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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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Form 10-K



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(Amendment No. 1)



(Mark One)

|x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------------



For the Fiscal Year Ended March 29, 2004



OR



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



Commission file number 1-11112



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American Media Operations, Inc.

(Exact name of the registrant as specified in
its charter)



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|                                                               |  |                                  
|-------------------------------------------------------------- |  | ---------------------------------
|Delaware                                                       |  | 59-2094424                       
|(State or other jurisdiction of incorporation or organization) |  | (IRS Employee Identification No.)
|                                                               | 
|1000 American Media Way, Boca Raton, Florida                   |  | 33464                            
|(Address of principal executive offices)                       |  | (Zip Code)                       



Registrants
telephone number, including area code

(561) 997-7733



Securities registered pursuant to Section 12(b) and 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 reference in Part III of this Form 10-K or any amendment to this Form 10-K.    x



Indicate by check mark whether
the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).    Yes ̈No  x



As of June 28, 2004, 7,507.6 shares of registrants common stock were outstanding. The common stock is privately held and, to the knowledge of registrant, no shares have been sold in the past 60 days.



Documents Incorporated by Reference

None



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AMERICAN MEDIA OPERATIONS, INC.



FORM
10-K



For the Year Ended March 29, 2004



|         |  |                                                                                       |  |   
|-------- |  | ------------------------------------------------------------------------------------- |  | --
|         |  | PART I                                                                                |  |   
|Item 1.  |  | Business                                                                              |  | 3 
|Item 2.  |  | Properties                                                                            |  | 9 
|Item 3.  |  | Legal Proceedings                                                                     |  | 10
|Item 4.  |  | Submission of Matters to a Vote of Security Holders                                   |  | 10
|         |  |                                                                                      
|         |  | PART II                                                                               |  |   
|Item 5.  |  | Market for Registrants Common Equity and Related Security Holders                    |  | 11
|Item 6.  |  | Selected Financial Data                                                               |  | 11
|Item 7.  |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 12
|Item 7A. |  | Quantitative and Qualitative Disclosures About Market Risks                           |  | 21
|Item 8.  |  | Financial Statements and Supplementary Data                                           |  | 22
|Item 9.  |  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure  |  | 45
|Item 9A. |  | Controls and Procedures                                                               |  | 45
|         |  |                                                                                      
|         |  | PART III                                                                              |  |   
|Item 10. |  | Directors and Executive Officers                                                      |  | 45
|Item 11. |  | Executive Compensation                                                                |  | 47
|Item 12. |  | Security Ownership of Certain Beneficial Owners and Management                        |  | 48
|Item 13. |  | Certain Relationships and Related Transactions                                        |  | 49
|Item 14. |  | Principal Accountant Fees and Services                                                |  | 51
|         |  |                                                                                      
|         |  | PART IV                                                                               |  |   
|Item 15. |  | Exhibits, Financial Statement Schedules, and Reports on Form 8-K                      |  | 52
|         |  | Signatures                                                                            |  | 55



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Explanatory Note



This Amendment No. 1 to the Annual Report on Form 10-K of American Media Operations, Inc. is being filed to amend and supplement Items 10,
11, and 15.



PART I



Item 1.Business



Unless the context otherwise requires, references in this Form 10-K to the Company or us, we or our are to American Media Operations, Inc. and its subsidiaries. All references to a particular
fiscal year are to the four fiscal quarters ended the last Monday in March of the fiscal year specified.



We were incorporated under the laws of Delaware in February 1981 and are a wholly-owned subsidiary of American Media, Inc. (Media, or,
together with its subsidiaries, AMI). We conduct all of Medias operations and represent substantially all of Medias assets. Our headquarters and principal executive offices are located at 1000 American Media Way, Boca Raton,
FL 33464 and our telephone number is (561) 997-7733.



On May 7,
1999 all of the common stock of Media was purchased by EMP Group LLC (the LLC), a Delaware limited liability company, pursuant to a merger of Media and EMP Acquisition Corp. (EMP), a wholly owned subsidiary of the LLC. The
acquisition was financed, in part, by borrowings of approximately $350 million under a new $400 million senior bank facility (the Credit Agreement), as well as a cash equity investment by the LLC and borrowings in the form of senior
subordinated notes. Upon consummation of this transaction, EMP was merged with and into Media (the Merger) resulting in a change in ownership control of both Media and the Company. As a result of this change in control, as of the Merger
date we reflected a new basis of accounting that included the elimination of historical amounts of certain assets and liabilities and the revaluation of certain of our tangible and intangible assets.



On November 1, 1999, we acquired all of the common stock of Globe
Communications Corp. and certain of the publishing assets and liabilities of Globe International, Inc. (collectively, the Globe Properties) for total consideration of approximately $105 million (the Globe Acquisition). The
Globe Properties consist of several tabloid style magazines, including Globe, National Examinerand Sunas well as other titles including Mini Mags.



