<PAGE>


                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549
                              --------------------
                                   FORM 10-K/A
                                (Amendment No. 1)

 [x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934 FOR THE FISCAL YEAR ENDED MARCH 31, 2001.

                                       OR

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

              For the Transaction Period From _________ to ________

                        Commission File Number 333-48014

                              ZIFF DAVIS MEDIA INC.
             (Exact Name of Registrant as Specified in Its Charter)

<TABLE>
<S>                                                                           <C>
                        DELAWARE                                                         36-4336460
(State or other jurisdiction of incorporation or organization)               (I.R.S. Employer Identification No.)
</TABLE>

                              28 East 28th Street,
                            New York, New York 10016
              (Address of principal executive offices and zip code)

        Registrants telephone number, including area code: (212) 503-3500

          Shares registered pursuant to Section 12(b) of the Act: None

          Shares registered pursuant to Section 12(g) of the Act: None

     Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [_]

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by references in Part III of this Form 10-K or any amendment to
this Form 10-K. [_]

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

     As of July 13, 2001, 1,000 shares of common stock, par value, $0.01 per
share.

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None

<PAGE>

                              ZIFF DAVIS MEDIA INC.

          Index to Form 10-K/A for the Fiscal Year ended March 31, 2001

<TABLE>
<CAPTION>
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<S>                                                                                                             <C>
PART I
Item  1.      Business......................................................................................       5

PART II
Item  5.      Market for Registrant's Common Equity and Related Stockholder Matters ........................      12
Item  7.      Management's Discussion and Analysis of Financial Condition and Results of Operations ........      12
Item  7A.     Quantitative and Qualitative Disclosures About Market Risk ...................................      12

PART III
Item  11.     Executive Compensation .......................................................................      13
Item  12.     Security Ownership of Certain Beneficial Owners and Management ...............................      15
Item  13.     Certain Relationships and Related Transactions ...............................................      16

PART IV
Item  14.     Exhibits, Financial Statement Schedules and Reports on Form 8-K ..............................      18

SIGNATURES .................................................................................................      19

APPENDIX ...................................................................................................      F-1
</TABLE>

                                 IMPORTANT NOTE

     This Amendment No. 1 to Form 10-K/A amends and restates items 1, 5, 7, 7A,
11, 12, 13 and 14 originally included in the Annual Report on Form 10-K for the
fiscal year ended March 31, 2001 as filed with the Securities and Exchange
Commission on July 16, 2001.

                                       1

<PAGE>

Forward-Looking Statements and Risk Factors

     Certain statements in this Annual Report on Form 10-K contain
"forward-looking statements." Forward-looking statements are any statements
other than statements of historical fact. Examples of forward-looking statements
include projections of earnings, revenue or other financial items, statements of
the plans and objectives of management for future operations, and statements
concerning proposed new products and services, and any statements of assumptions
underlying any of the foregoing. In some cases, you can identify forward-looking
statements by the use of words such as "may", "will", "expects", "should",
"believes", "plans", "anticipates", "estimates", "predicts", "potential" or
"continue", and any other words of similar meaning.

     Statements regarding the company's future financial performance or results
of operations, including expected revenue growth, future paper, postage,
printing or other expenses, future operating margins, anticipated capital
spending, our ability to obtain funding and other future or expected performance
are subject to the following risks: the acquisition of businesses or the launch
of new lines of business, which could increase operating expenses and decrease
operating margins; the inability to identify, develop and achieve success for
new products, services and technologies; the inability to attract new customers
for the company's publications and services; increased competition, which could
lead to decreases in users or negative pressure on the company's pricing and the
need for increased marketing; the inability to maintain, establish or renew
relationships with suppliers and advertisers; a decrease in the growth of
advertising spending in magazines or in general or on our businesses in
particular; failure of advertisers to meet their commitments under their
contracts to purchase advertising. Risks about our business include the
following:

Because we have substantial debt, we may be more vulnerable to general adverse
economic and industry conditions.

     As of March 31, 2001 we had total indebtedness of approximately $459.2
million (excluding unused commitments under the revolving portion of our senior
credit facilities) and total stockholder's equity of $278.6 million.

     Our substantial indebtedness could have the following important
consequences:

     .    require us to dedicate a substantial portion of our cash flow from
          operations to payments on our indebtedness, thereby reducing the
          availability of our cash flow to fund our operations;

     .    increase our vulnerability to general adverse economic and industry
          conditions;

     .    limit our flexibility in planning for, or reacting to, changes in our
          business and the publishing industry generally;

     .    place us at a competitive disadvantage compared to our competitors
          that have less debt; and

     .    limit, along with the financial and other restrictive covenants in our
          indebtedness, among other things, our ability to borrow additional
          funds; if we fail to comply with those covenants we could trigger an
          event of default under the agreements governing our indebtedness that,
          if not cured or waived, could have a material adverse effect on us.

Our projected sources of cash may be insufficient to meet our obligations under
our debt.

     We expect to pay our expenses and principal and interest on our debt with
cash flow from operations and future borrowings under the revolving portion of
our senior credit facilities. Our ability to make payments on and to refinance
our indebtedness and to fund our business strategy, working capital and capital
expenditures will depend on our ability to generate cash in the future, which is
subject to general economic, financial, competitive, legislative, regulatory and
other factors that are beyond our control. We cannot assure you that our
business will generate sufficient earnings or cash flow from operations. Future
borrowings may not be available to us and our subsidiaries under the revolving
portion of our senior credit facilities in an amount sufficient to enable us to
pay our indebtedness or to fund our other liquidity needs. If we cannot service
our indebtedness we will be forced to take actions such as delaying or reducing
the implementation of our business strategy or capital expenditures, selling
assets, restructuring or refinancing our indebtedness or seeking additional
equity capital or bankruptcy protection. We cannot assure you that any of these
remedies can be effected on commercially reasonable terms or at all.

                                       2

<PAGE>

Noncompliance with our debt facilities could accelerate our obligations.

     A breach of any of the restrictive covenants under the credit agreement
relating to our senior credit facilities or our inability to comply with the
required financial ratios could result in a default under our senior credit
facilities. In the event of any such default, the lenders under our senior
credit facilities may elect to declare all outstanding borrowings, together with
accrued and unpaid interest and other fees, to be immediately due and payable,
to require us to use all of our available cash to repay such borrowings or to
prevent us from making debt service payments on our notes, which would result in
an event of default under our notes. Our senior lenders also have the right in
such circumstances to terminate any commitments they have to provide further
financing, including under the revolving portion of our senior credit
facilities.

If we are not successful in evolving publications to a rapidly changing market,
we may not be able to compete effectively.

     As a result of the rapidly changing market in which we compete, we are in
the process of evolving some of our publications in order to maintain a leading
position in the marketplace. Although every effort is and will continue to be
made to ensure such evolution is successful, we cannot guarantee that we will
continue to retain current levels of circulation and advertising revenue.

We may not be able to protect our owned intellectual property.

     We rely on copyright and trademark rights to protect our publishing
products. Effective trademark and copyright protection may be unavailable or
limited, or we may not have applied for such protection in the United States or
abroad. In addition, we have been, and may in the future be, notified of claims
that our publishing products may infringe trademarks, copyrights and/or other
intellectual property rights of others. Such claims, including any related
litigation, could result in significant expense to us and adversely affect our
cash flow, whether or not such litigation is resolved in our favor.

Our business might suffer if we fail to retain our senior management or to
recruit and retain key personnel.

     We believe that our success depends on our ability to retain our senior
management team. Our business is managed by a small group of key executive
officers. The loss of services of one or more of these senior executives could
adversely affect our ability to effectively manage our overall operations or
successfully execute current or future business strategies.

     In addition, our success depends on our continued ability to recruit and
retain highly skilled, knowledgeable and sophisticated editorial, sales and
technical personnel. Competition for highly skilled personnel is intense.
Accordingly, we cannot assure you of our ongoing ability to attract and retain
such qualified employees.

Because we depend on advertising as a principal source of revenue, we may be
harmed by reduced advertising.

     We expect that advertising revenue will continue to be the principal source
of our revenue in the foreseeable future. Most of our advertising contracts are
either short-term contracts and/or can be terminated by the advertiser at any
time with little notice. We cannot assure you that we will be able to retain
current advertisers or obtain new advertising contracts. Advertising revenue for
the magazine industry is cyclical and dependent upon general economic
conditions. If the general economic downturn continues in the future, our
advertisers may continue to reduce their advertising budgets. In addition,
factors such as pricing pressures, delays and new product launches may affect
technology product advertisers. We cannot assure you that advertisers will
maintain current levels of advertising in special-interest magazines and events
instead of advertising in more general-interest media.

We face significant competition for advertising and circulation.

     We face significant competition with respect to our print publications from
a number of technology publishers, some of which may have greater financial and
other resources than we have, which may enhance their ability to compete in the
technology publishing market. We principally compete for advertising and
circulation revenue with publishers of other technology publications. We also
face broad competition from media companies that produce general-interest
magazines and newspapers. Competition for advertising revenue is primarily based
on advertising rates, the nature and scope of readership, reader response to
advertisers' products and services and the effectiveness of sales teams. Overall
competitive factors in publishing include product positioning, editorial
quality, circulation, price and customer service.

                                       3

<PAGE>

Our principal vendors are consolidating and this may adversely affect our
business and operations.

     Our principal vendors include paper suppliers, printers, subscription
fulfillment houses and national newsstand distributors. Each of these industries
is currently experiencing consolidation among its principal participants. Such
consolidation may result in all or any of the following which could adversely
affect our results of operations:

     .    decreased competition, which may lead to increased prices;
     .    interruptions and delays in services provided by such vendors; and
     .    greater dependence on certain vendors.

We may be adversely affected by fluctuations in paper and postage costs.

     Our principal raw material is paper. Paper prices have fluctuated over the
past several years. We generally enter into contracts for the purchase of paper
which adjust the price on a quarterly basis. We have not entered, and do not
currently plan to enter, into long-term forward price or option contracts for
paper. Accordingly, significant increases in paper prices could adversely affect
our future results of operations.

     Postage for magazine distribution is also one of our significant expenses.
We primarily use the U.S. Postal Service to distribute magazine subscriptions.
We may not be able to recover, in whole or in part, paper or postage cost
increases. Accordingly, significant cost increases could have a material adverse
effect on our cash flow.

     Any or all of our forward-looking statements in this report and in any
other public statements we make may turn out to be wrong. They can be affected
by inaccurate assumptions we might make or by known or unknown risks and
uncertainties. Many factors mentioned in the discussion in this report will be
important in determining future results. Consequently, no forward-looking
statement can be guaranteed. Actual future results may vary materially. We
undertake no obligation to publicly update any forward-looking statements,
whether as a result of new information, future events or otherwise. You are
advised, however, to consult any further disclosures we make on related subjects
in our reports to the SEC. Also note that we provide the following cautionary
discussion of risks, uncertainties and possibly inaccurate assumptions relevant
to our businesses. These are factors that we think could cause our actual
results to differ materially from expected and historical results. Other factors
besides those listed here could also adversely affect us. This discussion is
provided as permitted by the Private Securities Litigation Reform Act of 1995.

                                       4

<PAGE>

                                     PART I

ITEM 1. BUSINESS

Background

     Ziff Davis Media Inc. (the "Company", "we") is a multimedia content company
whose principal business is publishing. We publish and license magazines,
provide editorial content about technology and the Internet, both in print and
online, and also provide custom testing services and software and produce
conferences, seminars and webcasts. The Company was incorporated in the state of
Delaware on November 24, 1999 and was formed to acquire certain publishing
assets of the Publishing division ("Ziff-Davis Publishing", "ZDP" or
"Predecessor") of Ziff-Davis Inc. ("ZDI"), an unrelated company. Our major
operating subsidiaries are Ziff Davis Publishing Inc., Ziff Davis Development
Inc. ("LaunchCo") and Ziff Davis Internet Inc. ("InternetCo"). The Company's
year-end is March 31, while ZDP's year-end was December 31.

     We had no operations prior to April 5, 2000, when we completed the
acquisition of ZDP for $780.0 million plus expenses (the "Acquisition"). The
Acquisition was accounted for under the purchase method of accounting. We funded
the Acquisition by: (i) issuing 1,000 shares of common stock to our parent
company, Ziff Davis Holdings Inc., for $335.0 million, (ii) entering into a
$405.0 million senior credit facility of which $355.0 million was borrowed at
closing and (iii) issuing $175.0 million of senior subordinated notes (the
"Bridge Loan") (See Note 5 of Notes to Consolidated Financial Statements). Fees
and expenses, including debt issuance costs associated with the Acquisition,
totaling approximately $30.0 million, were paid with the equity and debt
proceeds.

     Our operations are classified into two reportable operating segments,
Established Businesses and Developing Businesses.

