% for the three months ended June 30, 2003 from 58.6% for the same period
in 2002. Editorial costs increased $0.5 million, general and administrative cost
increased $0.3 million, restructuring costs increased $0.1 million, partially
offset by a decrease of $0.6 million in sales and marketing expenses. The
restructuring cost adjustment of $0.1 million recorded in the six months ended
June 30, 2003 related to the Company's update of its assumptions used in
determining the fair value of the remaining lease obligations associated with
the facilities vacated during 2002 in accordance with SFAS 146, "Accounting for
costs associated with exit or disposal activities". This adjustment relates to
the reserve established in 2002.

Income from operations. For the three months ended June 30, 2003, income from
operations decreased by $1.0 million, or 23.8%, to $3.2 million from $4.2
million for the same period in 2002 and income from operations as a percentage
of revenue, net decreased to 10.9% from 13.6% for the same period in 2002. This
decrease was primarily due to the factors described above.

Interest expense. For the three months ended June 30, 2003, interest expense
decreased by $0.3 million, or 4.2%, to $6.9 million from $7.2 million for the
same period in 2002 and interest expense as a percentage of revenue, net was
flat at 23.5% compared to the same period in 2002.

Income tax provision. For the three months ended June 30, 2003, the provision
for income taxes decreased by $0.2 million, or 100.0%, to $0.0 from $0.2 million
for the same period in 2002. Weekly Reader also recorded non-cash deferred
income tax expense of approximately $0.2 million for the three months ended June
30, 2003 and 2002 related to the continued effect of SFAS 142. Historically,
Weekly Reader did not need a valuation allowance for the portion of their net
operating loss equal to the excess of tax over book amortization on
tax-deductible goodwill and trademarks since the liability was expected to
reverse during the carryforward period of the net operating losses. As a result
of the adoption of SFAS 142, the timing of the reversal of this liability is
indefinite and can no longer be offset by Weekly Reader's net operating loss
carryforwards. While book amortization of tax-deductible goodwill and trademarks
ceased on January 1, 2002, Weekly Reader will continue to amortize these assets
for tax purposes. As a result, Weekly Reader will have deferred tax liabilities
that will arise each quarter because the taxable temporary differences related
to the amortization of these assets will not reverse prior to the expiration
period of Weekly Reader's deductible temporary differences unless the related
assets are sold or an impairment of the assets is recorded. Accordingly, Weekly
Reader recorded non-cash deferred income tax expense of $0.2 million for the
three months ended June 30, 2002 and 2003. A tax refund offset the non-cash
deferred income tax expense in the three months ended June 30, 2003.


                                                                              30
<PAGE>

Net loss. For the three months ended June 30, 2003, net loss increased by $0.9
million, or 30.0%, to $3.9 million from $3.0 million for the same period in 2002
for the reasons discussed above. Net loss as a percentage of net revenues
increased to 13.3% for the three months ended June 30, 2003 from 9.9% for the
same period in 2002.

Adjusted EBITDA. For the three months ended June 30, 2003, Adjusted EBITDA
decreased by $1.0 million, or 14.5%, to $5.9 million from $6.9 million for the
same period in 2002. This decrease is primarily attributable to the factors
described above. Adjusted EBITDA is defined as income (loss) before interest
expense, income taxes, depreciation, amortization, other (income) charges
excluding unrealized hedge gain of ($207) for three months ended June 30, 2002
and restructuring costs of $126 for the three months ended June 30, 2003.
Adjusted EBITDA data is a non-GAAP measure and is included in our discussion
because we believe that this information may be considered by investors as an
additional basis on which to evaluate Weekly Reader's performance. Because all
companies do not calculate Adjusted EBITDA identically, the presentation of
Adjusted EBITDA in this report is not necessarily comparable to similarly titled
measures of other companies. Adjusted EBITDA is not intended to represent cash
flow from operating activities and should not be considered an alternative to
net income or loss (as determined in conformity with GAAP) as an indicator of
the Company's operating performance or to cash flow as a measure of liquidity.
It is presented herein as the Company evaluates and measures each business'
performance based on their Adjusted EBITDA results. Adjusted EBITDA may not be
available for the Company's discretionary use as there are requirements to repay
debt, among other payments. See Adjusted EBITDA reconciliation to our net loss
below ($ in 000's):

                                             For the three months ended June 30,
Adjusted EBITDA reconciliation to Net Loss          2002            2003
                                                 ------------     ----------
   Net Loss                                      $   (2,969)      $  (3,931)
   Depreciation and amortization of intangibles       2,666           2,740
   Income taxes                                         183              49
   Interest expense                                   7,230           6,911
   Unrealized hedge gain                               (207)              -
   Restructuring costs                                    -             126
                                                 ----------       ---------
Adjusted EBITDA                                  $    6,903       $   5,895
                                                 ==========       =========


                                                                              31
<PAGE>


Results of Operations for the Six Months Ended June 30, 2003-- 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"). The results of operations
of WRC Media and its subsidiaries should be read together with the separate
discussion of the results of operations of Weekly Reader.

In analyzing WRC Media's results for the six months ended June 30, 2002 and
2003, respectively, the seasonal nature of WRC Media's business should be
considered. As a result of seasonality, approximately 20% of WRC Media's
publication and related service revenues usually occur in its first quarter, 20%
in its second quarter, and 60% 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 revenue, net basis. The following table sets forth, for the periods
indicated, consolidated statements of operations data for WRC Media and its
subsidiaries, expressed in millions of dollars and as a percentage of net
revenue.