On February 14, 2002, we issued $150 million in aggregate principal amount of 10.25% Series B Senior Subordinated Notes due
2009 through a private placement. The gross proceeds from the offering were approximately $150.8 million including the premium on the notes. We used the gross proceeds of the offering to (a) make an approximately $75.4 million distribution to the
LLC, (b) to prepay approximately $68.4 million of the term loans under our credit facility and (c) pay transaction costs. The notes are unsecured and subordinated in right of payment to all our existing and future senior indebtedness. The notes rank
equally with all our existing and future senior subordinated indebtedness. The notes are guaranteed on a senior subordinated basis by all our current domestic subsidiaries.



On January 23, 2003, we acquired Weider Publications LLC, a newly formed company to which the magazine business of Weider
Publications, Inc. and Weider Interactive Networks, Inc. had been contributed by Weider Health and Fitness, Weider Health and Fitness, LLC and Weider Interactive Networks, Inc. (collectively, Weider or the Weider Properties).
The aggregate purchase price paid by us was $357.3 million, which includes a post-closing working capital adjustment of $7.3 million. Weider is the leading worldwide publisher of health and fitness magazines, with a total estimated readership of 24
million in the United States, more than any other publisher in the health and fitness category. Weider currently publishes eight magazines, including Muscle & Fitness, Shape, Mens Fitness, Muscle & Fitness Hers, Flex, Fit Pregnancy,
Natural HealthandShape en Espanol, with an aggregate average circulation of approximately 4.1 million copies. In connection with the acquisition of the Weider Properties, Media borrowed $140 million in a new tranche C-1 term loan and
$150 million in senior subordinated notes, and issued $50 million of new equity in the LLC (of which approximately $8.8 million was an equity contribution from the Sellers).



As previously mentioned in connection with the Weider Properties, we issued $150 million in aggregate principal amount of
8.875% senior subordinated notes due 2011. The net proceeds from the offering were approximately $145.9 million including the discount on the notes. We used the net proceeds of the offering to fund a portion of the acquisition of Weider Publications
LLC. The notes are unsecured and subordinated in right of payment to all our existing and future senior indebtedness. The notes rank equally with all our existing and future senior subordinated indebtedness. The notes are guaranteed on a senior
subordinated basis by all our current domestic subsidiaries.



Our Boca Raton headquarters, which housed substantially all of our editorial operations (including its photo, clipping and research libraries), executive offices and certain administrative functions, was closed on October 7, 2001 by the
Palm Beach County



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Department of Health when traces of anthrax were found on a computer keyboard following the death of a photo editor of
the Sunfrom inhalation anthrax. The Company entered into a two-year lease for a 53,000 square foot facility two blocks from its current Boca Raton headquarters. In February 2002, the Palm Beach County of Health quarantined the building for
an additional 18 months.



In May 2002, we and our insurance
carrier reached a final compromise regarding our insurance claim and the Company received a compromised payment. The insurance proceeds resulted in a net gain on the insurance settlement of approximately $7.6 million for the fiscal year ended March
31, 2003. During the fiscal year ended March 31, 2003, the Company incurred costs for maintaining the Boca facility such as security and utilities, which have been netted against the gain on insurance settlement.



On April 17, 2003, we sold our anthrax-contaminated headquarters in Boca
Raton, Florida to 5401 Broken Sound LLC. As a result of the sale, we extended our lease in the 53,000 square foot facility described above. 5401 Broken Sound LLC paid $40,000 as consideration for the transfer of ownership and all future liabilities
that can occur with the building.



On April 17, 2003, we
completed a series of transactions whereby principals and affiliates of Evercore Partners (Evercore) and Thomas H. Lee Partners (T.H. Lee), David J. Pecker (the Chief Executive Officer of the Company), other members of
management and certain other investors contributed approximately $434.6 million in cash and existing ownership interests of the LLC, our ultimate parent, valued at approximately $73.3 million, to a merger vehicle which was merged with and into the
LLC in exchange for newly issued ownership interests of the LLC. These transactions are referred to collectively as the Recapitalization in this Form 10-K. Please see Security Ownership of Certain Beneficial Owners and
Management for a summary of our ownership structure and Note 14 to the Consolidated Financial Statements.



Industry Data and Circulation Information



Information contained in this Form 10-K concerning publishing industry data, circulation information, rankings, readership information (e.g., multiple
readers per copy) and other industry and market information, including our general expectations concerning the publishing industry, are based on estimates prepared by us based on certain assumptions and our knowledge of the publishing industry as
well as data from various third party sources. These sources include, but are not limited to, the report of the Audit Bureau of Circulations (ABC), BPA Circulation Statements, Statement of Ownership figures filed with the U.S. Postal
Service, Mediamark Research Inc. (MRI) syndicated research data and Veronis Suhler Stevenson research data. While we are not aware of any misstatements regarding any industry data presented in this Form 10-K we have not independently
verified any of the data from any of these sources and, as a result, this data may be imprecise. Our estimates, in particular as they relate to our general expectations concerning the publishing industry, involve risks and uncertainties and are
subject to change based on various factors.



Unless otherwise
indicated, all average weekly circulation information for our tabloid publications is an average of actual weekly single copy circulation for the fiscal year ended March 29, 2004. Unless otherwise indicated, all average circulation information for
Weiders publications is an average of actual per issue circulation for the twelve months ended March 29, 2004. All references to circulation are to single copy and subscription circulation, unless otherwise specified.