     The Established Businesses segment is engaged in publishing and licensing
magazines with editorial content about technology and the Internet. The business
segment licenses its content and brands to more than 50 licensees in over 30
foreign markets. In addition, this segment also publishes MacWorld through a 50%
owned joint venture with International Data Group.

     The Developing Businesses segment is comprised of our InternetCo and
LaunchCo subsidiaries. This segment is focused on developing (1)
Internet-related ventures leveraged off our editorial expertise and
relationships with our audience and advertisers in our Established Businesses
and (2) new businesses including publications, testing services, conferences and
research.

Established Businesses

     We are one of the largest technology magazine publishers in the United
States as measured by revenue. In 2000, we had an estimated 25% share of the
technology magazine industry based on advertising revenue. Our 11 established
U.S. titles, excluding our MacWorld joint venture, have a combined circulation
of approximately 5.9 million and estimated domestic readership of approximately
21 million individuals. Our magazines are well known, leading publications that
offer readers comprehensive market and product coverage as well as access to
lab-based testing and award-winning editorial content. Our titles include PC
Magazine and eWeek (formerly PC Week), which were the number two and number four
ranked technology magazines, respectively, in the United States in 2000 as
measured by advertising revenue. PC Magazine was the 17/th/ largest domestic
magazine in 2000 as measured by advertising revenue, placing it among the
leading domestic business and entertainment magazines such as Business Week's
North America edition, Forbes, Fortune and People. In addition, Yahoo! Internet
Life and Interactive Week, were named two of the top 20 magazine launches of the
1990s by Folio magazine and are the leading publications in their respective
market places. We are also the leading publisher of electronic games magazines,
with the largest market share, an estimated 40.1%, based on advertising revenue
in 2000.

     Our readers are well-educated, influential buyers of technology and other
products and decision-makers in their professional fields and households, which
makes them attractive to a wide range of technology advertisers. For example,
the more than 2.8 million estimated business influencers (professionals who
recommend, specify and/or approve product purchases) who read PC Magazine each
spent an estimated average of $390,000 on technology products in 2000, according
to IntelliQuest. Similarly, in December 2000, according to BPA International,
the average technology budget for readers of eWeek was $26.5 million.
Furthermore, according to Mediamark Research Inc.'s Fall 2000 data release, the
average household incomes of the PC Magazine and Yahoo! Internet Life readers
are approximately $77,000 and $71,000, respectively, which are significantly
higher than the average U.S. household income. The size and composition of our
readership offers advertisers concentrated exposure to their target audiences.
As a result, our top 10 advertisers, including Microsoft, International Business
Machines, Hewlett Packard and Dell Computer, have consistently advertised in our

                                       5

<PAGE>


publications. Importantly, as technology has become more pervasive, our
publications are becoming more appealing to a broader range of advertisers.

     Our current portfolio of established titles can be divided into the
following three categories: (1) Business publications; (2) Consumer
publications; and (3) Games publications. The following table sets forth
information regarding these titles:

Established Businesses Segment

<TABLE>
<CAPTION>
                                                                             Year 2001
                                                    First      Primary         Target
Magazine Title (1)                                  Issue      Audience     Circulation
------------------------------------------------------------------------------------------
<S>                                                 <C>        <C>          <C>
Business Publications
PC Magazine.......................................   1981      Business       1,225,000
Ziff Davis SMART BUSINESS.........................   1988      Business         800,000
eWeek.............................................   1983      Business         400,000
Interactive Week..................................   1994      Business         300,000
Smart Partner.....................................   1998      Business          85,000

Consumer Publications
Yahoo! Internet Life..............................   1995      Consumer       1,100,000
Family Internet Life (formerly FamilyPC)..........   1994      Consumer         700,000

Games Publications
Electronic Gaming Monthly.........................   1988      Consumer         500,000
Official U.S. PlayStation Magazine................   1997      Consumer         375,000
Computer Gaming World.............................   1981      Consumer         340,000
Expert Gamer......................................   1988      Consumer         200,000
</TABLE>

(1) Does not include MacWorld (published through a joint venture with
International Data Group)

Business Publications

     Our titles in this category provide authoritative, independent guidance to
business influencers and professionals that is considered by its readers a
primary resource for technology purchasing decisions and business solutions.

     PC Magazine. PC Magazine is one of the nation's largest technology
magazines, with a circulation rate base of more than 1.2 million and an
estimated readership of more than 6.6 million. The magazine's brand recognition
is estimated to be more than 50% among all U.S. adults and more than 80% among
individuals involved in the purchase of computer-related products and services.
PC Magazine differentiates itself through unique and extensive product reviews
based on benchmark testing performed in the PC Magazine Labs, supplemented by
its "First Looks" section covering recently released technology products and by
its widely respected opinion/analysis columns. As the Internet becomes more
pervasive, we are broadening PC Magazine's focus to increase its emphasis on
Internet infrastructure products and services.

     Ziff Davis Smart Business. The magazine is for business leaders needing to
know the "why and how" of deploying technology and services to grow business
focusing on the bottom line. The publication's editorial focus emphasizes not
only how a product will perform from a technical standpoint, but also how real
users will rate the product and how it will impact their business. The magazine
offers a blend of product-oriented coverage that combines performance-oriented
testing with usability testing from the Ziff Davis Smart Business Usability Lab.
Articles include reviews of hardware, software, Internet products and CD-ROMs,
as well as highlights of technologies and top picks.

     eWeek. With a rate base of 400,000, eWeek is one of the largest
controlled-circulation technology publications. Controlled-circulation
publications are distributed directly to qualified professionals without charge.
Through print, the Internet, webcasts, interactive and face-to-face seminars and
conferences, eWeek helps leading e-business IT decision makers evaluate and
deploy Internet technology solutions in their enterprises. In order to qualify
for subscriptions, eWeek readers must have a minimum budget authority of
$25,000, must purchase Internet/intranet products and services and work at a
site that has the Internet installed, as audited by BPA International. The
criteria we use to qualify readers for this magazine are some of the highest
qualification standards in the industry. We believe this makes eWeek attractive
to advertisers selling products and services to IT professionals and businesses
building dot-com enterprises, such as consulting, telecommunications and
Internet infrastructure companies.

                                       6

<PAGE>


     eWeek is aggressively expanding its franchise to other branded products and
services that are advertiser- or sponsor-supported, such as special report
series, online content and online events, such as the eWeek Live! platform. The
regularly scheduled online seminars focus on eWeek content areas, including
eWeek eValuations, Fast@Tracks special reports and eWeek Labs.

     Interactive Week. A controlled-circulation publication launched in 1994,
Interactive Week has become one of the largest newsweeklies focused on the
Internet as measured by circulation, with a rate base of 300,000 as of January
2001. We only distribute the magazine to readers who are business and technology
leaders responsible for facilitating and implementing e-commerce and
communications solutions for their organization's Internet strategies.
Interactive Week provides complete coverage of the Internet, from building the
infrastructure to the applications to the devices used to access the
information.

     Smart Partner. Smart Partner is the leading "how to" magazine for IT
consultants, integrators, outsourcing and solution providers. Smart Partner's
readers determine what and how customers select, design and deploy technology to
bolster operating results and solve business problems. Smart Partner identifies
the most lucrative opportunities and technologies in the consulting,
integration, outsourcing and software-development markets and shows IT
consultants how to build profitable alliances with customers, hardware
providers, software providers and service providers. Effective with the July 23,
2001 issue, Smart Partner will be published 18 times a year with
controlled-circulation of 120,100.

Consumer Publications

     Our titles in this category include Yahoo! Internet Life and Family
Internet Life. These publications address the changes and new opportunities that
technology and the Internet present in people's personal lives. The increasing
interest in and use of the Internet has contributed to the rapid growth of these
titles.

     Yahoo! Internet Life. Launched in 1995, Yahoo! Internet Life has been one
of the fastest growing technology magazines and among the fastest growing
magazines in the publishing industry with a rate base that grew from 100,000 to
1,100,000 (as of the September 2000 issue) in less than five years. We believe
the magazine has firmly established itself as the "Voice of the Net," helping
readers incorporate the benefits of the Internet revolution into their everyday
lives by explaining how and where to access and utilize the most valuable
content available on the Internet. Yahoo! Internet Life measures the societal
impact of the Internet with issues such as "How America Uses the Net,"
"America's Most Wired Cities and Towns," and "America's Most Wired Colleges."
Issues like "Online Music" and "Online Film" help capture and explain cultural
and lifestyle changes resulting from the Internet.

     Family Internet Life (formerly FamilyPC). Written for parents with children
between the ages of 3 and 18 years old, Family Internet Life inspires, educates
and empowers families to get the most out of life in the 21st century. The
magazine's mission is to be the definitive source of information for parents
seeking advice on their home computing and Internet experience. Family Internet
Life is unique in that it is written by parents, for parents, in a non-technical
format, and goes beyond reviewing technology and into technology-related issues.
Family Internet Life covers lifestyle-oriented topics, such as education,
entertainment, family finance, food, health and beauty, and travel, all within
the scope of technology and the family. Through comparative reviews of computer
products based on real world, in-home testing, as well as features, tutorials
and advice columns, all aspects of family computing are covered.

Games Publications

     Our titles in this category - Electronic Gaming Monthly, Official U.S.
Playstation Magazine, Computer Gaming World and Expert Gamer - are positioned to
capitalize on the growing interest in electronic games. According to the Informa
Media Group, in 2001, the U.S. electronic games market is expected to see sales
of approximately $15.7 billion, with revenues expected to rise to $23.7 billion
by 2006. Because our readers of these magazines are principally 18 to 34
year-old males, these publications offer advertisers access to a highly focused,
difficult-to-reach readership with attractive demographics and spending
patterns. At December 31, 2000, we were the leader in the United States in this
growing segment, based on advertising revenue (40.1% share), based on total
circulation (37.5% share) and based on newsstand circulation (43.4% share). In
2000, 38.5% of our game magazine circulation occurred at the newsstand compared
with 30.1% for our audited competitors. On average, our electronic games
publications sell nearly 530,000 copies at the newsstand each month.

                                       7

<PAGE>

Other Operations

     MacWorld Joint Venture. MacWorld is published through a 50:50 joint venture
with International Data Group and has a rate base of 425,000. MacWorld provides
Macintosh buyers with comparative, laboratory-based product evaluations, reviews
and information about Macintosh products, supported by its own product testing
facility that we believe is the most advanced in the Macintosh industry.

Developing Businesses Segment

     We are developing new publications and businesses through LaunchCo and
developing Internet-related ventures leveraged off our expertise in technology
and the Internet through InternetCo.

LaunchCo

     .    New Publications - Expedia Travels, The Net Economy and CIO Insight.
          In 2000, we launched two new publications - Expedia Travels, a paid
          consumer magazine with a rate base of 300,000 targeted at travel
          enthusiasts, and The Net Economy, a 75,000 controlled-circulation
          business-to-business publication targeted at network operators and
          service providers of all types. In May 2001, we launched CIO Insight,
          a 50,000 controlled-circulation publication targeting senior-level IT
          executives with strategic and business information.

<TABLE>
<CAPTION>
                                                              Primary
         Magazine Title               First Issue             Audience           Rate Base
         ------------------------------------------------------------------------------------
         <S>                          <C>                     <C>                <C>
         Expedia Travels              October 2000            Consumer            300,000
         The Net Economy              October 2000            Business             75,000
         CIO Insight                  May 2001                Business             50,000
</TABLE>

     .    eTESTING LABS - eTESTING LABS develops the benchmark tests for our
          publications and is also an independent for-hire testing service
          independent of our editorial testing groups. eTESTING LABS develops
          benchmarking and testing software, which we believe has become the de
          facto industry standard. Benchmarking is a competitive analysis tool
          that allows the user to compare competing products. eTESTING LABS'
          results provide the basis for some of the editorial content of PC
          Magazine, eWeek and Smart Partner and are instrumental in helping
          readers with their technology purchasing decisions. We believe that
          our labs give us a competitive advantage with respect to our editorial
          content and in acquiring and retaining readers.

InternetCo

     .    On January 19, 2001, we amended a content license agreement with ZDNet
          (and its new parent, CNET Networks) which provides that beginning on
          March 1, 2001, ZDNet's content license becomes non-exclusive and on
          March 1, 2002, all of ZDNet's license rights to content from our
          magazines terminate. During the time that the license is
          non-exclusive, we have the right to use and display the editorial
          content of our publications through any media, including the Internet.
          In a sequence from April 1, 2001 through November 1, 2001, ZDNet's
          right and obligation to maintain websites for our publications will
          terminate and we will obtain the right to host these websites.
          Accordingly, InternetCo plans to launch a series of URLs related to
          our publications throughout 2001.