                                                                              32
<PAGE>

<TABLE>
<CAPTION>
                                                                      Six Months Ended June 30,
                                                            2002                               2003
                                                -----------------------------     --------------------------
                                                  Amount    % of Net Revenue       Amount   % of Net Revenue
                                                ---------    ----------------     --------- ----------------
                                                                      (Dollars in millions)

<S>                                              <C>             <C>                <C>            <C>
Revenue, net                                    $   90.6         100.0%            $   90.5        100.0%
Cost of goods sold                                  26.0          28.7%                25.3         28.0%
                                                --------       -------             --------      -------
Gross profit                                        64.6          71.3%                65.2         72.0%
Costs and expenses:
     Sales and marketing                            24.9          27.5%                21.5         23.8%
     Research and development                        1.0           1.1%                 0.9          1.0%
     Distribution, circulation and fulfillment       6.0           6.6%                 6.4          7.1%
     Editorial                                       4.9           5.4%                 5.2          5.7%
     General and administrative                     10.5          11.6%                12.4         13.7%
     Restructuring costs and other                     -           0.0%                 1.5          1.7%
     non-recurring expenses
     Depreciation                                    1.6           1.8%                 1.2          1.3%
     Amortization of intangible assets               9.7          10.7%                 9.3         10.3%
                                                --------       -------             --------      -------
                                                    58.6          64.7%                58.4         64.6%
                                                --------       -------             --------      -------

Income from operations                               6.0           6.6%                 6.8          7.4%
                                                --------       -------             --------      -------
Interest expense, including amortization
  of deferred financing costs                      (14.8)        (16.3%)              (14.3)       (15.8%)
Loss on investments                                 (1.1)         (1.2%)                  -          0.0%
Other expense, net                                  (0.3)         (0.3%)               (0.6)        (0.7%)
                                                --------       -------             --------      -------
Loss before income tax provision                   (10.2)        (11.2%)               (8.1)        (9.1%)
Income tax provision                                 9.9          10.9%                 1.0          1.1%
                                                --------       -------             --------      -------
Loss before cumulative effect of change
  in accounting principle                          (20.1)        (22.1%)               (9.1)       (10.2%)
Cumulative effect of change in accounting
  principle                                        (72.0)        (79.5%)                  -          0.0%
                                                --------       -------             --------      -------
Net loss                                        $  (92.1)       (101.6%)           $   (9.1)       (10.2%)
                                                ========       =======             ========       =======

     Adjusted EBITDA (a)                        $   15.7          17.3%             $  18.8         20.8%
                                                ========       =======             ========       =======

     Restricted EBITDA(b)                       $   18.2          20.1%             $  17.7         19.6%
                                                ========       =======             ========       =======
</TABLE>

(a) Adjusted EBITDA is defined as income (loss) before interest expense, taxes,
    depreciation, amortization and other (income) charges excluding an
    unrealized hedge gain of ($207) for the six months ended June 30, 2003,
    restructuring costs of $1,289 for the six months ended June 30, 2003 and
    other non-recurring expenses of $192 for the six months ended June 30, 2003.
    Adjusted EBITDA data is a non-GAAP measure and is included in our discussion
    because we believe that this information may be considered by investors as
    an additional basis on which to evaluate WRC Media's performance. Because
    all companies do not calculate Adjusted EBITDA identically, the presentation
    of Adjusted EBITDA in this report is not necessarily comparable to similarly
    titled measures of other companies. Adjusted EBITDA is not intended to
    represent cash flow from operating activities and should not be considered
    an alternative to net income or loss (as determined in conformity with GAAP)
    as an indicator of the Company's operating performance or to cash flow as a
    measure of liquidity. It is presented herein as the Company evaluates and
    measures each business performance based on their Adjusted EBITDA
    results. Adjusted EBITDA may not be available for the Company's
    discretionary use as there are requirements to repay debt, among other
    payments.

(b) Restricted EBITDA is defined as Adjusted EBITDA excluding WRC Media's
    unrestricted subsidiaries. Given the projected near-term financial
    performance of ChildU and ThinkBox, WRC Media designated ChildU and ThinkBox
    as "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 financial performance will not be included in any
    covenant calculations and any measures of Adjusted EBITDA. Accordingly,
    Restricted EBITDA is defined as WRC Media consolidated Adjusted EBITDA
    excluding the $1.1 million EBITDA income in the six months ended June 30,
    2003 and the $2.5 million EBITDA loss in the six months ended June 30, 2002
    contributed by its unrestricted subsidiaries - ChildU and ThinkBox. As of
    June 30, 2003, there were $122.7 million senior secured term loans under the
    senior credit facilities, of which Adjusted EBITDA as defined in the credit
    agreement is utilized in both financial covenants. If the covenant were to
    be violated, the debt would become callable which could adversely affect the
    Company's financial condition and liquidity. The current minimum ratio for
    the leverage ratio is no greater than 5.75 to 1 and for the fixed charge
    ratio is no less than 1.05 to 1.


                                                                              33
<PAGE>

Six months Ended June 30, 2003 Compared to Six months Ended June 30, 2002

Revenue, net. For the six months ended June 30, 2003, revenue, net decreased
$0.1 million, or 0.1%, to $90.5 million from $90.6 million for the same period
in 2002. This decrease was primarily due to a decrease in revenue, net at Weekly
Reader Corporation of $0.5 million, or 0.8%, to $64.1 million from $64.6 million
for the same period in 2002 combined with a decrease at CompassLearning of $1.8
million, or 7.1%, to $23.5 million from $25.3 million partially offset by an
increase in revenue, net at ChildU, Inc. of $2.2 million, or 314.3%, to $2.9
million from $0.7 million for the same period in 2002.