The Company



Overview



We are a leading publisher in the field of general interest magazines, publishing National Enquirer, Star, Globe, National Examiner, Weekly World News,
Sun, Country Weekly, MIRA!, Muscle & Fitness, Shape, Shape en Espanol, Mens Fitness, Muscle & Fitness Hers, Flex, Fit Pregnancy, Natural Health and other monthly publications. Among our weekly periodicals, National Enquirer, Star,
and Globe, have the third, fourth and eighth highest weekly single copy circulation, respectively, of any weekly periodical in the United States. We are the leader in total weekly single copy circulation of magazines in the United States and Canada
with approximately 35% of total U.S. and Canadian circulation for audited weekly publications. Total average circulation per issue is approximately 5.7 million copies for our consumer publications (including Star magazine) and 2.7 million copies for
our tabloid publications, for an aggregate average circulation of 8.4 million copies.



On January 23, 2003, we acquired Weider Publications LLC, a privately held company controlled by Weider Health and Fitness. Weider is the leading worldwide publisher of health and fitness magazines, with a total
estimated readership of 24 million in the United States, more than any other publisher in the health and fitness category. The health and fitness category is the fastest growing advertising segment of special interest magazines. Weider currently
publishes eight magazines, including Muscle & Fitness, Shape, Shape en Espanol, Mens Fitness, Muscle & Fitness Hers, Flex, Fit Pregnancy and Natural Health, with an aggregate average circulation of approximately 4 million
copies.



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We derive approximately 65% of our revenues from circulation, predominantly single copy sales in retail
outlets, and the remainder from advertising and other sources. Our publications are distributed in approximately 145,000 retail outlets in the United States and Canada, representing, in the opinion of management, substantially complete coverage of
periodical outlets in these countries. Distribution Services, Inc. (DSI), our subsidiary, arranges for the placement, merchandising, and sales and marketing of our publications and third-party publications at retail outlets throughout
the United States and Canada. In addition, DSI provides sales of marketing, merchandising and information-gathering services for third parties including non-magazine clients.



Our tabloid publications include the following titles:



| |  | National Enquirer is a weekly general interest publication with an editorial content devoted to celebrities, investigative reporting, human interest stories and articles
covering lifestyle topics such as crime, health and food. National Enquireris the third highest selling weekly periodical based on U.S., Canadian and U.K. single copy circulation. AMI sells on average 1.2 million single copies of National
Enquirerper week in the United States, Canada and the United Kingdom. National Enquirerhas a total average weekly circulation of approximately 1.5 million copies, including subscriptions, with a total estimated readership in the United
States, Canada and the United Kingdom of 11.7 million.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Globe is a weekly tabloid with celebrity features that are edgier than National Enquirer, with a greater emphasis on investigative crime stories. Globeis the
eighth highest selling weekly periodical in the United States and Canada based on single copy circulation, selling on average 482,000 copies per week. Globehas a total average weekly circulation of approximately 527,000 copies, including
subscriptions, with an estimated readership of 3.7 million.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | National Examiners editorial content consists of celebrity and human-interest stories, differentiating it from the other titles through its upbeat positioning as the
gossip, contests, womens service and good news tabloid. National Examinerhas an average weekly single copy circulation of 217,000 copies, with a total average weekly circulation of approximately 234,000 copies, including
subscriptions. Total readership is estimated at 1.6 million.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Weekly World News is a tabloid devoted to the publication of bizarre and strange stories. There is much humorous original content and the paper has created several characters
that have become staples of pop culture. Weekly World Newshas an average weekly single copy circulation of 153,000 copies, with a total average weekly circulation of approximately 167,000 copies, including subscriptions. Total readership is
estimated at 1.2 million.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Sunseditorial content is skewed to an older target audience and focuses on religion, health, holistic remedies, predictions and prophecies. Sunalso includes
entertaining and unusual articles from around the world. Sunhas an average weekly single copy circulation of approximately 120,000 copies, including subscriptions, with a total readership estimated at 721,000.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Mira!is a Spanish language tabloid that features exclusive news, gossip and goings-on about the hottest stars in the Latino community, along with interviews and in-depth
stories spotlighting them at work and at play. It is distributed at checkout counters in mass merchandisers, supermarkets and bodegas in the top 43 Hispanic markets in the United States. The magazine was launched in June 2000 and has a total
bi-weekly circulation of approximately 120,000 copies including subscriptions and an estimated total readership of 893,000. It is the largest newsstand Hispanic magazine in the United States.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Our consumer publications include the following titles:



| |  | Star is a weekly celebrity news-based magazine dedicated to covering the stars of movies, television and music, as well as the lives of the rich and famous from politics,
business, royalty and other areas. Starseditorial content also incorporates fashion, health, fitness and diet features, all with a celebrity spin. Staris the fourth highest selling weekly periodical in the United States and
Canada based on single copy circulation, selling on average 943,000 copies per week. Starhas a total average weekly circulation of approximately 1.2 million copies, including subscriptions, with a total estimated readership in the United
States and Canada of 7.8 million.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Muscle & Fitnessis the preeminent monthly fitness training magazine, appealing to exercise enthusiasts and athletes of all ages, especially those focused on resistance
training, body fat control and sports nutrition. Muscle & Fitnesshas 65 years of brand equity and has served as a successful brand extension foundation for new titles. Muscle & Fitnesshas a total average monthly circulation
of approximately 459,000 copies, with monthly subscriptions of 261,000, and an estimated total readership of 7.0 million based on an estimated 15 readers per copy.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  | Shapeis the leader in circulation and advertising revenues in the attractive womens active lifestyle category. Shapesmission is to help women lead a
healthier lifestyle by providing information on exercise techniques, nutrition, psychology, beauty and other inspirational topics. Shapehas a total average monthly circulation of approximately 1.6 million copies, with monthly subscriptions
of 1.2 million, and an estimated total readership of 5.6 million.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Mens Fitnessis a leading monthly magazine for men 18-34 years old with active lifestyles. The magazine promotes a multi-training approach towards exercise and offers
information and advice in the areas of fitness, career, and relationships. Mens Fitnesshas a total average monthly circulation of approximately 619,000 copies, with monthly subscriptions of 517,000, and an estimated total readership of
5.1 million.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Muscle & Fitness Herswas launched in 2000 as a female focused magazine from Muscle & Fitness. The magazine targets the underserved market of female fitness
enthusiasts and athletes. The editorial style and content emphasizes resistance training and sports nutrition designed to improve physical appearance, strength, health and sports performance. Muscle & Fitness Hershas a total average
circulation per issue of approximately 225,000 copies, with subscriptions per issue of 94,000, and an estimated total readership of 1.1 million.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Flex, which was spun off from Muscle & Fitnessin 1983, is a monthly magazine devoted to professional bodybuilding. The magazine delivers nutrition and performance
science information for bodybuilding enthusiasts. As Flexis a premier title in the bodybuilding segment it receives a significant share of advertising devoted to the sports nutritional and vitamin business. Flexhas a total average
monthly circulation of approximately 146,000 copies, with monthly subscriptions of 54,000, and an estimated total readership of 875,000.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Fit Pregnancywas spun off from Shapein 1995. Fit Pregnancyseditorial focus makes it a premier lifestyle magazine for women during pregnancy and the
first couple of years after childbirth. Fit Pregnancy delivers authoritative information on health, fashion, food and fitness. Fit Pregnancy recently increased its editorial emphasis on the two-year postpartum period and as a result
has expanded its postnatal products advertising. Fit Pregnancyhas a total average circulation per issue of approximately 514,000 copies, with subscriptions per issue of 408,000, and an estimated total readership of 1.8 million.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Natural Healthis a leading wellness magazine published ten times a year, offering readers practical information to benefit from the latest scientific knowledge and
advancements in the field of natural health, including advice to improve well-being and combat illness. Published for more than 30 years, Natural Healthis one of the longest continuously published and most widely read paid publications in
its field. Natural Healthhas a total average circulation per issue of approximately 317,000 copies, with subscriptions per issue of 266,000, and an estimated total readership of 1.6 million.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Shape en Espanolgives its readers the latest fitness, diet, health, nutrition, family, beauty and fashion information. While 50% of the editorial is derived from the pages
of Shape, the majority is original content produced specifically for Latin women between the ages of 18 and 35. This gives Shape en Espanol a unique voice in the Hispanic community and makes it the only active lifestyle
Spanish-language publication. Shape en Espanol has a total average circulation per issue of approximately 77,000 copies, with subscriptions per issue of 52,000, and an estimated readership of 308,000.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Country Weeklyis an entertainment magazine presenting various aspects of country music and related lifestyles, events and personalities, and has the highest bi-weekly
circulation of any such magazine in its category. Country Weeklyis a bi-weekly publication and has an average single copy circulation of 181,000 copies, with a total average bi-weekly circulation of approximately 434,000 copies, including
subscriptions. Total readership is estimated at 3.8 million.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Quick! Digestsare pocket-sized digest magazines covering such topics as parents relationships with their children, diets, health, music, pop culture, horoscopes,
astrology and pets. We believe we are the largest such publisher in the field, producing approximately 100 million copies annually with 1.1 million positions of retail.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | New Media.We have web sites for Star (starmagazine.com), Muscle & Fitness (muscleandfitness.com), Flex (flexonline.com), Mens Fitness
(mensfitness.com), Muscle & Fitness Hers (muscleandfitnesshers.com), Shape (shape.com), Natural Health (naturalhealthmagazine.com), Fit Pregnancy (fitpregnancy.com), National Enquirer (nationalenquirer.com),
Country Weekly (countryweekly.com) and Weekly World News (weeklyworldnews.com). Additionally, we maintain an online fitness portal (fitnessonline.com) and also sell a paid subscription based interactive online weight loss &
exercise program (iShape.com).
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Circulation



Total average circulation per issue is approximately 5.7 million copies for our consumer publications and 2.7 million copies for our tabloid publications,
for an aggregate average circulation of 8.4 million copies. Our tabloid titles have historically had greater single copy circulation while our consumer titles are more subscription based. For fiscal 2004, approximately 84% of circulation revenue and
55% of total operating revenue were generated by single copy circulation and the remainder of circulation revenues by subscriptions.