     .    On June 1, 2001, InternetCo launched ExtremeTech.com, a web site that
          targets "hardcore technologists" - the IT professionals and computer
          enthusiasts who are truly passionate about technology. The site
          focuses on the technologies that power products, providing this early
          adopter audience with technical detail that goes well beyond
          traditional tech coverage.

     .    On July 2, 2001, InternetCo launched PC Magazine Online
          (www.pcmag.com) targeting IT professionals with comprehensive product
          reviews, performance tests and evaluations.

                                       8


<PAGE>

Assets Held For Sale

     In connection with the Acquisition, we determined that ZDP's wholly-owned
international operations (excluding international licensing operations and
international joint ventures) did not meet our long-term strategic objectives.
As a result, the operations were sold on August 4, 2000. The results of these
operations are excluded from our consolidated statement of operations for the
period from April 5, 2000 to the sale date, August 4, 2000. (See Note 5 of the
Notes to Consolidated Financial Statements).

Circulation

     Our publications include paid-circulation magazines, which generate revenue
from advertising, newsstand sales and subscriptions, and controlled-circulation
publications, which are distributed to business leaders and qualified IT
professionals and generate revenue principally from the sale of advertising. Our
controlled-circulation publications offer business-oriented technology content
that appeals to a professional audience in need of specific technology
information. Our paid-circulation publications offer business and/or
consumer-oriented content that appeals to a broader audience interested in
business technology, general Internet/technology, travel and/or electronic games
information. In 2000, we published nine domestic paid-circulation publications
and four domestic controlled-circulation publications.

     Our paid-circulation publications are distributed to paid subscribers and
are available for sale at newsstands and other retail outlets. Our
controlled-circulation publications are distributed free of charge to
individuals who meet demographic standards we established in an effort to make
the publication attractive to advertisers. We have an agreement with Warner
Publishing Services to manage our newsstand and retail distribution. Warner
Publishing Services in turn has agreements with magazine wholesalers to arrange
for national and regional placements of our publications and manage billing and
collection of amounts due from the magazine wholesalers. Our paid subscribers
receive their publications through the U.S. postal service. We have an agreement
with EDS to manage our subscription billing, collection and processing, which
includes providing mailing labels for each of the publications. The qualified
subscribers of our controlled-circulation publications also receive such
publications via the U.S. postal service. We have an agreement with Omeda to
manage our list and mailing labels for these publications.

     In the year ended March 31, 2001, Circulation Management magazine awarded
four of our publications Circulation Excellence Awards, recognizing outstanding
achievement, innovation and strategic performance in circulation marketing and
management.

Paper and Printing

     Paper is our principal raw material, and in fiscal year ending March 31,
2001, it accounted for 34.0% of our total production costs. We purchased our
paper from five main suppliers for our publications, of which four accounted for
more than 10% each of our paper supply in fiscal 2001 as measured by tonnage.

     We outsource the printing process for all of our publications. To
facilitate efficient and timely printing of our publications, we have
established strategic relationships with certain printing companies, including
R.R. Donnelley, Brown, and Quebecor. In fiscal 2001, approximately half of our
total printing expenses for our publications were for printing services supplied
by R.R. Donnelley. Since the Acquisition, we have been seeking to achieve
operating improvements by enhancing vendor relationships. In that regard, we
have consolidated from four to three printers and outsourced the majority of our
pre-press and paper buying operations to these printers.

Competition

     The magazine publishing industry is highly competitive. We compete for
advertising and circulation revenue principally with publishers of other
technology magazines with similar editorial content as ours. The technology
magazine industry has traditionally been dominated by a small number of large
publishers. In 2000, the three largest technology publishing companies, Ziff
Davis Media Inc., International Data Group ("IDG") and CMP Media ("CMP")
accounted for 72.6% of total technology magazine advertising revenue and 62.3%
of total technology advertising pages. IDG publications include CIO,
Computerworld, InfoWorld, The Industry Standard, Network World, PC World and the
"Dummies" book series, and CMP publications include Network Computing,
Information Week, Computer Reseller News, Electronic Engineering Times and
VARBusiness.

     We believe that we compete successfully with other technology publications
based on our market leading position within the technology magazine sector, the
nature and quality of our magazines' editorial content and the attractive
demographics of our readers. In addition to other technology magazines, our
magazines also compete for advertising revenue with general-

                                       9

<PAGE>

interest and business magazines and other forms of media, including broadcast
and cable television, radio, newspaper, direct marketing and electronic media.
In competing with general-interest and business magazines and other forms of
media, we rely on our ability to reach a targeted segment of the population in a
cost-effective manner.

License Agreements and Service Contracts

     Agreements with CNET Networks and ZDNet. On January 19, 2001, we amended a
content license agreement with ZDNet (and its new parent, CNET Networks) to
provide that beginning on March 1, 2001, ZDNet's content license becomes
non-exclusive and on March 1, 2002, all of ZDNet's license rights to content
from our magazines terminate. During the time that the license is non-exclusive,
we will have the right to use and display the editorial content of our
publications through any media, including the Internet. In a sequence from April
1, 2001 through November 1, 2001, ZDNet's right and obligation to maintain
websites for our publications will terminate and we will obtain the right to
host these websites. As consideration for amending the license agreement, ZDNet
is obligated to pay us a royalty termination fee of $4.5 million, $2.2 million
of which was paid on March 1, 2001 and $2.3 million of which is payable on March
1, 2002, and ZDNet is not obligated to pay any royalties with respect to
licensed content after February 28, 2001.

     Under the previous five-year license agreement with ZDNet, we were
providing the editorial content of our publications existing as of April 4, 2000
to ZDNet and ZDNet maintained websites for those publications. This agreement
did not cover any new publications acquired or developed by us after the date of
the Acquisition (such as Expedia Travels and The Net Economy), to which we
retain all rights in every medium, and it specifically allows us, in certain
circumstances, to transact e-commerce independently of ZDNet for all
publications.

     We have a license from ZDNet to use the trademark "ZD" in print in
perpetuity. ZDNet continues to use the trademark "ZD" online and may use certain
derivations of the trademark "ZD" in print. We also have a license from ZDNet to
use the trademark "Interactive Investor" in print in perpetuity. Currently, our
magazine Interactive Week includes the column "Interactive Investor." ZDNet
continues to use the "Interactive Investor" trademark online and derivations
thereof in print.

     In connection with the closing of the Acquisition, we entered into a
services agreement with ZDI. Under this agreement, Ziff Davis Publishing Inc.
(our publishing subsidiary) provides distribution, circulation and production
services to ZDI for its Computer Shopper magazine, and ZDI paid Ziff Davis
Publishing Inc. its costs in relation to the performance of these services plus
an additional $5.0 million annually in fees. On January 19, 2001, we agreed with
ZDI to terminate this services agreement and we entered into a new agreement
effective March 1, 2001. The new agreement contains substantially similar terms,
except that ZDI will not be required to pay us any annual fee and will only be
required to reimburse us for our out-of-pocket expenses incurred in connection
with producing and distributing Computer Shopper. ZDI agreed to pay us a $2.0
million non-refundable termination fee on March 1, 2001 in connection with the
termination of the original Computer Shopper services agreement. The new
agreement expires on February 28, 2003, however ZDI may terminate the agreement
at any time with 90 days prior written notice.

     Agreements with Others. We have been granted a license to use certain
trademarks owned by Yahoo! Corporation in connection with the publishing of
Yahoo! Internet Life magazine both in print and online. The term of our right to
use these marks expires on January 15, 2016. We have been granted an exclusive
license to use certain trademarks owned by Sony Computer Entertainment Corp. in
connection with the publishing of the magazine Official U.S. Playstation
Magazine in the United States and Canada. The initial term of our right to use
these marks extends until December 31, 2001. We are currently in discussion with
Sony to renew this license. We have also been granted an exclusive license to
use certain trademarks owned by Expedia, Inc. in connection with the publishing
of the magazine Expedia Travels in the United States and its territories and
possessions. The initial term of our right to use these marks expires on January
28, 2010.

Trademarks

     We have developed strong brand awareness for our principal publications and
services. Accordingly, we consider our trademarks, copyrights, trade services
and similar intellectual property critical to our success and rely on trademark,
copyright and trade secrets laws, as well as licensing and confidentiality
agreements, to protect our intellectual property rights. We generally register
our material trademarks in the U.S. and in certain other key countries in which
these trademarks are used. Effective trademark, copyright and trade secret
protection may not be available in every country where our publications and
services are available.

     We may be subject to claims of alleged infringement by third parties or
licensees of trademarks and other intellectual property right of third parties
from time to time in the ordinary course of business. We do not believe there
are any such

                                       10

<PAGE>

legal proceedings or claims that are likely to have, individually or in the
aggregate, a material adverse affect on our business, financial condition or
results of operations.

Employees

     As of March 31, 2001, we had a total of approximately 1,080 employees, all
based in the U.S. or Canada. None of our employees are represented by a labor
union. We believe our relations with our employees are good.

                                       11


<PAGE>

                                     PART II

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

     The Company is a wholly-owned subsidiary of Ziff Davis Holdings, Inc. There
is no public trading market for the Company's common stock.

     The Company did not pay cash dividends on its common stock and currently
intends to retain any future earnings to finance operations, debt service and
business expansion. Therefore, the payment of any cash dividends on the common
stock is unlikely in the foreseeable future. Any future determination to pay
cash dividends will be at the discretion of the Board of Directors and will be
dependent upon the Company's earnings, capital requirements and financial
condition and such other factors deemed relevant by the Board of Directors.

Exchange of Notes.

     On October 16, 2000, the Company filed with the SEC a Registration
Statement on Form S-4 (file no. 333-48014) with respect to its exchange offer
for up to $250 million of 12% Senior Subordinated Notes due 2010 in exchange for
12% Series B Senior Subordinated Notes due 2010. The Registration Statement was
declared effective by the SEC on January 26, 2001 and the exchange offer was
completed on February 26, 2001. All of the 12% Senior Subordinated Notes were
exchanged in the exchange offer. The Company did not receive any proceeds from
the exchange offer. The net proceeds from the original $250 million note
offering, after deducting estimated fees and expenses, were approximately $241.5
million. The company used the net proceeds to repay indebtedness incurred to
finance the acquisition of the Company by an investor group led by Willis Stein,
including $175 million in principal amount of senior subordinated notes, $16.8
million outstanding under its senior tranche A term facility, $42.9 million
outstanding under its senior tranche B term facility and $6.9 million of accrued
interest related to its senior and subordinated debt. The Company incurred an
estimated $350,000 in fees and expenses in connection with the exchange offer.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

     For information required under Item 7, see the Appendix to this Form 10-K.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The information required by this item appears in Management's Discussion
and Analysis of Financial Condition and Results of Operations under the headings
"Inflation and Fluctuations in Paper Prices and Postage Costs" and "Interest
Rate Risk".

                                       12

<PAGE>


                                    PART III

ITEM 11. EXECUTIVE COMPENSATION

     None of the executive officers named below were granted any options during
the Company's fiscal year ended March 31, 2001 and did not hold any options at
March 31, 2001.

Summary Compensation Table

     The following table sets forth certain information concerning the
compensation earned by (a) James D. Dunning Jr., the Company's Chief Executive
Officer, during the fiscal year ended March 31, 2001 and (b) the four other most
highly compensated individuals who served as executive officers of the Company
during the fiscal year ended March 31, 2001.

<TABLE>
<CAPTION>
                                                                        Annual Compensation
                                                                     ---------------------------
                                                           Fiscal                                   All Other
Name and Principal Position                                 Year     Salary ($)     Bonus ($)    Compensation/(1)/
-----------------------------------------------------------------------------------------------------------------
<S>                                                        <C>       <C>            <C>          <C>
James D. Dunning Jr. - Chairman, Chief Executive               2001   2,000,000             --             --
Officer and President of our Parent, Ziff Davis
Media and Ziff Davis Publishing

Alan J. Perlman - President of Business                        2001     450,000        286,800          3,000
Publications, Ziff Davis Media and Ziff Davis
Publishing

Scott Crystal - Executive Vice President and                   2001     397,450        178,300             --
Publishing Director, Ziff Davis Consumer Publications

Peter Longo - Executive Vice President and                     2001     315,000        167,300             --
Publishing Director, Ziff Davis Business Media Group

Thomas McGrade - Senior Executive Vice President               2001     350,000             --             --
and Chief Operating Officer, Ziff Davis Media Inc.
and Ziff Davis Publishing Inc.