At Weekly Reader, not including AGS and World Almanac, revenue, net increased
$2.0 million, or 14.5%, to $15.8 million from $13.8 million for the same period
in 2002. This was primarily attributable to higher custom publishing shipments
by Weekly Reader's subsidiary Lifetime Learning Systems.

AGS revenue, net decreased $1.1 million, or 4.2%, to $25.2 from $26.3 million
for the same period in 2002, primarily due to a $1.5 million decrease in
backlisted curriculum products sold partially offset by the growth in assessment
products of $0.4 million.

World Almanac revenue, net decreased $1.4 million, or 5.7%, to $23.1 million
from $24.5 million for the same period in 2002. This decrease was primarily due
to lower shipments at WAE Library Services and lower revenue, net at Facts On
File News Services driven by the continuing weak library market conditions.

CompassLearning revenue, net decreased $1.8 million, or 7.1%, to $23.5 million
from $25.3 million for the same period in 2002. This decrease was primarily due
to (1) a decrease in software revenue of $0.4 million, or 3.2%, to $12.2 million
from $12.6 million for the same period in 2002 primarily as a result of delayed
Title 1 funding and state budget deficits, which contributed to additional
spending delays, (2) a decrease in service revenue from technical support of
$0.5 million, or 7.4%, to $6.3 million from $6.8 million in for the same period
in 2002, and (3) a decrease in professional development revenue of $0.8 million,
or 14.8%, to $4.6 million from $5.4 million for the same period in 2002.

At ChildU, WRC's unrestricted subsidiary, revenue, net increased $2.2 million or
314.3% to $2.9 million from $0.7 million for the same period in 2002 driven by
sales of its web-enabled curriculum products. ChildU achieved an important
milestone in the period ended June 30, 2003, by becoming EBITDA positive ($0.8
million) on a trailing twelve month basis.

The K-12 funding environment continues to be impacted by growing state budget
deficits, which have been causing reductions in state and local educational
spending, including spending on supplemental educational materials. While we
believe WRC will benefit from numerous provisions in the Federal No Child Left
Behind Act (the "NCLB Act"), most of this Federal educational funding will not
be available until later in 2003. Although we expect that Federal educational
funding will increase in the second half of 2003 as a result of the NCLB Act, we
do not believe this funding improvement will be sufficient to offset cuts in
state and local education funding. We expect these cuts and delayed purchases
will negatively affect our top-line revenue, net in the third quarter and may
continue to affect our top-line performance beyond the third quarter. The
uncertainty in the current operating environment makes it difficult to forecast
future results.


                                                                              34
<PAGE>

Gross profit. For the six months ended June 30, 2003, gross profit increased by
$0.6 million, or 0.9%, to $65.2 million from $64.6 million for the same period
in 2002. This increase was primarily attributable to $2.0 million of higher
gross profit at ChildU driven by its revenue growth discussed above, combined
with higher gross profit at Weekly Reader of $0.2 million driven by its increase
in revenues discussed above, partially offset by a lower gross profit at
CompassLearning of $1.5 million caused by its revenue decline. WRC Media's gross
profit as a percentage of revenue, net increased to 72.0% for the six months
ended June 30, 2003 from 71.3% for the same period in 2002.

Costs and expenses. For the six months ended June 30, 2003, costs and expenses
decreased by $0.2 million, or 0.3%, to $58.4 million from $58.6 million for the
same period in 2002. This was primarily attributable to $3.4 million or 13.7%
decrease in sales and marketing expenses, offset by an increase of $1.9 million
in general and administrative expenses and an increase of $1.5 million in
restructuring costs and non-recurring expenses incurred by the Company. During
the six months ended June 30, 2003 CompassLearning recorded an additional bad
debt reserve of $0.9 million in order to increase its allowance for doubtful
accounts. This reserve was recorded due to the uncertainty of collection of the
receivable which resulted from a change in financial condition of the purchaser.
The restructuring cost adjustment of $1.3 million was recorded in the six months
ended June 30, 2003 related to the Company's update of its assumptions used in
determining the fair value of the remaining lease obligations associated with
the facilities vacated during 2002 in accordance with SFAS 146. This adjustment
relates to the reserve established in 2002. The non-recurring charges of $0.2
million relates to failed acquisition due diligence costs.

Income from operations. For the six months ended June 30, 2003, income from
operations increased $0.8 million or 13.3%, to $6.8 million from $6.0 million
for the same period in 2002, due to the factors described above.

Interest expense, including amortization of deferred financing costs. For the
six months ended June 30, 2003, interest expense decreased by $0.5 million, or
3.4%, to $14.3 million from $14.8 million for the same period in 2002 and
interest expense as a percentage of revenue, net decreased to 15.8% from 16.3%
for the same period in 2002.

Loss on investments. For the six months ended June 30, 2003, loss on investments
decreased $1.1 million, or 100.0%, to $0.0 from $1.1 million for the same period
in 2002. The loss in the prior period related to a write down of WRC Media's
minority investment in ThinkBox, Inc.