Subscription Sales



Our strategy with respect to subscriptions seeks to optimize subscription revenues and profitability as opposed to subscription circulation. We accomplish
this strategy by focusing on direct sales of our titles by us through inserts, direct mailings and in-house advertisements in the respective magazines. In fiscal 2004, approximately 16% of our total revenues from circulation were from subscription
sales.



Advertising Revenues



Our advertising revenues are generated by national advertisers, including
automotive, entertainment, packaged goods, pharmaceutical, sports apparel, beauty and cosmetics, tobacco and direct response. The average ad pages for the period from January to December 2003, as measured by the Publishers Information Bureau, were
flat over the prior year period for National Enquirerand Star,while the overall industry was down 1.0%.



Production and Distribution



An outside vendor performs most of the pre-press operations for our publications and is responsible for transmitting them electronically to printing
plants. We have a long-term printing agreement with a printer to print National Enquirer, Star, Globe, National Examiner, Weekly World News, Sunand Country Weeklythrough December 2015 for sales in the United States, Canada and, to
the extent applicable, outside of North America (except for the United Kingdom). National Enquirerhas a special United Kingdom edition, which is printed by another printer. A different party performs the pre-press operations for the Weider
publications and is responsible for transmitting them electronically to plants. This same vendor also performs the printing for the Weider publications. Both the pre-press and printing contracts for the Weider publications expire in December 2005.



Once printed, the copies are distributed primarily by 4
regional wholesalers, who we estimate represent 82% of the newsstand distribution market, as well as several smaller wholesalers who represent the remaining 18%, in the United States and Canada, who deliver the requisite number of copies to
approximately 145,000 retail sales locations. We believe our relationships with our printing companies are adequate and that there are printing facilities available elsewhere, should the need arise.



The principal raw materials utilized by our publications are paper and ink.
Paper is purchased directly from several suppliers based upon pricing and, to a lesser extent, availability. Both paper and ink are commodity products with pricing affected by demand, capacity and economic conditions. We believe that adequate
sources of supply are, and will continue to be, available to fulfill our requirements. Our operating income may be significantly affected by the price of paper used in our publications. We have currently committed a significant portion of our volume
and pricing requirements with our major suppliers through December 2005.



Marketing and Merchandising



We have
established, through DSI, our own marketing organization whose primary function is to arrange for the sales and marketing, placement and merchandising of our publications and third-party publications at retail outlets throughout the United States
and Canada.



In addition to the services DSI provides for our
publications, DSI acts as a category captain for approximately 40% (based on our estimates) of all new front-end racking programs accounting for 65% of all the racks placed annually in the United States and Canada by supermarkets and
other retailers. Recently, DSI has begun to leverage its network of field representatives, which are regularly in retail outlets performing its services, by expanding its services to provide merchandising, resetting of rack programs and other
information gathering services to consumer product companies outside the publishing industry. We have expanded the distribution of the Weider titles since the acquisition of the Weider Properties utilizing DSIs retail relationships.



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Approximately every three years, supermarkets and other retailers typically redesign their front-end
racks, generally as part of store renovations or new store openings. As a category captain, DSI is selected by retailers to coordinate the design and installation of the front-end racks and the positioning of magazines for increased
sales. Publishers, including AMI, which are allocated space on a rack enter into contracts directly with the retailer for the payment of fees (rack display payments) or other charges with respect to that space. DSI uses its role as category captain
of new front-end rack programs initiated annually by retailers in the United States to achieve better placement of our publications and of the publications of DSIs third-party publishing clients.



Some of DSIs third-party clients include Hachette, which publishes
Womans Dayand Elle;Gruner + Jahr, which publishes Family Circle, Fitness, Parentsand YM; Newsweek, Inc., which publishes Newsweek; Bauer Publishing, which publishes First for Women, Womans Worldand In-Touch; Rodale, Inc., which publishes Prevention, Mens Healthand Organic Style; General Mills, which publishes Pillsburyand Betty Crocker;and New York Magazine Holdings, which publishes New
York Magazine and Specials.



Other Businesses



On November 27, 2000, we sold our 80% owned
subsidiary, Frontline Marketing (FMI), to the minority shareholder for a $2.5 million note receivable. (See Note 11 to the Consolidated Financial Statements).



We also had ancillary sales (primarily licensing, syndication, new media and product merchandise sales) of $8.3 million in
fiscal 2004.



In connection with the Weider acquisition, we
acquired Weider Interactive Networks, Inc. (WIN). WIN houses the online operations for Weider. WIN develops and tests new interactive consumer fitness information products in an effort to develop new revenue streams for Weider. In
addition, WIN creates and operates companion websites and web-delivered applications for Weiders branded businesses, delivering both development expertise and networking services. Revenues are generated primarily from a subscription based
interactive on-line weight loss and exercise program (ishape.com), but also include advertising and branded product sales.