/(1)/Vehicle Allowance
</TABLE>

Executive Agreements

     Mr. Dunning. In connection with the Acquisition, our Parent and Ziff Davis
Publishing Inc. entered into an executive agreement with Mr. Dunning. The
agreement provides, among other things, that Mr. Dunning will serve as
President, Chief Executive Officer and Chairman of the Board of Ziff Davis
Publishing, Ziff Davis Media Inc. and our Parent during a term ending on April
5, 2005. Under his agreement, Mr. Dunning is entitled to a base salary of $2.0
million per year, subject to annual cost-of-living increases. In addition to his
base salary, Mr. Dunning is eligible to receive an annual bonus of $500,000 for
each of the fiscal years ended March 31, 2001 and March 31, 2002 based upon our
Parent's financial performance as measured by EBITDA. Under his executive
agreement, Mr. Dunning contributed $5.0 million in cash to our Parent in
exchange for stock of our Parent.

     Mr. McGrade. In connection with the Acquisition, our Parent and Ziff Davis
Publishing entered into an executive agreement with Mr. McGrade. The agreement
provides, among other things, that he will serve as Senior Executive Vice
President and Chief Operating Officer of Ziff Davis Publishing during a term
ending on April 5, 2005. His base salary will be $350,000 per year, subject to
annual cost of living adjustments, and he will be eligible to receive an annual
bonus of $250,000, payable in the discretion of our Parent's board of directors.

     Mr. Perlman. In connection with the Acquisition, our Parent and Ziff Davis
Publishing entered into an executive agreement with Mr. Perlman. The agreement
provides, among other things, that he will serve as President of Business Media
of Publishing during a term ending on April 5, 2005. His base salary will be
$450,000 per year, subject to annual cost of living adjustments, and he will be
eligible to receive an annual bonus of no less than $250,000, payable in the
discretion of our Parent's board of directors.

     Ms. Millard. On December 11, 2000, our Parent and Ziff Davis Publishing
entered into an executive agreement with Ms. Millard. This agreement provided,
among other things, that she will serve as Chief Internet Officer of Ziff Davis
Media and President and Chief Internet Officer of Ziff Davis Internet during a
term expiring on December 11, 2005. Her base salary will be $300,000 in the
first year, $325,000 in the second year and $350,000 thereafter. She will
receive a one-time $25,000 bonus on March 31, 2001 and will be eligible to
receive an annual target bonus of $250,000 based upon meeting certain financial
performance metrics, payable in the discretion of our Parent's board of
directors and the Chief Executive Officer of Publishing.

                                       13

<PAGE>

     All of the above referenced executive agreements provide for severance
payments to the respective executive upon termination of such executive's
employment by the Company without Cause (as such term is defined in the
executive agreement). The severance provisions provide that the executive will
receive his or her annual base salary until the one-year anniversary of the
termination of such executive's employment.

Equity Incentive Plans

     Following the Acquisition, we implemented an equity incentive program. The
program provides for the issuance of, or the grant of options to purchase
restricted common stock to certain of our employees, directors and officers of
the company. Under the program, our Parent has reserved 2,630,000 shares of its
fully diluted common equity (approximately 10% of its fully diluted common
equity) and we have reserved up to 10% of the fully diluted common equity of
LaunchCo and up to 20% of the fully diluted common equity of InternetCo for our
employees, directors and officers. In connection with the issuance of, or the
grant of options to acquire these equity interests, the participants in the
program will grant to participants customary "drag-along" rights in the event of
a sale of the entity in which they hold equity interests. We also have the
option to repurchase the participant's option shares if his/her employment
terminates for any reason, including upon his/her death, disability or
resignation.

                                       14

<PAGE>

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The Company is authorized to issue a total of 1,000 shares of common stock,
par value $0.01 per share. There are 1,000 shares of common stock issued and
outstanding.

     All of the Company's outstanding capital stock is owned by our Parent. The
table below lists information about the beneficial ownership of our Parent's
capital stock, as of June 30, 2001, by each person whom we know to own
beneficially more than 5% of any class of our Parent's stock, by each of our
Parent's directors, the executive officers named in the Summary Compensation
table and by all of our Parent's directors and our executive officers as a
group. Our Parent has two classes of capital stock authorized for issuance,
Series A preferred stock and common stock. The Series A preferred stock is
divided into two Series, Series A-1 and Series A-2, which are identical in all
respects except for the initial date that dividends begin to accrue. There are
445,000 shares of our Parent's Series A preferred stock (of which 350,000 are
designated Series A-1 and 95,000 are designated Series A-2) authorized for
issuance, 357,583 of which are issued and outstanding and 100,000,000 shares of
our Parent's common stock authorized for issuance, of which 76,049,302 are
issued and outstanding. In the event of an initial public offering of our
Parent's common stock, Willis Stein and the other holders of our Parent's Series
A preferred stock may elect to convert their shares of Series A preferred stock
to shares of our Parent's common stock. Unless otherwise noted, the address of
each director and executive officer is c/o Ziff Davis Media Inc., 28 East 28th
Street, New York, New York 10016.

<TABLE>
<CAPTION>
                                                                          Beneficial Ownership/(1)/
                                                             ------------------------------------------------------
                                                                           Percent of
                                                               Shares of   Outstanding                 Percent of
                                                               Series A     Series A     Shares of    Outstanding
                                                               Preferred   Preferred      Common        Common
                                                                Stock       Stock         Stock         Stock
                                                             ------------------------------------------------------
<S>                                                          <C>           <C>           <C>          <C>
Willis Stein Entities/(2)/...............................        310,083.0       86.72%   66,049,302       86.85%
DLJ Entities/(3)/ .......................................         47,500.0       13.28    10,000,000       13.15
James D. Dunning, Jr. ...................................          8,455.0        2.36     4,146,000        5.45
Alan J. Perlman .........................................            285.0        0.08       552,917        0.73
Scott Crystal ...........................................               --         --        117,511        0.16
Peter Longo .............................................               --         --        148,664        0.20
Thomas McGrade ..........................................            142.5        0.04       522,917        0.69
Wenda Harris Millard ....................................            475.0        0.13       346,458        0.46
John R. Willis/(2)/ .....................................        310,083.0       86.72    66,049,302       86.85
Avy H. Stein/(2)/ .......................................        310,083.0       86.72    66,049,302       86.85
Daniel H. Blumenthal/(2)/ ...............................        310,083.0       86.72    66,049,302       86.85
Milton J. "Chip" Block ..................................               --          --            --          --
David M. Wittels/(3)/ ...................................               --          --            --          --
All directors and executive officers as a group
   (11 persons) .........................................        310,083.0       86.72%   66,049,302       86.85%
</TABLE>
______________

/(1)/ "Beneficial ownership" generally means voting or investment power with
      respect to a security or the right to acquire such power within 60 days.
      Unless otherwise indicated, we believe that each holder has sole voting
      and investment power with regard to the equity interests listed as
      beneficially owned.

/(2)/ Includes 233,750 shares of Series A Preferred Stock (65.37%) and
      45,000,000 shares of Common Stock (59.17%) held by Willis Stein & Partners
      II, L.P., Willis Stein & Partners III, L.P., Willis Stein & Partners
      Dutch, L.P., Willis Stein & Partners Dutch III-A, L.P., Willis Stein &
      Partners Dutch III-B, L.P., and Willis Stein & Partners III-C, L.P.
      (collectively, the "Willis Stein Entities"). Also includes 76,333 shares
      of Series A Preferred Stock and 21,049,302 shares of Common Stock held by
      the stockholders executing the Investor Rights Agreement (other than the
      DLJ Entities). Such stockholders have agreed pursuant to the terms of the
      Investor Rights Agreement to vote their shares as directed by the Willis
      Stein Entities in certain matters as described more fully in Item 13
      hereof and in the Investor Rights Agreement attached hereto as an Exhibit.
      As a result of the foregoing, the Willis Stein Entities may be deemed to
      have beneficial ownership with respect to the shares held by the
      stockholders executing the Investor Rights Agreement (other than the DLJ
      Entities). The Willis Stein Entities disclaim beneficial ownership of such
      shares held by such stockholders. Messrs. John R. Willis, Avy H. Stein and
      Daniel H. Blumenthal are Managing Directors of each of the ultimate
      general partners of the Willis Stein Entities, and, as a result, may be
      deemed to have beneficial ownership with respect to the shares held by and
      deemed to be beneficially owned by the Willis Stein Entities. Each
      disclaims beneficial ownership of such shares held by and deemed to be
      beneficially owned by such funds. The address for Willis Stein and Messrs.
      Willis, Stein and Blumenthal is 227 West Monroe Street, Suite 4300,
      Chicago, Illinois 60606.

/(3)/ Includes shares held by DLJ Diversified Partners, L.P., DLJ Diversified
      Partners-A, L.P., DLJ EAB Partners, L.P., DLJ ESC II L.P., DLJ First Esc
      L.P., DLJ Merchant Banking Partners II-A, L.P., DLJ Offshore Partners II,
      C.V. and DLJMB Funding II, Inc., which are private equity investment funds
      affiliated with DLJ Merchant Banking, Inc. Mr. Wittels is a Principal of
      DLJ Merchant Banking, Inc. Mr. Wittels disclaims beneficial ownership of
      the shares held by the investment funds associated with DLJ Merchant
      Banking, Inc. The address for DLJ Merchant Banking, Inc. and Mr. Wittels
      is 277 Park Avenue, New York, New York 10172.

                                       15

<PAGE>


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Investor Rights Agreement

     The investor rights agreement, dated as of April 5, 2000 is attached hereto
as an exhibit. The parties to the investor rights agreement are as follows: (i)
our Parent, (ii) the Willis Stein Entities, (iii) each of the investors listed
on the Schedule of Coinvestors attached to the investor rights agreement, (iv)
any executive employee of our Parent who, at any time, acquires securities of
our Parent and executes a counterpart of the investor rights agreement or agrees
to be bound by the investor rights agreement, and (v) each other stockholder
listed on the Schedule of New Stockholders attached to the investor rights
agreement (as such schedule is amended from time to time), who, at any time,
acquires securities of our Parent and who executes a counterpart of the investor
rights agreement or otherwise agrees to be bound by the investor rights
agreement. All of our Parent's outstanding capital stock is subject to the terms
of the investor rights agreement. The investor rights agreement provides that
our Parent's board of directors will be established at seven directors or such
other number designated by Willis Stein. The agreement provides that the board
will consist of:

     .  our Parent's chief executive officer, who will initially be Mr. Dunning;

     .  one person designated by DLJ Merchant Banking Partners II, L.P.;

     .  four persons designated by Willis Stein, who initially included Avy H.
        Stein, Daniel H. Blumenthal, and Milton J. "Chip" Block and subsequently
        John R. Willis; and

     .  one additional person to be identified by Willis Stein.

     The stockholders executing the investor rights agreement other than DLJ
have agreed to vote their shares as directed by Willis Stein in matters relating
to any amendment of our Parent's certificate of incorporation, any merger or
other business combination with, any sale by our Parent of substantially all of
the assets of our Parent or any liquidation of our Parent. Willis Stein may also
control the circumstances under which a public offering of our Parent's equity
securities may take place. References in this section to DLJ refer to DLJ
Merchant Banking Partners II, L.P. and its affiliates that are holders of our
Parent's stock.

     The investor rights agreement generally restricts the transfer of shares of
our Parent's stock. The parties to the investor rights agreement have granted
our Parent a right of first refusal with respect to its stock, which, if not
exercised by our Parent, may be exercised by Willis Stein and its equity
co-investors. Each holder of shares generally has the right to participate in
any transfer of shares by Willis Stein, with certain exceptions. In addition,
our Parent has agreed not to issue new equity securities (or securities with
equity features) without giving Willis Stein and its equity co-investors an
opportunity to purchase their pro rata share of the new securities on
substantially the same terms, with certain exceptions. Each of our Parent's
stockholders has agreed to consent to a sale of our Parent or the assets of our
Parent if Willis Stein votes to approve the sale.

     The investors rights agreement also provides that Willis Stein may request
at any time that all or any portion of its common stock be registered with the
SEC. If Willis Stein no longer owns at least 50% of the common stock specified
in the investor rights agreement, DLJ may also make one such request. In the
event that Willis Stein or DLJ makes a request for registration, the other
parties to investor rights agreement that hold common stock will be entitled to
participate in the registration. Our Parent has also granted the parties to the
investor rights agreement piggyback registration rights with respect to
registrations by it and our Parent has agreed to pay all expenses relating to
any registrations.

Make-Well Agreement

     In connection with the closing of the transactions, we, our Parent, Willis
Stein and its equity co-investors entered into a make-well agreement. Under this
agreement, if our ratio of debt to EBITDA is greater than 4.5 to 1.0 on March
31, 2001, then either we must repay debt owed by us under our senior credit
facilities or Willis Stein and its equity co-investors must contribute to us up
to a maximum of $50.0 million in additional equity so that we may repay
indebtedness under our senior credit facilities such that our ratio of debt to
EBITDA is equal to or less than 4.5 to 1.0 on March 31, 2001, after giving pro
forma effect to any repayment. The Company's debt to EBITDA ratio at March 31,
2001 was 4.45 to 1.0 therefore, no make-well payment was required.