                                                                              35
<PAGE>

Income tax provision. For the six months ended June 30, 2003, the provision for
income taxes decreased $8.9 million or 89.9% to an income tax provision of $1.0
million from $9.9 million for the same period in 2002. The Company recorded
non-cash deferred income tax expense of $8.7 million on January 1, 2002 and $1.0
million during the six months ended June 30, 2002 and 2003, which would not have
been required prior to the adoption of SFAS 142. The non-cash charge of $8.7
million on January 1, 2002 was recorded to increase the valuation allowance
related to the Company's net operating losses. As a result of the adoption of
SFAS 142, book amortization will not occur during the carry-forward period of
the operating losses. In addition, since book amortization of tax-deductible
goodwill and trademarks ceased on January 1, 2002, the Company will have
deferred tax liabilities that will arise each year because the taxable temporary
differences related to the amortization of these assets will not reverse prior
to the expiration period of the Company's deductible temporary differences
unless the related assets are sold or an impairment of the assets is recorded.

Net loss. For the six months ended June 30, 2003, net loss decreased by $83.0
million, or 90.1%, to $9.1 million from $92.1 million for the same period in
2002 primarily due to the non-cash charges recorded in the prior period
resulting in the Company's adoption of SFAS 142 as described above.

ADJUSTED EBITDA / RESTRICTED EBITDA. For the six months ended June 30, 2003,
Adjusted EBITDA increased $3.1 million or 19.7% to $18.8 million from $15.7
million for the same period in 2002. The increase was primarily attributable to
the higher gross profit combined with the reduced operating expenses excluding
restructuring costs and other non-recurring expense discussed above. Adjusted
EBITDA is defined as income (loss) before interest expense, income taxes,
depreciation, amortization, other (income) charges excluding unrealized hedge
gain of ($207) for the six months ended June 30, 2002, restructuring costs of
$1,289 for the six months ended June 30, 2003 and non-recurring expenses of $192
for the six months ended June 30, 2003. Restricted EBITDA is defined as Adjusted
EBITDA excluding WRC Media's unrestricted subsidiaries. Adjusted EBITDA data is
a non-GAAP measure and is included in our discussion because we believe that
this information may be considered by investors as an additional basis on which
to evaluate WRC Media's performance. Because all companies do not calculate
Adjusted EBITDA identically, the presentation of Adjusted EBITDA in this report
is not necessarily comparable to similarly titled measures of other companies.
Adjusted EBITDA is not intended to represent cash flow from operating activities
and should not be considered an alternative to net income or loss (as determined
in conformity with GAAP) as an indicator of the Company's operating performance
or to cash flow as a measure of liquidity. It is presented herein as the Company
evaluates and measures each business' performance based on their Adjusted EBITDA
results. Adjusted EBITDA may not be available for the Company's discretionary
use as there are requirements to repay debt, among other payments. Given the
projected near-term financial performance of ChildU and ThinkBox, WRC Media
designated ChildU and ThinkBox as "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 included in any covenant calculations and
in any measures of Adjusted EBITDA. Accordingly, Restricted EBITDA is defined as
WRC Media consolidated Adjusted EBITDA excluding the $1.1 million EBITDA income
in 2003 and the $2.5 EBITDA loss in 2002


                                                                              36
<PAGE>

contributed by its unrestricted subsidiaries - ChildU and ThinkBox. As of
June 30, 2003, there were $122.7 million senior secured term loans under the
senior credit facilities, of which Adjusted EBITDA as defined in the credit
agreement is utilized in both financial covenants. If the covenant were to be
violated, the debt would become callable which could adversely affect the
Company's financial condition and liquidity. The current minimum ratio for the
leverage ratio is no greater than 5.75 to 1 and for the fixed charge ratio is no
less than 1.05 to 1. See Adjusted EBITDA / Restricted EBITDA reconciliation to
net loss below ($ in 000's):

<TABLE>
<CAPTION>

                                                                         For the six months ended June 30,
Adjusted EBITDA / Restricted EBITDA reconciliation to Net Loss                2002             2003
                                                                           ----------       ----------

<S>                                                                        <C>               <C>
     Net Loss                                                              $  (92,061)       $ (9,098)
     Depreciation and amortization of
       intangibles**                                                           11,245          11,123
     Income taxes                                                               9,883           1,042
     Interest expense                                                          14,804          14,270
     Cumulative effect of change in accounting
       principle                                                               72,022               -
     Unrealized hedge gain                                                       (207)              -
     Restructuring costs                                                            -           1,289
     Non-recurring expenses                                                         -             192
                                                                           ----------       ---------
Adjusted EBITDA                                                                15,686          18,818
     Add: ChildU EBITDA (income) loss                                           1,347          (1,142)
     Add: Thinkbox EBITDA loss                                                  1,137               -
                                                                           ----------       ---------
Restricted EBITDA                                                          $   18,170       $  17,676
                                                                           ==========       =========
</TABLE>

**  2003 Amount includes amortization of capitalized software costs of $592
    which are included in operating costs and expenses above.


                                                                              37
<PAGE>

Results of Operations for the Six Months Ended June 30, 2003 -- 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 revenue.