Competition



Star, National Enquirer, Globe, National Examiner, Weekly World News, Sun, Mira!, and Country Weeklycompete in varying degrees with other
publications sold at retailers checkout counters, as well as forms of media concentrating on celebrity news, such as certain newspapers, magazines and television and radio programs. We believe that historical declines in single copy
circulation of Star, National Enquirer, Globeand National Examinerhave resulted in part from increased competition from these publications and forms of media. Competition for circulation is largely based upon the content of
the publication, its placement in retail outlets and, to a lesser extent, its price. As part of our re-launch of Star as a 100 page glossy magazine, we physically moved Star copies in most retail outlets to be next to People
magazine and away from the tabloid publications. Competition for advertising revenues is largely based upon circulation levels, readership, demographics, price and advertising results. We believe that our most significant direct competitors in the
print media are Time Warner Inc. (which publishes People, In Styleand Entertainment Weekly), Wenner Media, Inc. (which publishes US Weekly), and Bauer (which publishes In-Touch).



Each of our Weider specialty consumer magazines faces competition in its
subject area from a variety of publishers and competes for readers on the basis of the high quality of its targeted editorial content. Competition for advertising revenues is largely based upon circulation levels, readership, demographics, price and
advertising results. We believe that Weiders most significant direct competitors include Conde Nast Publications, Inc. (which publishes Self), Gruner + Jahr Publishing (which publishes Fitness, Parentsand Child), Rodale
Inc. (which publishes Mens Healthand Organic Style), Wenner Media, Inc. (which publishes Mens Journal), Advanced Research Press (which publishes Muscular Development) and Muscle Media Publishing (which
publishes Muscle Media).



DSI competes with two other
companies providing marketing and distribution services.



Employee
Relations



We currently employ approximately 976
full-time employees and 1,387 part-time employees. Approximately 1,582 of our employees, including almost all of our part-time employees, work for DSI. None of our employees are represented by any union or other labor organization. We have had no
strikes or work stoppages during the last five years. We believe that our relations with our employees are good.



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Item 2.Properties



Our Boca Raton headquarters, which housed substantially all editorial operations (including photo, clipping and research libraries), executive offices and certain administrative functions, was closed on October 7, 2001 by the Palm Beach
County Health Department when traces of anthrax were found on a computer keyboard following the death of one of our photo editors from inhalation anthrax. In response to the closure of our Boca Raton facility, we immediately implemented our
hurricane disaster plan to produce all of our weekly publications as originally scheduled. In February 2002, the Palm Beach County Health Department quarantined the Boca Raton facility for an additional 18 months. We entered into a two year lease
for a 53,000 square foot facility two blocks from our Boca Raton headquarters which was due to expire in February 2004. During February 2004, we extended this lease until 2007. In May 2002, we reached a final settlement with our property insurance
carrier and received payment. On April 17, 2003, the Company sold its anthrax contaminated headquarters in Boca Raton, Florida to 5401 Broken Sound LLC. 5401 Broken Sound LLC paid $40,000 as consideration for the transfer of ownership.



The following table sets forth certain information with respect to our
principal locations as of March 29, 2004. We consider the locations presently used for our operations as adequate for our present needs.



|                                          |  |                                                                                                                                                        |  |                         |  |                                                 
|----------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----------------------- |  | ------------------------------------------------
|Location                                  |  | Principal Use                                                                                                                                          |  | Approximate Square Feet |  | Lease Expiration Date                           
|Boca Raton, FL 4950 Communication Drive   |  | Executive and administrative offices (Corporate, National Enquirer, Globe, National Examiner, Sun and Weekly World News)                               |  | 52,719                  |  | Lease expires in 2007                           
|                                          |  |                                                                                                                                                        | 
|New York, NY One Park Avenue              |  | Executive and administrative offices (Advertising, Star, Mens Fitness, Mira!, Shape en Espanol, Thalia and Minimags)                                  |  | 72,844                  |  | Lease expires in 2005 (sublease expires in
2010)
|                                          |  |                                                                                                                                                        | 
|Woodland Hills, CA 21100 Erwin Street     |  | Executive and administrative offices (Advertising, Shape, Muscle & Fitness, Flex, Muscle & Fitness Hers, Natural Health, Fit Pregnancy and Living Fit) |  | 49,393                  |  | Leases expire in 2006 and 2007                  
|                                          |  |                                                                                                                                                        | 
|Delray Beach, FL 190 Congress Park Drive  |  | Executive and administrative offices (Corporate)                                                                                                       |  | 16,362                  |  | Lease expires in 2007                           
|                                          |  |                                                                                                                                                        | 
|West Palm Beach, FL 580 Village Boulevard |  | Executive and administrative offices (Distribution
Services, Inc.)                                                                                     |  | 14,606                  |  | Lease expires in 2004                           
|                                          |  |                                                                                                                                                        | 
|Palm City, FL 1995 S.W. Martin Highway    |  | Executive and administrative (Information
Technology)                                                                                                  |  | 15,000                  |  | Lease expires in 2006                           
|                                          |  |                                                                                                                                                        | 
|New York, NY 415 Madison Ave.             |  | Executive and administrative (Advertising)                                                                                                             |  | 11,819                  |  | Lease expires in 2006                           
|                                          |  |                                                                                                                                                        | 
|Nashville, Tennessee 118 16thAvenue South |  | Executive and administrative (Country
Weekly)                                                                                                          |  | 4,500                   |  | Lease expires in 2006                           
|                                          |  |                                                                                                                                                        | 
|Santa Monica, CA 520 Broadway             |  | Executive and administrative (Advertising, National
Enquirer, Star and Globe)                                                                          |  | 7,002                   |  | Lease expires in 2007                           
|                                          |  |                                                                                                                                                        | 
|Detroit, MI 28411 Norwestern Highway      |  | Executive and administrative (Advertising)                                                                                                             |  | 8,599                   |  | Leases expire in 2005 and 2007                  
|                                          |  |                                                                                                                                                        | 
|Chicago, IL 444 N. Michigan Avenue        |  | Executive and administrative (Advertising)                                                                                                             |  | 6,366                   |  | Lease expires in 2007                           
|                                          |  |                                                                                                                                                        | 
|Miami, FL 799 Brickel Plaza               |  | Executive and administrative (Advertising)                                                                                                             |  | 7,302                   |  | Lease expires in 2005                           
|                                          |  |                                                                                                                                                        | 
|Lake Worth, FL 1932 7thCourt North        |  | Warehouse                                                                                                                                              |  | 7,250                   |  | Lease expires in 2005                           