Executive Promissory Notes

                                       16

<PAGE>

     Under his or her executive agreement, each of Messrs. Dunning, McGrade,
Perlman and Ms. Millard purchased shares of our Parent's stock with one or more
promissory notes.

     Mr. Dunning paid for his shares with $5.0 million in cash and two
promissory notes in the aggregate principal amount of $4,491,500. The first
promissory note is in the principal amount of $3,900,000 and the second
promissory note is in the principal amount of $591,500. Both notes accrue simple
interest at a rate equal to the lesser of 7.0% per annum or the highest rate
permitted by law, and both mature on April 5, 2007. Mr. Dunning must prepay all
amounts due under the notes if his employment terminates for any reason or if we
are (or our Parent is) sold, and if Mr. Dunning receives any cash in respect of
his shares, he must use that cash to repay a portion of the amounts due under
the notes. Mr. Dunning's personal liability under the notes is limited to no
more than 60% of the aggregate principal amount of $4,491,500 minus the amount
of any principal payments made under his notes plus 100% of any accrued and
unpaid interest. Mr. Dunning has pledged all of his shares of our Parent's stock
to secure his obligations under his notes. As of March 31, 2001, all of the
aggregate principal amount of Mr. Dunning's notes (and interest accrued thereon)
was outstanding.

     Mr. McGrade paid for his shares with two promissory notes in the aggregate
principal amount of $273,229. The first promissory note in the principal amount
of $150,000 was repaid in full as of May 31, 2000. The second promissory note in
the principal amount of $123,229 matures on April 5, 2007. The first note
accrued and the second note accrues simple interest at a rate equal to the
lesser of 7.0% per annum or the highest rate permitted by law. Mr. McGrade's
personal liability under the second promissory note is limited to no more than
60% of the aggregate principal amount of $123,229 minus the amount of any
principal payments made under that note plus 100% of any accrued and unpaid
interest. The prepayment terms under Mr. McGrade's note are similar to those
under Mr. Dunning's notes. Mr. McGrade has pledged all of his shares of our
Parent's stock to secure his obligations under his note. As of March 31, 2001,
all of the aggregate principal amount of Mr. McGrade's second promissory note
(and interest accrued thereon) was outstanding.

     Mr. Perlman paid for his shares with $300,000 in cash and a promissory note
in the principal amount of $123,229, which matures on April 5, 2007, which
accrues simple interest at a rate equal to the lesser of 7.0% per annum or the
highest rate permitted by law. Mr. Perlman's personal liability under his
promissory note is limited to no more than 60% of the principal amount of
$123,229 minus the amount of any principal payments made under his note plus
100% of any accrued and unpaid interest. The prepayment terms under Mr.
Perlman's note are similar to those under Mr. Dunning's notes. Mr. Perlman has
pledged all of his shares of our Parent's stock to secure his obligations under
his note. As of March 31, 2001, all of the principal amount of Mr. Perlman's
note (and interest accrued thereon) was outstanding.

     Ms. Millard paid for her shares with $500,000 in cash and a promissory note
in the principal amount of $61,615, which matures on April 5, 2007, which
accrues simple interest at a rate equal to the lesser of 7.0% per annum or the
highest rate permitted by law. Ms. Millard's personal liability under her
promissory note is limited to no more than 60% of the principal amount minus the
amount of any principal payments made under her note plus 100% of any accrued
and unpaid interest. The prepayment terms under Ms. Millard's note are similar
to those under Mr. Dunning's notes. Ms. Millard has pledged all of her shares of
our Parent's stock to secure her obligations under her note. As of March 31,
2001, all of the principal amount of Ms. Millard's note (and interest accrued
thereon) was outstanding.

Subscription Services

     Investment funds affiliated with Willis Stein are shareholders of USApubs
Inc., a marketer of magazine subscriptions and other services. We sell
subscriptions to our publications both directly and through independent
subscription marketing companies, including USApubs Inc. For the fiscal year
ended March 31, 2001, we paid approximately $6.6 million in fees to USApubs and
have accounts payable, net of approximately $0.3 million at March 31, 2001. In
management's opinion, our transactions with USApubs are generally representative
of arm's-length transactions.

                                       17

<PAGE>
                                     PART IV

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

A.  Exhibit Index

1.1       Purchase Agreement by and among Ziff Davis Media Inc., Deutsche Bank
          Securities Inc. and CIBC World Markets Corp. dated July 18, 2000.*

2.1       Purchase Agreement dated December 6, 1999 among WS-ZP Acquisition,
          Inc., ZD Inc. and ZD Holdings (Europe) Ltd.*

2.2       Sale and Purchase Agreement relating to Certain Print-Based Publishing
          Assets in the UK, Germany and France, dated June 30, 2000 with VNU
          N.V., View Group B.V., VNU Business Publications Limited, VNU Holding
          Deutschland GMBH, VNU Business Publications France SA.*

3.1      Article of Incorporation for Ziff Davis Media Inc.*

3.2      By-laws for Ziff Davis Media Inc.*

4.1       Indenture between Ziff Davis Media Inc., Ziff Davis Publishing
          Holdings Inc., Ziff Davis Internet Inc., Ziff Davis Development Inc.,
          Ziff Davis Publishing Inc., eTESTING LABS, Inc. and Bankers Trust
          Company dated July 1, 2000.*

4.2       Registration Rights Agreement by and among Ziff Davis Media Inc., Ziff
          Davis Publishing Holdings Inc., Ziff Davis Internet Inc., Ziff Davis
          Development Inc., Ziff Davis Publishing Inc., eTESTING LABS, Inc.,
          Deutsche Bank Securities Inc. and CIBC World Markets Corp. dated July
          21, 2000.*

9.1       Investor Rights Agreement by and among Ziff Davis Holdings Inc.,
          Willis Stein & Partners II, L.P., Willis Stein & Partners Dutch II,
          L.P., Willis Stein & Partners III, L.P. (and other partnerships
          sharing a common general partner therewith), the investors listed on
          the Schedule of Co-Investors, certain executive employees of Ziff
          Davis Holdings Inc., and certain other stockholders listed on the
          Schedule of New Stockholders, dated April 5, 2000.**

10.1      Credit Agreement between Ziff Davis Media Inc., CIBC World Markets
          Corp., Bankers Trust Company, Fleet National Bank, Canadian Imperial
          Bank of Commerce and other credit parties dated April 5, 2000, as
          amended.*

10.2     License Agreement, dated April 5, 2000 with ZD Inc.*

10.3     License Agreement, dated April 5, 2000 with ZD Inc. (ZD logo).*

10.4     License Agreement, dated April 5, 2000 with ZD Inc. (Interactive).*

10.5      Limited Liability Company Agreement, dated July 31, 1997, with
          Ziff-Davis Inc., Macworld Communications, Inc. and International Data
          Group, Inc., as amended.*

10.6      Executive Agreements by and between Ziff Davis Holdings Inc. and Mr.
          Dunning, dated as of April 5, 2000.*+

10.7      Executive Agreements by and between Ziff Davis Holdings Inc. and Mr.
          Thomas McGrade, dated as of April 5, 2000.*+

10.8      Executive Agreement by and between Ziff Davis Holdings Inc. and Mr.
          Alan Perlman, dated April 5, 2000.*+

10.9      Executive Agreements by and between Ziff Davis Holdings Inc. and Ms.
          Millard, dated December 6, 2000.*+

10.10     Amendment to License Agreement, dated January 19, 2001 with ZDNet,
          Inc.*

12.1     Statements re computation of ratio of earnings to fixed charges.*

21.1     Subsidiaries of the registrant.*
_____________

*  previously filed in connection with the Company's Registration Statement on
   Form S-4 dated January 24, 2001.

**  filed herewith.

+   denotes compensation plan or arrangement.

B.   No reports on Form 8-K have been filed during the year.

                                       18

<PAGE>

                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
it behalf by the undersigned, thereunto duly authorized on the 16th day of July
2001.

                                               Ziff Davis Media Inc.

                                               By:     /s/ James D. Dunning Jr.
                                                      --------------------------
                                               Name:  James D. Dunning Jr.
                                               Title: Chief Executive Officer

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities on July 16, 2001.

<TABLE>
<CAPTION>
                   Signatures                                  Title
                   ----------                                  -----
     <S>                                          <C>
         /s/ James D. Dunning Jr.                 Chairman, Chief Executive Officer, President and
     ------------------------------------         Director (Principal Executive Officer)
     James D. Dunning Jr.

         /s/ Thomas McGrade
     ------------------------------------
     Thomas McGrade                               Director

         /s/ Alan J. Perlman
     ------------------------------------
     Alan J. Perlman                              Director

         /s/ Wenda Harris Millard
     ------------------------------------
     Wenda Harris Millard                         Director

         /s/ John R. Willis
     ------------------------------------
     John R. Willis                               Director

         /s/ Avy H. Stein
     ------------------------------------
     Avy H. Stein                                 Director

         /s/ Daniel H. Blumenthal
     ------------------------------------
     Daniel H. Blumenthal                         Director

         /s/ Milton J. "Chip" Block
     ------------------------------------
     Milton J. "Chip" Block                       Director

         /s/ David Wittels
     ------------------------------------
     David Wittels                                Director

         /s/ David F. Mullen
     ------------------------------------
     David F. Mullen                              Vice President (Principal Accounting Officer and
                                                  Acting Principal Financial Officer)
</TABLE>

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

     None.

                                       19

<PAGE>

                                   SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Form 10-K/A to be signed on its behalf by the
undersigned thereunto duly authorized.


                                        Ziff Davis Media Inc.


                                        By: /s/ Bart W. Catalane
                                            ------------------------------------
                                            Bart W. Catalane
                                            Chief Operating Officer and Chief
                                            Financial Officer

                                        Date: March 20, 2002
                                              ----------------------------------

                                       20

<PAGE>

                              ZIFF DAVIS MEDIA INC.

                                    APPENDIX

<TABLE>
<CAPTION>
                                                                                                    Page
                                                                                                    ----
<S>                                                                                                 <C>
Management's Discussion and Analysis of Financial Condition and Results of Operations ...........    F-2
</TABLE>

                                      F-1

<PAGE>

           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS

     The following discussion and analysis of the Company's financial condition
and results of operations should be read in conjunction with our financial
statements including the notes to those statements.

Overview

     We are a multimedia content company whose principal business is publishing.
We publish and license magazines, provide editorial content about technology and
the Internet, both in print and online, and to a lesser extent provide custom
testing services and software and produce conferences, seminars and webcasts. On
April 5, 2000, we acquired certain publishing assets ("Ziff Davis Publishing",
"ZDP" or the "Predecessor") from Ziff-Davis Inc. ("ZDI"), an unrelated company
for $780.0 million plus expenses (the "Acquisition"). The Acquisition was
accounted for under the purchase method of accounting.

     We had no operations prior to April 5, 2000 (date of Acquisition). Our
financial statements as of March 31, 2001, and for the fiscal year then ended
are prepared on a consolidated basis and include the accounts of the Company and
its subsidiaries. The combined financial statements of the Predecessor for the
period prior to April 5, 2000 are prepared on a carve-out basis, as ZDP was not
a separate legal entity owned by ZDI.

     Since April 5, 2000, we have formed two subsidiaries which are focused on
developing and launching new products and businesses. These subsidiaries, Ziff
Davis Development Inc. ("LaunchCo") and Ziff Davis Internet Inc. ("InternetCo"),
are collectively referred to, and defined under our debt agreements, as
"Unrestricted Subsidiaries". We are developing new publications and businesses
through LaunchCo and developing Internet-related ventures leveraged off our
editorial expertise and relationships with our audience and advertisers through
InternetCo. Where appropriate in our discussion below, we have separately
identified amounts associated with the Unrestricted Subsidiaries when comparing
amounts to prior year periods, as they relate to the new business established in
the current fiscal year and are required to be reported separately under our
credit agreements.

     In connection with the Acquisition, we determined that ZDP's wholly-owned
international operations (excluding international licensing operations and
international joint ventures) did not meet our long-term strategic objectives.
As a result, the operations were sold on August 4, 2000. The results of these
operations are excluded from our consolidated statement of operations for the
period from April 5, 2000 to the sale date, August 4, 2000. (See Note 5 of the
Notes to Consolidated Financial Statements). Financial statements for periods
prior to April 5, 2000 include the operating results of ZDP's wholly-owned
international operations.