<TABLE>
<CAPTION>
                                                                      Six Ended June 30,
                                                          2002                               2003
                                                -----------------------------     --------------------------
                                                  Amount    % of Net Revenue       Amount   % of Net Revenue
                                                ---------    ----------------     --------- ----------------
                                                                      (Dollars in millions)

<S>                                                 <C>            <C>              <C>              <C>
Revenue, net                                        $  64.6        100.0%           $  64.1          100.0%
Cost of goods sold                                     16.9         26.2%              16.2           25.3%
                                                    -------      -------            -------         -------
Gross profit                                           47.7         73.8%              47.9           74.7%
Costs and expenses:
     Sales and marketing                               13.5         20.9%              12.0           18.7%
     Distribution, circulation and
       fulfillment                                      6.0          9.3%               6.4           10.0%
     Editorial                                          4.9          7.6%               5.1            8.0%
     General and administrative                         7.9         12.2%               8.9           13.9%
     Restructuring costs                                  -          0.0%               0.1            0.2%
     Depreciation                                       0.9          1.4%               0.9            1.4%
     Amortization of intangible assets                  4.4          6.7%               4.6            7.2%
                                                    -------      -------            -------         -------
                                                       37.6         58.1%              38.0           59.4%
                                                    -------      -------            -------         -------

Income from operations                                 10.1         15.7%               9.9           15.3%

Interest expense                                      (14.3)       (22.1%)            (13.7)         (21.5%)
Other income (expense), net                             0.2          0.3%              (0.2)          (0.3%)
                                                    -------      -------            -------         -------
Loss before income tax provision                       (4.0)        (6.1%)             (4.0)          (6.5%)
Income tax provision                                    1.8          2.8%               0.2            0.3%
                                                    -------      -------            -------         -------
Loss before cumulative effect of change
   in accounting principle                             (5.8)        (8.9%)             (4.2)          (6.8%)
Cumulative effect of change in
   accounting principle                               (72.0)      (111.5%)                -            0.0%
                                                    -------      -------            -------         -------

Net loss                                            $ (77.8)      (120.4%)          $  (4.2)          (6.8%)
                                                    =======      =======            =======         ======

     Adjusted EBITDA(a)                             $  15.5         24.0%           $  15.3           23.9%
                                                    =======      =======            =======         ======
</TABLE>

(a) Adjusted EBITDA is defined as income (loss) before interest expense, income
    taxes, depreciation, amortization, other (income) charges excluding
    unrealized hedge gain of ($207) for six months ended June 30, 2002 and
    restructuring costs of $126 for the six months ended June 30, 2003. Adjusted
    EBITDA data is a non-GAAP measure and is included in our discussion because
    we believe that this information may be considered by investors as an
    additional basis on which to evaluate Weekly Reader's performance. Because
    all companies do not calculate Adjusted EBITDA identically, the presentation
    of Adjusted EBITDA in this report is not necessarily comparable to similarly
    titled measures of other companies. Adjusted EBITDA is not intended to
    represent cash flow from operating activities and should not be considered
    an alternative to net income or loss (as determined in conformity with GAAP)
    as an indicator of the Company's operating performance or to cash flow as a
    measure of liquidity. It is presented herein as the Company evaluates and
    measures each business' performance based on their Adjusted EBITDA results.
    Adjusted EBITDA may not be available for the Company's discretionary use as
    there are requirements to repay debt, among other payments.

Six months Ended June 30, 2003 Compared to Six months Ended June 30, 2002

Revenue, net. For the six months ended June 30, 2003, revenue, net decreased
$0.5 million or 0.8% to $64.1 million from $64.6 million for the same period in
2002.


                                                                              38
<PAGE>

At Weekly Reader, not including AGS and World Almanac, revenue, net increased
$2.0 million, or 14.5%, to $15.8 million from $13.8 million for the same period
in 2002. This was primarily attributable to higher custom publishing shipments
by Weekly Reader's subsidiary Lifetime Learning Systems.

AGS revenue, net decreased $1.1 million, or 4.2%, to $25.2 from $26.3 million
for the same period in 2002, primarily due to a $1.5 million decrease in
backlisted curriculum products sold partially offset by the growth in assessment
products of $0.3 million.

World Almanac revenue, net decreased $1.4 million, or 5.7%, to $23.1 million
from $24.5 million for the same period in 2002. This decrease was primarily due
to lower shipments at WAE Library Services and lower revenue, net at Facts On
File News Services driven by continuing weak library funding market conditions.

Gross profit. For the six months ended June 30, 2003, gross profit increased
$0.2 million, or 0.4% to $47.9 million from $47.7 million for the same period in
2002. Gross profit as a percentage of revenue, net increased to 74.7% for the
six months ended June 30, 2003 from 73.8% for the same period in 2002.

Costs and expenses. For the six months ended June 30, 2003, costs and expenses
increased $0.4 million, or 1.1% to $38.0 million from $37.6 million for the same
period in 2002. The costs and expenses as a percentage of revenue, net increased
to 59.4% for the six months ended June 30, 2003 from 58.1% for the same period
in 2002. General and administrative expenses increased $1.0 million,
distribution, circulation and fulfillment increased $0.4 million, editorial
costs increased $0.2 million, amortization of intangible assets increased $0.2
million, and restructuring costs increased $0.1 million. These expense increases
were partially offset by a decrease in sales and marketing expenses of $1.5
million. The restructuring cost adjustment of $0.1 million was recorded in the
six months ended June 30, 2003 related to the Company's update of its
assumptions used in determining the fair value of the remaining lease
obligations associated with facilities vacated during 2002 in accordance with
SFAS 146, "Accounting for costs associated with exit or disposal activities".
This adjustment relates to the reserve established in 2002.