9



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##### Table of Contents

Item 3.Legal Proceedings



We are involved in a number of litigation matters which have arisen in the ordinary course of our business. Because the focus of our publications often involves controversial celebrities or subjects, the risk of
defamation or invasion of privacy litigation arises in the ordinary course of our business. Our experience suggests that the claims for damages made in such lawsuits are heavily inflated. We do not believe that we are currently party to any pending
legal action that could reasonably be expected to have a material adverse effect on our business, financial condition and results of operations.



Item 4.Submission of Matters to a Vote of Security Holders



No items were submitted to a vote of our security holders during the fourth quarter of fiscal 2004.



10



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##### Table of Contents

PART II



Item 5.Market for the Registrants Common Equity and Related Security Holders



All of the Companys common stock is owned by Media. Accordingly, there is no established public trading market for our common stock.



Item 6.Selected Financial Data



The selected financial data for each of the five fiscal years in the period ended March 29, 2004 below have been derived from the consolidated financial statements of the Company, which have been audited by
independent certified public accountants. The following selected financial data should be read in conjunction with Managements Discussion and Analysis of Financial Condition and Results of Operations, the Companys
Consolidated Financial Statements and Notes thereto and other financial information appearing elsewhere in this Form 10-K. As discussed above, the parent of American Media Operations, Inc. was purchased on May 7, 1999 resulting in a change in the
historical cost basis of various assets and liabilities. Accordingly, the historical financial information provided herein, for periods prior to May 7, 1999 is not comparable to post acquisition financial information. For purposes of presentation,
all historical financial information for periods prior to May 7, 1999 will be referred to as the Predecessor Company and all periods subsequent to May 6, 1999 will be referred to as the Company. A solid black vertical line
has been inserted in tables where financial information may not be comparable across periods.