Revenue

     Our principal sources of revenue are advertising (74.0% of fiscal year 2001
total revenue), circulation (18.0%) and other (8.0%). Circulation comprises both
paid subscriptions (11.0%) and newsstand sales (7.0%) while other includes
royalties, mailing list rentals, testing services, custom publishing and
seminars. No single advertiser has comprised more than 6.0% of our advertising
revenue or 4.5% of total revenue in fiscal year 2001. We record revenue net of
agency commissions, estimated subscription cancellations and newsstand returns.

     Advertising. Advertising rates and rate structures vary among our
publications and are based on, among other things, the circulation of the
particular publication, the readership demographics, the scheduled frequency and
the size and placement of the advertisement in the publication. Our advertising
revenue is influenced by a number of external factors, including the volume of
new technology product introductions, the amount and allocation of marketing
expenditures by our advertising clients and the extent to which our customers
elect to advertise using print media.

     Newsstand. We sold approximately 8.9 million single copy magazines for the
fiscal year ended March 31, 2001. Generally we receive approximately 57.0% of
the cover price of an individual magazine sold through a newsstand with the
balance of the cover price going to the magazine's distributor, wholesaler and
retailer.

     Subscriptions. Generally, we sell subscriptions to our publications either
directly by our circulation force or by an independent subscription direct
marketing companies or agents. We receive approximately 18.0% of the total price
of subscriptions sold through agents. In addition to agents, we have
historically sold subscriptions using a variety of techniques including direct
reply subscription cards, direct mail and the Internet.

                                      F-2

<PAGE>

     Other Revenue Sources. We also derive revenue from royalty arrangements,
testing services and mailing list rentals. Our most significant licensing
royalty agreement was with ZDNet, the Internet business of the seller. In
exchange for use of our editorial content on ZDNet's websites, ZDNet paid
royalties to us based on its annual revenue, net of bad debt expense and
discounts and subject to minimum and maximum annual payments. On January 19,
2001, we amended this agreement to provide that starting March 1, 2001, ZDNet's
license will no longer be exclusive and on March 1, 2002, all of ZDNet's license
rights to content from our magazines will terminate. As consideration for
amending the license agreement, ZDNet is obligated to pay us a royalty
termination fee of $4.5 million, $2.2 million of which was paid on March 1, 2001
and $2.3 million of which is payable on March 1, 2002, and ZDNet was not
obligated to pay any royalties with respect to licensed content after February
28, 2001. Under a service agreement with ZDI we produced and distributed ZDI's
Computer Shopper magazine in return for a $5.0 million annual fee, which we
recognize as revenue. ZDI reimbursed us for all costs incurred in producing and
distributing Computer Shopper. On January 19, 2001, we agreed with ZDI to
terminate the service agreement and enter into a new agreement effective March
1, 2001. The new agreement contains substantially similar terms, except that ZDI
will not be required to pay us any annual fee and will only be required to
reimburse us for our out-of-pocket expenses incurred in connection with
producing and distributing Computer Shopper. ZDI paid us a $2.0 million
non-refundable termination fee in connection with the termination of the
original service agreement on March 1, 2001. The new agreement expires on
February 28, 2003, however, ZDI may terminate the agreement at any time with 90
days prior written notice.

     We will recognize the revenue associated with these termination payments
over the term of the respective agreement.

Operating costs

     The principal components of our production costs are raw materials,
printing and distribution, which represented 39.0%, 34.0% and 27.0%,
respectively of our total 2001 publishing production expenses. Our principal raw
material is paper. Paper supply and prices are subject to volatility and may be
significantly affected by many factors, including market and economic
conditions.

     Our other principal operating costs are selling, general and administrative
expenses, including editorial costs. Included in these costs are salaries, sales
commissions and benefits along with marketing


and promotion expenses related to advertising and circulation. Prior to the
transactions, we received an allocation of centralized costs from the seller
based on estimated utilization. We have since built an infrastructure to service
our needs as a stand-alone entity.

Factors affecting future periods

     Our revenue and profitability are influenced by a number of external
factors, including the volume of new technology product introductions, the
amount and allocation of marketing expenditures by our clients, the extent to
which sellers elect to advertise using print and online media, changes in paper
prices, and competition among computer technology marketers, including print
publishers, and providers of other technology information services. Accordingly,
we may experience fluctuations in revenue from period to period. Many of our
large customers concentrate their advertising expenditures around major new
product or service launches. Marketing expenditures by technology companies can
also be affected by factors generally affecting the technology industry,
including pricing pressures and temporary surpluses of inventory. Revenue and
profitability are also influenced by product mix and the timing and frequency of
our new product launches and launches in new markets, as well as by
acquisitions. New publications generally require several years to achieve
profitability and upon achieving initial profitability, often have lower margin
than more established publications. Accordingly, our revenue from year to year
may be affected by the number and timing of new product launches. If we conclude
that a new publication or service will not achieve certain milestones with
regard to revenue, profitability and cash flow within a reasonable period of
time, management may discontinue such publication or service or merge it into
another existing publication, trade show or service.

     Current economic trends in the United States have had a negative impact on
our business. These trends include consolidation among our advertisers,
increases in postage costs and a general decline in advertising spending. In
anticipation of this decline, we have begun a restructuring program during which
we expect to consolidate operations and eliminate headcount to reduce costs. We
expect to finalize these initiatives during the second quarter of our fiscal
year and anticipate incurring employee termination and related costs, which have
not yet been quantified.

     Further, as a result of a significant decline in our fiscal 2002 first
quarter operating results, we do not expect to meet certain financial ratios
required under our credit facility. Accordingly, in July 2001 we amended our
credit facility. See Liquidity and Capital Resources.

                                       F-3

<PAGE>

Results of operations

Comparison of the fiscal year ended March 31, 2001 and the year ended December
31, 1999 (Predecessor)

     The table below sets forth our consolidated summary of operations (in
millions of dollars and as a percentage of net revenue) for the fiscal year
ended March 31, 2001 and the year ended December 31, 1999 (Predecessor),
respectively. For comparative purposes, pro forma adjustments have been made to
the 1999 figures to exclude the operating results of eTESTING LABS and ZDP's
wholly-owned international operations which, as described above, have been sold.

<TABLE>
<CAPTION>
                                               For the                                                 For the       For the year
                                              fiscal year                                             fiscal year       ended
                                                ended                 For the year ended                ended         December 31,
                                              March 31,               December 31, 1999               March 31,           1999
                                                2001                     (Predecessor)                   2001         (Predecessor)
                                            ------------     ------------------------------------    ------------    --------------
                                                                                                        Actual         Pro Forma
                                                                                                     ------------    --------------
                                                                      International
                                                                      Operations
                                                                        & eTESTING                            As a percent of
                                                Actual         Actual      LABS        Pro Forma              Revenue, net
                                              ----------    ---------- ------------   -----------    ------------------------------
<S>                                           <C>           <C>        <C>            <C>             <C>            <C>
Statement of Operations Data:
Revenue, net ...............................    $  440.5      $  535.7      $  81.5      $  454.2        100.0%          100.0%
Cost of production .........................       139.3         158.0         27.9         130.1         31.6            28.6
Selling, general and administrative
expenses....................................       254.5         281.6         61.4         220.3         57.8            48.5
Depreciation and amortization ..............        66.1          82.5          3.1          79.4         15.0            17.5
Write-down of intangible assets ............          --         778.8          2.8         775.9          n/a             n/a
                                                --------      --------      -------      --------
Loss from operations .......................       (19.4)       (765.2)       (13.7)       (751.5)
Equity in income from joint ventures .......         1.3           1.9           --           1.9          0.3             0.4
Interest expense, net ......................        54.7            --           --            --         12.4             n/a
Income tax (benefit) provision .............         0.6        (180.3)          --        (180.3)         0.1           (39.7)
                                                --------      --------      -------      --------
Net loss ...................................    $  (73.4)     $ (583.0)     $ (13.7)     $ (569.3)
                                                ========      ========      =======      ========

Other Data:

EBITDA, as defined herein ..................    $   48.0      $  103.6      $  (7.8)     $  111.4
EBITDA, as defined - Restricted
Subsidiaries................................        97.5           n/a          n/a           n/a
EBITDA, as defined - Unrestricted
Subsidiaries................................       (49.5)          n/a          n/a           n/a
</TABLE>

International operations & eTESTING LABS

   As discussed above, we determined to sell our international operations at the
time of the Acquisition and completed the sale in August 2000. Accordingly, the
net assets related to these operations were recorded as assets held for sale at
the estimated net proceeds from the sale and liquidation of the business, as
adjusted for estimated cash flows from these operations and an allocation of
interest expense for the estimated holding period. Additionally, eTESTING LABS
became an Unrestricted Subsidiary business unit in the fourth quarter of fiscal
2000. As a result, for the year ended December 31, 1999 pro forma adjustments
have been made to revenue, cost of production and selling, general and
administrative expense to exclude these results. The financial statements for
the fiscal year ended March 31, 2001 do not reflect any results of operations of
the international operations. The discussion below excludes the impact of the
above-described international operations for the year ended December 31, 1999.

Revenue, net

   Revenue was $440.5 million for the fiscal year ended March 31, 2001, compared
to $454.2 million in the year ended December 31, 1999, a decrease of $13.7
million, or 3.0%. Revenue from the Unrestricted Subsidiaries was $10.5 million
for the fiscal year ended March 31, 2001, which primarily related to service
fees earned by eTESTING LABS and advertising revenue from new publications, The
Net Economy and Expedia Travels. Excluding the Unrestricted Subsidiaries,
advertising revenue decreased by $17.2 million, or 5.1%, to $322.5 million. This
decrease in advertising revenue was due to a 17.2% decline in advertising pages,
partially offset by 13.3% increase in average revenue per page. Other revenue,
which is primarily derived from royalties, mail list rentals and other services,
increased $9.3 million, or 45.6%, to $29.6 million. This increase is due
primarily to (1) $5.0 million of fees related to certain services we provide to
Computer Shopper, an unaffiliated magazine and (2) a $4.1 million increase in
royalty revenue, primarily due to a $1.5 million increase in license fees from
ZDNet. Circulation revenue decreased $15.9 million to $78.2 million, or 16.9%,
primarily related to fewer single-copy sales as compared to the year ended
December 31, 1999. Excluding the Unrestricted Subsidiaries, advertising,
circulation and other revenue accounted for 74.0%, 18.0% and 8.0% of our
consolidated net revenue during the fiscal year ended March 31, 2001, as
compared to 72.9%, 22.5% and 4.6% in the year ended December 31, 1999.

                                      F-4

<PAGE>

Cost of production

   Cost of production was $139.3 million for the fiscal year ended March 31,
2001 compared to $130.1 million for the year ended December 31, 1999, an
increase of $9.2 million, or 7.1%. Cost of production related to the
Unrestricted Subsidiaries was $7.6 million which primarily related to the new
publications, The Net Economy and Expedia Travels. Excluding the Unrestricted
Subsidiaries, cost of production increased $1.6 million, or 1.2%. This increase
was due to (1) an increase of approximately 5.7% in the total number of copies
printed to meet increased circulation levels in our aggregate magazine portfolio
and (2) an increase of approximately 5.5% in our average price per pound of
paper driven by (1) the mix of paper used in our publications and (2) an
increase in paper prices. These increases were partially offset by a decline in
total pages produced in our magazine portfolio. Cost of production, excluding
Unrestricted Subsidiaries, increased as a percentage of net revenue to 30.6%
from 28.6% in the previous period, due to the increased circulation levels
partially offset by higher advertising revenue per page being achieved.
Recently, a 2.6% increase in postage rates for calendar year 2001 was approved
by the Governors of the U.S. Postal Service. Although we may not be able to
recover the postage price increase in whole or in part in our pricing, we do not
believe that this increase will have a material adverse effect on our cash flows
or results of operations. In addition, a 1.6% increase effective July 2001 has
been requested by the U.S. Postal Service.

Selling, general and administrative expenses

   Selling, general and administrative expenses for the fiscal year ended March
31, 2001 were $254.5 million compared to $220.3 million for the year ended
December 31, 1999, an increase of $34.2 million, or 15.5%. Selling, general and
administrative expenses related to the Unrestricted Subsidiaries were $52.4
million and consisted mainly of operating, pre-publication and business
development expenses for our new publications and Internet ventures. Excluding
Unrestricted Subsidiaries, selling, general and administrative expenses
decreased $18.2 million, or 8.3%. This decrease was partially related to cost
reductions realized in administrative areas such as corporate sales, information
technology, finance and human resources, as well as reduced bad debt expense. In
addition, the prior year period includes approximately $3.0 million of costs
related to remediation of the Year 2000 problem. These selling, general and
administrative expense reductions were partially offset by increased editorial,
brand development, sales and marketing spending in support of our magazine
portfolio, brand repositioning and growth initiatives. Excluding Unrestricted
Subsidiaries, selling, general and administrative expenses as a percentage of
revenue decreased from 48.5% to 47.0% for the year ended December 31, 1999 and
fiscal year ended March 31, 2001, respectively. Selling, general and
administrative expenses related to the Unrestricted Subsidiaries are anticipated
to increase as development of these new businesses continues. As a result,
selling, general and administrative expenses, both in total and as a percentage
of revenue, are expected to increase in relation to the comparable prior year
period.