Income from operations. For the six months ended June 30, 2003, income from
operations decreased by $0.2 million, or 2.0%, to $9.9 million from $10.1
million for the same period in 2002 for the reasons discussed above. Income from
operations as a percentage of revenue, net decreased to 15.3% from 15.7% for the
same period in 2002. This decrease was primarily due to the factors described
above.

Interest expense. For the six months ended June 30, 2003, interest expense
decreased by $0.6 million, or 4.2%, to $13.7 million from $14.3 million for the
same period in 2002. Interest expense as a percentage of revenue, net decreased
to 21.5% from 22.1% for the same period in 2002.


                                                                              39
<PAGE>

Income tax provision. For the six months ended June 30, 2003, provision for
income taxes decreased by $1.6 million, or 88.9%, to $0.2 million from $1.8
million for the same period in 2002. Weekly Reader recorded non-cash deferred
income tax expense of approximately $1.4 million on January 1, 2002 related to
the adoption of SFAS 142. The non-cash charge of $1.4 million on January 1, 2002
was recorded to increase the valuation allowance related to the deferred tax
asset associated with Weekly Reader's net operating losses. Historically, Weekly
Reader did not need a valuation allowance for the portion of their net operating
loss equal to the excess of tax over book amortization on tax-deductible
goodwill and trademarks since the liability was expected to reverse during the
carryforward period of the net operating losses. As a result of the adoption of
SFAS 142, the timing of the reversal of this liability is indefinite and can no
longer be offset by Weekly Reader's net operating loss carryforwards. While book
amortization of tax-deductible goodwill and trademarks ceased on January 1,
2002, Weekly Reader will continue to amortize these assets for tax purposes. As
a result, Weekly Reader will have deferred tax liabilities that will arise each
quarter because the taxable temporary differences related to the amortization of
these assets will not reverse prior to the expiration period of Weekly Reader's
deductible temporary differences unless the related assets are sold or an
impairment of the assets is recorded. Accordingly, Weekly Reader recorded
non-cash deferred income tax expense of $0.3 million for the six months ended
June 30, 2002 and 2003.

Net loss. For the six months ended June 30, 2003, net loss decreased by $73.6
million, or 94.6%, to $4.2 million from $77.8 million for the same period in
2002 primarily due to the non-cash charges recorded in the prior period
resulting in the Company's adoption of SFAS 142 as described above. Net loss as
a percentage of net revenue, net improved to negative 6.8% for the six months
ended June 30, 2003 from negative 120.4% for the same period in 2002.

ADJUSTED EBITDA. For the six months ended June 30, 2003, Adjusted EBITDA
decreased $0.2 million, or 1.3%, to $15.3 million from $15.5 million for the
same period in 2002. This decrease is primarily attributable to the factors
described above. Adjusted EBITDA is defined as income (loss) before interest
expense, income taxes, depreciation, amortization, other (income) charges
including unrealized hedge gain of ($207) for six months ended June 30, 2002 and
restructuring costs of $126 for the six months ended June 30, 2003. Adjusted
EBITDA data is a non-GAAP measure and is included in our discussion because we
believe that this information may be considered by investors as an additional
basis on which to evaluate Weekly Reader's performance. Because all companies do
not calculate Adjusted EBITDA identically, the presentation of Adjusted EBITDA
in this report is not necessarily comparable to similarly titled measures of
other companies. Adjusted EBITDA is not intended to represent cash flow from
operating activities and should not be considered an alternative to net income
or loss (as determined in conformity with GAAP) as an indicator of the Company's
operating performance or to cash flow as a measure of liquidity. It is presented
herein as the Company evaluates and measures each business' performance based on
their Adjusted EBITDA results. Adjusted EBITDA may not be available for the
Company's discretionary use as there are requirements to repay debt, among other
payments. See Adjusted EBITDA reconciliation to our net loss below ($ in 000's):


                                                                              40
<PAGE>

<TABLE>
<CAPTION>

                                                          For the six months ended June 30,
Adjusted EBITDA reconciliation to Net Loss                    2002                2003
                                                           -----------       -----------

<S>                                                        <C>                <C>
   Net Loss                                                $   (77,765)       $  (4,235)
   Depreciation and amortization of intangibles                  5,334            5,433
   Income taxes                                                  1,797              224
   Interest expense                                             14,321           13,733
   Unrealized hedge gain                                          (207)               -
   Cumulative effect of change in accounting principle          72,022                -
   Restructuring costs                                              -               126
                                                           ----------        ----------
Adjusted EBITDA                                            $   15,502        $   15,281
                                                           ==========        ==========
</TABLE>

Liquidity, Working Capital and Capital Resources

WRC Media's sources of cash are its (i) operating subsidiaries, Weekly Reader
Corporation and CompassLearning, Inc. and (ii) a $30.0 million revolving credit
facility. As of June 30, 2003, $24.0 million of the revolving credit facility
has been drawn down which bears interest which approximated 4.7%. 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. We expect these sources of cash to be adequate for the Company's needs
for the foreseeable future.

As of June 30, 2003, WRC Media and its subsidiaries had negative working capital
of $20.3 million. 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 fourth quarter. WRC Media's cash and cash equivalents were
approximately $12.5 million at June 30, 2003. Included in cash is approximately
$0.4 million of restricted monies, which represent the remaining proceeds from
the issuance of $13.75 million of 18% Junior Cumulative Convertible Preferred
Stock on May 9, 2001 used to purchase and fund ChildU and its minority
investment in ThinkBox. The $0.2 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' operations used approximately $13.8 million in
cash for the six months ended June 30, 2003. WRC Media and its subsidiaries
principal uses of cash are for debt service, working capital and potential
acquisitions.