Interest expense, net

     Interest expense was $54.7 million for the fiscal year ended March 31, 2001
compared to no interest expense in the year ended December 31, 1999. This
increase is the result of indebtedness incurred in connection with the
Acquisition, and the issuance of our 12% senior subordinated notes due 2010, in
fiscal year 2001. Our weighted average debt outstanding was approximately $554.6
million and our weighted average interest rate was 10.9% for the fiscal year
ended March 31, 2001. Prior to the transactions, external financing transactions
were executed and funded by ZDI, as a result, interest expense of the
Predecessor is not applicable.

Equity in income from joint ventures

     Our equity in income from joint ventures decreased $0.6 million from $1.9
in the year ended December 31, 1999 to $1.3 million in the fiscal year ended
March 31, 2001, primarily due to a decrease in income from Mac Publishing LLC.

Income taxes

     The income tax provision of $0.6 million for the fiscal year ended March
31, 2001 and the income tax benefit of $180.3 million in the year ended December
31, 1999 represent effective rates of negative 0.9% and positive 23.6%,
respectively. The effective rate for the fiscal year ended March 31, 2001
results from certain minimum state and local taxes despite the consolidated
entity being in a pre-tax loss position. As a result of the Acquisition and the
different tax profiles of our Company and the Predecessor, the effective tax
rate of the Predecessor is not applicable or representative of our ongoing
business and income tax position.

                                      F-5

<PAGE>

Net loss

     Net loss of $73.4 million for the fiscal year ended March 31, 2001 improved
$509.6 million compared to net loss of $583.0 million for the year ended
December 31, 1999. The decline is primarily due to the write-down of intangible
assets totaling $778.8 million in the year ended December 31, 1999, to reflect
the fair value of the business based on the $780.0 purchase price for ZDP's
publishing assets. Excluding the results of ZDP's wholly-owned international
operations and eTESTING LABS, net loss for the year ended December 31, 1999 was
$569.3 million.

EBITDA

     EBITDA is defined as income before provision for income taxes, interest
expense, depreciation and amortization expense and other non-cash charges.
EBITDA, as defined is not a measure of performance under GAAP, and EBITDA should
not be considered in isolation or as a substitute for net income, cash flows
from operating activities and other income or cash flow statement data prepared
in accordance with GAAP or as a measure of profitability or liquidity. EBITDA is
presented because it is commonly used by certain investors and analysts to
analyze a company's ability to service debt. EBITDA (subject to certain
adjustments) is also a component of our debt compliance calculations. However,
our method of computation may not be comparable to similarly titled measures of
other companies.

     EBITDA for the fiscal year ended March 31, 2001, was $48.0 million. EBITDA
related to the Unrestricted Subsidiaries was a loss of $49.5 million. Excluding
Unrestricted Subsidiaries, EBITDA was $97.5 million compared to $111.4 million
for the year ended December 31, 1999, a $13.9 million or 12.5% decrease.

Comparison of the period January 1, 2000 to April 4, 2000 (Predecessor) and the
three months ended March 31, 1999 (Predecessor)

Revenue, net

     Revenue increased by $2.1 million, or 1.7%, from $126.8 million in the
three months ended March 31, 1999 to $128.9 million in the comparable period in
2000. This increase reflects significant growth in our newer publications,
including Yahoo! Internet Life and Interactive Week, partially offset by lower
advertising in certain of our business publications. Margin pressures on smaller
computer equipment manufacturers, and the resulting consolidation in that
industry have contributed to a reduced demand for advertising in certain of our
business publications. Revenue from international operations, which generated
15.2% of revenue, decreased $0.5 million, or 2.7%. Other revenue increased $2.1
million, or 45.5%, due to an increase in royalties from ZDNet and the launch of
eTESTING LABS external testing services.

Cost of production

     Production costs decreased by $0.8 million, or 1.9%, from $39.5 million in
the three months ended March 31, 1999 to $38.7 million in the comparable period
in 2000. This represents a decrease in cost of production as a percent of
revenue from 31.1 % in 1999 to 30.0% in 2000. These decreases were primarily due
to a net decline in advertising pages and an increase in advertising revenue per
page.

Selling, general and administrative expenses

     Selling, general and administrative expenses increased by $11.7 million, or
18.3%, from $63.9 million in the three months ended March 31, 1999 to $75.6
million in the comparable period in 2000. This represents an increase in
selling, general and administrative expenses as a percent of revenue from 50.4%
in 1999 to 58.7% in 2000. This increase was primarily related to increased
spending in support of our newer publications, including Yahoo! Internet Life
and Interactive Week. The areas of such spending and the increase over all
domestic titles include editorial ($2.1 million), circulation ($1.9 million) and
sales and marketing ($5.7 million). In addition, expenses at the newly launched
eTESTING LABS increased $1.3 million, as the business pursues third party
opportunities. Some savings were realized in administrative areas as a result of
the cost reductions prior to the transactions.

Stock-based compensation expense

     Stock-based compensation of $0.4 million in the period January 1 to April
4, 2000 is a non-cash charge that is recorded over the vesting period of certain
ZDNet stock option grants to our employees. This represents a slight decrease
from the 1999 period due to forfeitures of options.

                                      F-6

<PAGE>

Depreciation and amortization

     Total depreciation and amortization decreased $8.0 million, or 40.1%, from
$20.1 million in the three months ended March 31, 1999 to $12.1 million in the
comparable period in 2000. This decline resulted from the $778.8 million
write-down of intangible assets that was recorded in December 1999 to reflect
the fair value of the business based on the $780.0 million purchase price. This
write-down resulted in lower goodwill amortization in subsequent periods.

Equity in income and loss from joint ventures

     Our equity share in income and losses from joint ventures increased $0.4
million from a loss of $0.1 million in the three months ended March 31, 1999 to
$0.3 million in the three months ended March 31, 2000 primarily due to stronger
performance from the Mac Publishing LLC joint venture.

Income taxes

     The income tax expenses of $0.7 million in the three months ended March 31,
1999 and $2.1 million in the comparable period in 2000 represent effective rates
of 24.6% and 59.2%, respectively. This 2000 effective rate is significantly
higher than the federal statutory rate of 35.0% due to non-recognition of losses
in foreign jurisdictions and the impact of state and local taxes. The 1999
effective tax rate, which is based on the full year effective rate, is lower
than the federal statutory rate of 35.0% primarily due to the amortization of
non-deductible goodwill.

Comparison of the year ended December 31, 1999 (Predecessor) and the year ended
December 31, 1998 (Predecessor)

Revenue, net

     Revenue decreased by $5.3 million, or 1.0%, from $541.0 million in 1998 to
$535.7 million in 1999. This decline was primarily due to the absence of revenue
from three publications discontinued in October 1998. Excluding discontinued
publications, revenue increased $18.8 million, or 3.6% from 1998. This growth
was due to advertising and circulation increases in our newer publications,
including Yahoo! Internet Life and Interactive Week, partially offset by lower
advertising revenues in certain of our business publications. Margin pressures
on smaller computer equipment manufacturers, industry and product delays, lower
demand in Asia and reduced advertising budgets to fund expenses associated with
the Year 2000 transition contributed to a reduced demand for advertising pages
in our established magazines. However, this decline was partially offset by
higher advertising revenue per page in 1999. Revenue from international
operations, which generated 14.8% of revenue, was relatively unchanged. Other
revenue increased $4.3 million, or 21.4%, from 1998 due to an increase in
royalties from ZDNet and the launch of eTESTING LABS' external testing services.

Cost of production

     Production costs decreased by $9.3 million, or 5.5%, from $167.3 million in
1998 to $158.0 in 1999. This represents a decrease in production costs as a
percent of revenue from 30.9% in 1998 to 29.5% in 1999. The decrease was
primarily due to the absence of costs related to three publications that were
discontinued in the fourth quarter of 1998. In addition, a net decline in
advertising pages and higher advertising revenue per page contributed to the
decline.

Selling, general and administrative expenses

     Selling, general and administrative expenses decreased by $2.5 million, or
1.0%, from $284.1 million in 1998 to $281.6 million in 1999. This represents a
decrease in selling, general and administrative expenses as a percent of revenue
from 52.5% in 1998 to 52.6% in 1999. The decrease reflects efficiencies gained
through the 1998 restructuring in which three magazines were discontinued.

Stock-based compensation expense

     Stock-based compensation is a non-cash charge that is recorded over the
vesting period of certain ZDNet stock option grants to our employees. These
options were granted on December 21, 1998, as such 1999 is the first period in
which the related expense is incurred.

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Year 2000 remediation costs

     Year 2000 remediation costs represent the costs we incurred to ensure our
various computer systems were Year 2000 compliant. No such charges were incurred
in 1998.

Depreciation and amortization

     Total depreciation and amortization increased $0.2 million from $82.3
million in 1998 to $82.5 million in 1999.

Restructuring

     Margin pressure on smaller computer equipment manufacturers, industry and
product delays, lower demand in Asia and reduced advertising budgets to fund
expenses associated with Year 2000 transition contributed to a reduced demand
for advertising in our magazines, principally, PC Magazine, Ziff Davis SMART
BUSINESS (formerly PC/Computing) and eWeek (formerly PC Week).

     As a result of this reduced demand, in October 1998 we announced a
restructuring program with the intent of significantly reducing our costs base.
We incurred a pre-tax charge of $40.0 million in connection with this
restructuring program. The charge was reported as a component of income from
operations for the fourth quarter of 1998. The charge included asset impairment
costs ($34.2 million), employee termination costs ($3.9 million) and costs to
exit activities ($1.9 million) principally resulting from the discontinuation of
three publications, Windows Pro, Internet Business and Equip, and the reduction
of our work force by 184 employees. The following sets forth additional detail
concerning the principal components of the charge:

     .   Asset impairment costs were a non-cash write-off of intangible assets,
         primarily subscriber lists, advertising lists and tradenames associated
         with the discontinued publications.

     .   Employee termination costs related to severed personnel at the closed
         publications as well as a rationalization and resulting workforce
         reduction of the remainder of our operations. Employee termination
         costs included payments for severance and earned vacation as well as
         the costs of outplacement services and the provision of continued
         benefits to personnel.

     .   Costs to exit activities reflect the costs associated with the final
         closure of discontinued publications including the costs to reduce
         office space under lease as a result of the reduced level of employees.

Write-down of intangible assets

     The $778.8 million write-down of intangible assets was recorded to reflect
the fair value of the business based on the $780.0 million purchase price.

Equity in income from joint ventures

     Our equity share in income from joint ventures decreased $0.3 million, or
13.0%, from $2.2 million in 1998 to $1.9 million in 1999 primarily due to the
acquisition of the remaining 50% interest of FamilyPC in May 1998. This resulted
in FamilyPC being consolidated from that time, therefore its earnings are no
longer reflected as earnings from joint ventures.

Income taxes

     The 1999 income tax benefit of $180.3 million represents an effective tax
rate of 23.6%, slightly higher than the 22.5% effective rate experienced in
1998. These effective rates are lower than the federal statutory rate of 35.0%
primarily due to the amortization of non-deductible goodwill.

Liquidity and Capital Resources

     Total cash at March 31, 2001 was $24.9 million of which $5.3 million is
earmarked for Unrestricted Subsidiaries.

     Under our senior credit facility, we have Restricted and Unrestricted
Subsidiaries. As described above, the Unrestricted Subsidiaries are LaunchCo and
InternetCo and, at the time of the Acquisition, $50.0 million of our equity
proceeds (contributed by Willis Stein and co-investors) were earmarked for
funding of these subsidiaries. In March 2001, an equity

                                      F-8

<PAGE>

contribution of $17 million was also earmarked for funding of the Unrestricted
Subsidiaries. The Restricted Subsidiaries represent our remaining subsidiaries
and are generally comprised of businesses that were acquired from ZDI. The
senior credit facility and indenture governing the $250.0 million 12% notes due
2010 place restrictions on funding from the Restricted Subsidiaries to the
Unrestricted Subsidiaries.

     Details of changes in cash and cash equivalents during the fiscal year
ended March 31, 2001, are discussed below. Prior to April 5, 2000, the
Predecessor participated in ZDI's centralized cash management system. As such,
external financing transactions including debt service and capital spending for
major capital projects were executed and funded by ZDI. Predecessor cash
balances primarily represent cash held by international operations.