WRC Media and its subsidiaries investing activities for the six months ended
June 30, 2003 included investments in software development of approximately $2.1
million and capital expenditures of approximately $0.6 million.


                                                                              41
<PAGE>

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 six months ended June 30, 2003,
financing activities provided cash of $19.9 million, which primarily resulted
from net borrowings of $24.0 million under the revolving credit facility
partially offset by a $3.9 million repayment of the senior secured term loans.
We believe that our current cash position, cash from operations and the
availability under our revolving credit facility is sufficient to finance the
Company's operations through December 31, 2003.

The terms of our senior secured credit agreement require us on an ongoing basis
to meet certain financial covenants, including a maximum leverage ratio covenant
and a minimum fixed charge coverage ratio covenant. Compliance with these
covenants is measured as of the last day of each fiscal quarter. Each ratio
becomes more stringent periodically through March 31, 2004. With respect to the
first two fiscal quarters of 2003, we are required to have a leverage ratio no
greater than 5.75:1.0 and a fixed charge coverage ratio no less than 1.05:1.0.
For the fiscal quarter ended June 30, 2003, our leverage ratio was 5.75:1.0 and
our fixed charge coverage ratio was 1.13:1.0.

As of June 30, 2003, we were in compliance with our financial covenants. Our
compliance with the financial covenants in our credit agreement in future
quarters is primarily dependant on our ability to increase net revenue and
control costs. We are pursuing a variety of net revenue and cost control
initiatives. If these initiatives are not successful or the educational funding
environment of our customers does not improve later this year, we may not be
able to comply with our quarterly financial covenants at some point in fiscal
year 2003. Accordingly, we are currently exploring various potential
alternatives that may be available to us in the event we do not comply with such
quarterly financial covenants. No assurances can be given that the Company will
be successful in achieving any of these alternatives or that they will be
achieved on a timely basis with reasonable terms or at all.

If we are unable to continue to comply with the financial covenants as in effect
at the end of any fiscal quarter, we may be in default under our credit
agreement. Upon the occurrence of an event of default under our credit
agreement, our lenders have no obligation to grant us a waiver or extend
additional loans under the revolving facility and have the right to accelerate
in full the repayment of all amounts outstanding under our credit agreement,
including all amounts outstanding under the term loan facilities and revolving
credit facility. As of June 30, 2003, $122.7 million was outstanding under our
term loan facilities and there was $24.0 million of outstanding borrowings under
our revolving credit facility. If any such event of default occurs under our
credit agreement and the lenders take steps to accelerate the amounts due, we
can make no assurance that we would be able to repay such amounts. Our credit
agreement is secured by liens on substantially all of our assets. In the event
that the lenders were to accelerate our prepayment obligations under the term
loan facilities and the revolving facility, such action would constitute an
event of default under our Notes.

Accounting Policies and Estimates

There have been no changes in accounting policies or estimates that would have a
material effect on the financial statements. See Note 2 to the consolidated
financial statements filed in WRC Media's annual report Form 10-K for the year
ended December 31, 2002.


                                                                              42
<PAGE>

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
net revenue are significantly affected by the school year. Weekly Reader's net
revenue in the third, and to a lesser extent the fourth, quarters are generally
the strongest as products are shipped for delivery during the school year.
CompassLearning's revenues are generally strongest in the second quarter, and to
a lesser extent the fourth quarter. CompassLearning's revenues 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 and installed over the summer and ready to train
teachers when they return from summer vacation. CompassLearning's fourth quarter
revenue 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.

Inflation

We do not believe that inflation has had a material impact on our financial
position or results of operations for the periods discussed above. Although
inflationary increases in paper, postage, labor or operating costs could
adversely affect operations, we have generally been able to offset increases in
costs through price increases, labor scheduling and other management actions.

Factors that may affect the future results and financial condition

This Quarterly Report on Form 10-Q contains forward-looking statements.
Additional written and oral forward-looking statements may be made by the
Company from time to time in Securities and Exchange Commission ("SEC") filings
and otherwise. The Company cautions readers that results predicted by
forward-looking statements, including, without limitation, those relating to the
Company's future business prospects, revenues, working capital, liquidity,
capital needs, interest costs and income, are subject to certain risks and
uncertainties that could cause actual results to differ materially from those
indicated in the forward-looking statements, due to factors including the
following and other risks and factors identified from time to time in the
Company's filings with the SEC:

The Company's ability to continue to produce successful supplemental education
material and software products;

Reductions in state and local funding for educational spending materials
resulting, among other things, from increasing state budget deficits.

Uncertainty in the current operating environment which makes it difficult to
forecast future results.


                                                                              43
<PAGE>

The ability of the Company's print and electronic supplemental instructional
materials to continue to successfully meet market needs;

The Company's ability to maintain relationships with its creative talent;

Changes in purchasing patterns in and the strength of educational, trade and
software markets;

Competition from other supplemental education materials companies;

Significant changes in the publishing industry, especially relating to the
distribution and sale of supplemental educational materials;

The effect on the Company of volatility in the price of paper and periodic
increases in postage rates;

The Company's ability to effectively use the Internet to support its existing
businesses and to launch successful new Internet initiatives;

The general risks inherent in the market and the impact of rising interest rates
with regard to its variable debt facilities; and

The terms of our senior secured credit agreement require us on an ongoing basis
to meet certain financial covenants, including a maximum leverage ratio covenant
and a minimum fixed charge coverage ratio covenant. Each ratio becomes more
stringent periodically through March 31, 2004. A default under the credit
agreement could result in acceleration of payment obligations which would impact
our ability to continue to finance our business through other debt agreements,
or otherwise.