     Operating Activities. We currently rely primarily upon cash flow from
operating activities, borrowings under our revolving credit facility and equity
contributions to finance our operations and expansion. Cash provided by
operating activities was $37.6 million the fiscal year ended March 31, 2001,
compared to $91.4 million for the year ended December 31, 1999, a decrease of
$53.8 million or 58.9%. The decrease in cash provided by operating activities
was due primarily to lower EBITDA and $47.4 million of cash interest paid,
partially offset by increased cash flow associated with certain working capital
improvements achieved during the fiscal year ended March 31, 2001. These working
capital improvements mainly related to reductions in advertising accounts
receivable primarily due to enhanced credit and collection activities since the
Acquisition and reductions in inventory due to our decision to outsource a
significant portion of our paper buying operations to our printers resulting in
a decreased investment in paper inventory. Cash flow from accounts receivable
and inventory increased $18.3 million and $8.1 million, respectively, when
compared to the year ended December 31, 1999.

     Investing Activities. Cash used by investing activities of $802.5 million
in the fiscal year ended March 31, 2001 reflects cash used primarily for our
purchase of ZDP at a total cost of $802.0 million, including fees and expenses,
and $33.7 million of capital expenditures ($10.6 million associated with the
Restricted Subsidiaries). These cash investments were partially offset by net
proceeds from the sale of our international operations of $28.3 million, $1.7
million from the sale of our ZDNet Media (China) LDC (previously named Ziff
Davis Richina Media LDC) and $3.6 million of distributions received from our
MacWorld joint venture. We earmarked and used $3.3 million of our international
proceeds to partially fund the Restricted Subsidiary capital expenditures during
the fiscal year ended March 31, 2001. We anticipate making additional capital
investments in connection with the continued development of the businesses of
the Unrestricted Subsidiaries, however, the amount and timing of such
investments has not yet been determined and will vary depending upon the
implementation of the related business plans.

     Financing Activities. Cash provided by financing activities was $787.8
million for the fiscal year ended March 31, 2001. In conjunction with the
Acquisition, we (1) entered into a $405.0 million senior credit facility of
which $355.0 million was funded at the closing of the Acquisition, (2) issued
$175.0 million senior subordinated notes and (3) received equity contributions
from our parent company, Ziff Davis Holdings, Inc., of $335.0 million ($333.0
million of which was received during the fiscal year ended March 31, 2001) that
was funded by Willis Stein and its co-investors. In July 2000, we completed an
offering of $250.0 million 12% senior subordinated notes due 2010 ("the Notes"),
the proceeds of which were primarily used to repay indebtedness. In connection
with the foregoing financing activities, we paid approximately $30.0 million in
costs and expenses related to our various debt agreements. In March 2001, the
Company received an additional $17.0 million equity contribution from our parent
company, Ziff Davis Holdings Inc., which was earmarked to fund the Unrestricted
Subsidiaries.

     Proceeds from the Notes were used to (1) repay the $175.0 million senior
subordinated notes in full, (2) prepay approximately $59.7 million of the senior
credit facilities, (3) pay $6.8 million of accrued interest related to senior
and subordinated debt and (4) pay approximately $8.5 million of transaction
related fees. Following the Notes offering, the senior credit facility consisted
of a $295.3 million term loan and a $50.0 million revolving credit facility, of
which up to $10.0 million may be utilized for letters of credit. The term loan
matures in two tranches, one due December 31, 2006 and the other due March 31,
2007, respectively, with quarterly payments beginning March 31, 2001. At March
31, 2001, $7.4 million of our bank debt was due within the next 12 months.
Borrowings under the revolving credit facility are due December 31, 2006.

     In addition to the $59.7 million prepayment discussed above, we prepaid
$84.0 million of principal outstanding under senior credit facilities during the
fiscal year and made a $2.1 million scheduled principal payment, reducing our
total debt balance to $459.2 million and our senior debt balance to $209.2
million. Based on our weighted average interest rate for fiscal 2001, these
principal prepayments will result in a reduction of approximately $8.5 million
in annual interest expense.

     At March 31, 2001, we were required to have a ratio of debt to EBITDA of
4.5 to 1.0. If the ratio was in excess of 4.5 to 1.0, either we would need to
repay indebtedness under our senior credit facilities or Willis Stein and its
co-investors would

                                       F-9

<PAGE>

need to contribute to us a maximum of $50.0 million in additional equity so that
we could repay indebtedness under our senior credit facilities in order to
reduce our ratio of debt to EBITDA. As of March 31, 2001, we were in compliance
with our debt covenants and no additional equity payment was required. As of
March 31, 2001, total indebtness was $459.2 million and consisted of $209.2
million of outstanding principal under the senior credit facility and $250.0
million under the 12% senior subordinated notes due 2010. Amounts outstanding
under the senior credit facility bear interest, at our option, at a rate per
annum equal to either the base rate or the Eurodollar rate (as defined in the
Credit Agreement) in each case plus an additional margin. The additional margin
adjusts according to a performance pricing grid based on our ratio of total debt
to EBITDA (as defined in the Credit Agreement). As of March 31, 2001, borrowings
under the senior credit facility bore interest at rates ranging from 7.66% to
10.51%. Based on our total debt to EBITDA ratio at March 31, 2001, $4.8 million
of our $50.0 million revolving credit facility was available for additional
borrowing.

     In August 2000, our European subsidiaries and we completed the sale of our
wholly-owned International operations (excluding international licensing and
international joint ventures) to VNU N.V. and affiliates for a purchase price of
approximately $42.0 million.

     The purchase price for these assets consists of:

     (1) $31.0 million in cash subject to post closing adjustments; plus

     (2) $3.2 million related to purchase of inventory, prepaid expenses and
         fixed assets, excluding leasehold improvements offset by approximately
         $3.5 million of net subscription liabilities assumed; and

     (3) an additional $15.0 million to be paid over a period of five years in
         five annual payments of $3.0 million which we have recorded at a net
         present value of $11.3 million.


     We retained most of the related accounts receivable and liabilities. At
closing, we received net proceeds of $30.9 million and have incurred $2.7
million in net costs and expenses associated with the sale and liquidation of
these operations. Under our senior credit agreement, these net proceeds must be
used for certain permitted capital expenditures and acquisitions within 360 days
from the sale date or they must be used to prepay principal due under our senior
credit facility. During our fiscal year, we utilized $3.3 million of the
international proceeds for capital spending. In addition, we utilized $24.9
million of the international proceeds as part of our debt prepayments in the
fiscal year ended March 31, 2001.

     Under the terms of our credit agreement, the Unrestricted Subsidiaries and
the Restricted Subsidiaries are largely to be funded through distinct sources.
In connection with the Acquisition, we earmarked $50.0 million of our equity
proceeds, contributed by Willis Stein and co-investors, for funding the working
capital and financing needs of LaunchCo and InternetCo. The March 2001 equity
contribution of $17 million was also earmarked for funding of the Unrestricted
Subsidiaries. At March 31, 2001, $5.3 million of the earmarked contributions
remained for use by the Unrestricted Subsidiaries. In May 2001, an additional
$20 million of equity was contributed to fund the Unrestricted Subsidiaries. As
we continue to develop and launch products or businesses within LaunchCo and
InternetCo, we may seek additional funding, the amount and timing of such
funding needs will vary depending upon approval and implementation of the
related business plans. Under the terms of our amended debt agreements, the
Restricted Subsidiaries are generally not able to invest in the Unrestricted
Subsidiaries except that (1) equity specifically contributed to us and earmarked
for use by the Unrestricted Subsidiaries and (2) proceeds from specified assets
sales may both be used to fund the Unrestricted Subsidiaries. We are currently
seeking to raise additional funding for the Unrestricted Subsidiaries to meet
anticipated requirements in the second fiscal quarter. However, there can be no
assurance that we will be successful in raising the needed funds. Should funding
not be available, we would reduce or discontinue these operations as
appropriate.

     Our Restricted Subsidiaries have historically been funded by cash provided
by operations and the availability of funds under our revolving credit facility.
However, due to a substantial decrease in the number of advertising pages
published in our publications in the first fiscal quarter of 2002, we expect
that we will not be in compliance with certain debt covenants contained in our
senior credit facility at the end of the first fiscal quarter of 2002.
Accordingly, we have amended our senior credit facility. This amendment, among
other things, amends the compliance covenants such that we would expect to be in
compliance with such covenants at June 30, 2001 and adjusts required ratios for
the period through September 30, 2002 to levels more in line with our
performance expectations. In addition, the availability of the existing $50.0
million revolving credit facility was permanently reduced to $30.0 million, of
which only $10.0 million would be available during the amendment period.

     In consideration for amending the senior credit facility on July 13, 2001,
Willis Stein and its co-investors contributed $50.0 million of additional equity
to Ziff Davis Holdings Inc., our parent Company. The $50.0 million was
subsequently contributed to the Company of which $35.0 million is being used to
repay senior indebtedness and $15.0 million is restricted to

                                      F-10

<PAGE>

pay interest due on the Notes on July 16, 2001. Under the amendment, net
proceeds of up to $50.0 million from the sale of certain assets will not have to
be used to repay indebtedness and may be used to fund the Unrestricted
Subsidiaries. The Company has not entered into any agreements with respect to
such asset sales. In addition, interest rates under the credit facility will be
adjusted and we have paid a fee to our lenders totaling approximately $0.5
million.

     There can be no assurance that the number of advertising pages published in
our publications and related operating performance will improve and that we will
be in compliance with our loan covenants in the future. We continuously evaluate
potential acquisitions of businesses, which complement our existing operations.
Depending on various factors including, among others, the cash consideration
required in such potential acquisitions, we may determine to finance any such
transactions with existing sources of liquidity and may determine to consider
such acquisitions as a component of either the Restricted or Unrestricted
Subsidiaries.

Interest Rate Risk

     Our senior credit facility requires that we enter into hedge agreements so
that at least 50% of our funded debt be effectively set at a fixed rate of
interest. On September 27, 2000, we entered into an interest rate swap agreement
in the notional amount of $25.0 million and a maturity date of October 11, 2003.
Under this swap agreement, we receive a floating rate of interest based on
three-month LIBOR, which resets quarterly, and pay a fixed rate of interest each
quarter for the term of the agreement. This swap agreement, coupled with the
Notes, results in $275.0 million or 59.9% of our funded debt being effectively
set at a fixed rate of interest as of March 31, 2001. Accordingly, a 1%
fluctuation in interest rates would cause a $2.1 million fluctuation in interest
expense.

Cyclicality

     Revenue from advertising accounts for approximately 74% of our total
revenue. Cyclicality in advertising expenditures generally, or with respect to
magazine-based advertising specifically, could therefore have a material effect
on our business, financial condition or operating results. Further, economic
trends could also significantly impact the growth of our revenue and operating
results with respect to prior periods.

Seasonality

     Historically, our business has been seasonal because we have earned a
significant portion of our annual revenue in our third fiscal quarter. This is
largely due to the general increase in publishing revenue in the third quarter
as a result of increased consumer buying activity during the holiday season.
Factors affecting the seasonality of our business are holiday spending, customer
budgetary spending patterns, new product introductions and general economic
trends. Quarterly results may also be affected by the timing and magnitude of
acquisitions and related costs, variations in the number of magazines sold in
any quarter, customer spending patterns, termination of existing agreements,
costs incurred in connection with internal growth, changes in our mix of
customers, contracts of our business, fluctuation in the costs of raw materials
and other general economic conditions. Accordingly, our operating results in any
particular quarter may not be indicative of the results that can be expected for
any quarter or for the entire year. We cannot assure you that our third quarter
revenue for fiscal 2002 or any future year will be higher than revenue for our
other quarters. We have not had significant overhead and other costs generally
associated with large seasonal fluctuations.

Inflation and Fluctuations in Paper Prices and Postage Costs

     We continually assess the impact of inflation and changes in paper and
postage prices as these costs represent a significant portion of our cost of
production. Paper prices began to rise in 1994, rose significantly in 1995 and
1996 and then decreased in 1997. During 1998 and 1999, paper prices were
relatively flat with a price increase occurring in 2000. In 2001 paper prices
have declined

     During fiscal 2001, we outsourced the majority of our paper buying to
printers. As a result we hold significantly lower levels of inventory and are
purchasing paper at market prices at the time of use.

     Postage rates increased 5.0% in January 1999, 9.9% in January 2001 and 2.6%
in April 2001 and the U.S. Postal Service has proposed a 1.6% increase in July
2001. Management considers announced increases in our pricing policies but there
can be no assurance we will recover these incurred costs.

                                      F-11

<PAGE>

     We continually review our purchasing and manufacturing processes for
opportunities to reduce costs and mitigate the impact of paper price and postage
rate increases. In that regard, we have consolidated from four to three printers
and outsourced the majority of our pre-press and paper buying operations to our
primary printers.

                                      F-12