The foregoing list of factors should not be construed as exhaustive or as any
admission regarding the adequacy of disclosures made by the Company prior to the
date hereof. The Company disclaims any intention or obligation to update or
revise forward-looking statements, whether as a result of new information,
future events or otherwise.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

WRC Media 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 Media is subject to market risk exposure related to changes in interest
rates on the $122.7 million (as of June 30, 2003) 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:



                                                                              44
<PAGE>

(1)      For the revolving credit facility maturing in two years and the $17.0
         million senior secured term loan A facility maturing in three 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 $96.0 million senior secured term loan B facility maturing in
         three years, the LIBO rate plus 4.25% or the alternate base rate plus
         3.25%.
(3)      For the $9.7 million senior secured new term A loan facility maturing
         in three years, the LIBO rate plus 4.25% or the alternate base rate
         plus 3.25%

The senior credit facilities require WRC Media to obtain interest rate
protection for at least 50% of the senior secured term loans for the duration of
the senior credit facilities. On November 15, 2002, we entered into an
arrangement with a notional value of $64.8 million, which terminates on November
15, 2003 and requires us to pay a floating rate of interest based on the three
month LIBO rate as defined in that arrangement with a cap rate of 2.5%. The fair
value of the interest rate cap as of June 30, 2003 was de-minimus.


ITEM 4. CONTROLS AND PROCEDURES

(a) Disclosure Controls and Procedures. WRC Media Inc.'s management, with the
    participation of Chief Executive Officer and Chief Financial Officer, has
    evaluated the effectiveness of the Companuy's disclosure controls and
    procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under
    the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of
    the end of the period covered by this report. Based on such evaluation, the
    Company's Chief Executive Officer and Chief Financial Officer have concluded
    that, as of the end of such period, the Company's disclosure controls and
    procedures are effective.

(b) Internal Control Over Financial Reporting. There have not been any changes
    in WRC Media Inc.'s internal controls over financial reporting (as such term
    is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during
    the fiscal quarter to which this report relates that have materially
    affected, or are reasonably likely to materially affect, the Company's
    internal control over financial reporting.

                                                                              45
<PAGE>


PART II

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K


1.  Form 8-K, filed March 24, 2003, reporting operating results for the quarter
    ended December 31, 2002.

2.  Form 8-K, filed March 27, 2003, reporting the transcript of an investor
    conference call held March 26, 2003.

3.  Form 8-K filed May 15, 2003, reporting operating results for the quarter
    ended March 31, 2003.

4.  Form 8-K filed May 20, 2003, reporting the transcript of an investor
    conference call held on May 20, 2003.

5.  Form 8-K, filed August 12, 2003, reporting operating results for the quarter
    ended June 30, 2003.

6.  Form 8-K, filed August 13, 2003, reporting the transcript of an investor
    conference call held August 13, 2003.





Exhibit      Description
-------      -----------
31.1          Certification of Martin E. Kenney, Jr., Chief Executive Officer of
              WRC Media Inc. and CompassLearning, Inc., pursuant to
              Rules 13a-14(a) and 15(d)-14(a) of the Securities Exchange
              Act of 1934, as amended, dated August 14, 2003.

31.2          Certification of Robert S. Lynch, Chief Operating Officer and
              Financial Accounting Officer of WRC Media Inc., Weekly Reader
              Corporation and CompassLearning, Inc., pursuant to Rules
              13a-14(a) and 15(d)-14(a) of the Securities Exchange Act of 1934,
              as amended, dated August 14, 2003.

31.3          Certification of Richard Nota, Vice President of Finance and
              Principal Accounting Officer of WRC Media Inc., dated August 14,
              2003.

31.4          Certification of Robert Jackson, President of Weekly Reader
              Corporation, dated August 14, 2003.

32.1          Certification pursuant to 18 U.S.C ss. 1350, dated August 14,
              2003.


                                                                              46
<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.
<TABLE>
<CAPTION>

<S>                                                                      <C>
 /s/ Martin E. Kenney, Jr.                                               Date:  August 14, 2003
--------------------------------------------                             -------------------------------
Martin E. Kenney, Jr.
Director: WRC Media Inc., Weekly Reader Corporation
and CompassLearning, Inc.;
Chief Executive Officer: WRC Media Inc. and CompassLearning, Inc.;
President: CompassLearning, Inc.; and Executive Vice President,
Weekly Reader Corporation




 /s/ Robert S. Lynch                                                    Date:  August 14, 2003
--------------------------------------------                            -------------------------------
Robert S. Lynch
Director: WRC Media Inc., Weekly Reader Corporation
and CompassLearning, Inc.;
Executive Vice President, COO: WRC Media Inc. and
CompassLearning, Inc.; and Treasurer: WRC Media Inc.,
Weekly Reader Corporation and CompassLearning, Inc.


/s/ Richard Nota                                                        Date:  August 14, 2003
--------------------------------------------                            -------------------------------
Richard Nota
Vice President, Finance: WRC Media Inc.


 /s/ Robert Jackson                                                     Date:  August 14, 2003
--------------------------------------------                            -------------------------------
Robert Jackson
President, Weekly Reader Corporation
</TABLE>