|                                                           |  |                                              |        |   |                                                         |   |           |                                  |  |   |                                  |   |  |                                     |           |   |                                |   |           |   |  |   |           |  
|---------------------------------------------------------- |  | -------------------------------------------- | ------ | - | ------------------------------------------------------- | - | --------- | -------------------------------- |  | - | -------------------------------- | - |  | ----------------------------------- | --------- | - | ------------------------------ | - | --------- | - |  | - | --------- | -
|                                                           |  | Predecessor Company                          |        |   | The Company                                             |  
|                                                           |  | Six Weeks From March 30, Through May 6, 1999 |        |   | Forty-Six Weeks from May 7, 1999 through March 27, 2000 |   |           | Fiscal Year Ended March 26, 2001 |  |   | Fiscal Year Ended March 25, 2002 |   |  | Fiscal Year Ended March 31, 2003(1) |           |   | Fiscal YearEnded March 29,2004 |  
|                                                           |  |                                              |        |   | ($s in thousands)                                      |   |           |                                  |  |   |                                  |   |  |                                     |          
|Statement of Income (Loss) Data:                           |  |                                              |        |   |                                                         |   |           |                                  |  |   |                                  |   |  |                                     |           |   |                                |   |           |   |  |   |           |  
|Operating Revenues                                         |  | $                                            | 29,535 |   |                                                         | $ | 275,843   |                                  |  | $ | 372,201                          |   |  | $                                   | 368,131   |   |                                | $ | 399,733   |   |  | $ | 515,672   |  
|Operating Expenses(2)                                      |  |                                              | 22,771 |   |                                                         |   | 236,071   |                                  |  |   | 309,631                          |   |  |                                     | 321,298   |   |                                |   | 283,077   |   |  |   | 402,071   |  
|                                                           |  |                                              |        |   |                                                         |   |           |                                  |  |   |                                  |   |  |                                     |           |   |                                |   |           |   |  |   |           |  
|Operating Income                                           |  |                                              | 6,764  |   |                                                         |   | 39,772    |                                  |  |   | 62,570                           |   |  |                                     | 46,833    |   |                                |   | 116,656   |   |  |   | 113,601   |  
|Interest Expense                                           |  |                                              | (4,837 | ) |                                                         |   | (57,466   | )                                |  |   | (71,742                          | ) |  |                                     | (65,167   | ) |                                |   | (60,065   | ) |  |   | (75,001   | )
|Other Income (Expense), Net(3)                             |  |                                              | 25     |   |                                                         |   | 125       |                                  |  |   | 751                              |   |  |                                     | (139      | ) |                                |   | 288       |   |  |   | (185      | )
|                                                           |  |                                              |        |   |                                                         |   |           |                                  |  |   |                                  |   |  |                                     |           |   |                                |   |           |   |  |   |           |  
|Income (Loss) before Income Taxes and Extraordinary Charge |  |                                              | 1,952  |   |                                                         |   | (17,569   | )                                |  |   | (8,421                           | ) |  |                                     | (18,473   | ) |                                |   | 56,879    |   |  |   | 38,415    |  
|Income Taxes                                               |  |                                              | 1,365  |   |                                                         |   | 1,361     |                                  |  |   | 6,875                            |   |  |                                     | 3,009     |   |                                |   | 21,463    |   |  |   | 14,852    |  
|                                                           |  |                                              |        |   |                                                         |   |           |                                  |  |   |                                  |   |  |                                     |           |   |                                |   |           |   |  |   |           |  
|Income (Loss) before Extraordinary Charge                  |  |                                              | 587    |   |                                                         |   | (18,930   | )                                |  |   | (15,296                          | ) |  |                                     | (21,482   | ) |                                |   | 35,416    |   |  |   | 23,563    |  
|Extraordinary Charge, net of Income Taxes                  |  |                                              |       |   |                                                         |   | (2,581    | )                                |  |   |                                 |   |  |                                     |          |   |                                |   |          |   |  |   |          |  
|                                                           |  |                                              |        |   |                                                         |   |           |                                  |  |   |                                  |   |  |                                     |           |   |                                |   |           |   |  |   |           |  
|Net Income (Loss)                                          |  | $                                            | 587    |   |                                                         | $ | (21,511   | )                                |  | $ | (15,296                          | ) |  | $                                   | (21,482   | ) |                                | $ | 35,416    |   |  | $ | 23,563    |  
|                                                           |  |                                              |        |   |                                                         |   |           |                                  |  |   |                                  |   |  |                                     |           |   |                                |   |           |   |  |   |           |  
|Balance Sheet Data:                                        |  |                                              |        |   |                                                         |   |           |                                  |  |   |                                  |   |  |                                     |           |   |                                |   |           |   |  |   |           |  
|Total Assets                                               |  |                                              | N/M    |   |                                                         | $ | 1,166,964 |                                  |  | $ | 1,134,990                        |   |  | $                                   | 1,083,492 |   |                                | $ | 1,500,260 |   |  | $ | 1,497,476 |  
|Total Debt                                                 |  |                                              | N/M    |   |                                                         |   | 680,874   |                                  |  |   | 680,874                          |   |  |                                     | 748,459   |   |                                |   | 1,019,550 |   |  |   | 990,392   |  
|Total Stockholders Equity                                 |  |                                              | N/M    |   |                                                         |   | 201,698   |                                  |  |   | 186,493                          |   |  |                                     | 89,368    |   |                                |   | 174,920   |   |  |   | 207,146   |  
|Other Data:                                                |  |                                              |        |   |                                                         |   |           |                                  |  |   |                                  |   |  |                                     |           |   |                                |   |           |   |  |   |           |  
|EBITDA(4)                                                  |  | $                                            | 10,467 |   |                                                         | $ | 96,981    |                                  |  |   | 139,303                          |   |  |                                     | 135,003   |   |                                |   | 148,320   |   |  |   | 154,578   |  
|Depreciation                                               |  |                                              | 1,272  |   |                                                         |   | 10,281    |                                  |  |   | 19,154                           |   |  |                                     | 30,898    |   |                                |   | 24,748    |   |  |   | 26,773    |  
|Amortization of Intangibles                                |  |                                              | 2,431  |   |                                                         |   | 46,928    |                                  |  |   | 57,579                           |   |  |                                     | 57,272    |   |                                |   | 6,916     |   |  |   | 14,204    |  
|Capital Expenditures                                       |  |                                              | 717    |   |                                                         |   | 13,330    |                                  |  |   | 27,875                           |   |  |                                     | 27,882    |   |                                |   | 24,695    |   |  |   | 25,870    |  

---

|(1) | Includes 8 weeks of operations of the Weider Properties, as well as 53 weeks of operations for the AMI titles. All other annual periods presented include 52 weeks of operations.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | SFAS No. 142 was adopted during the fiscal year ended March 31, 2003, at which time we ceased amortization of goodwill and other indefinite lived intangible assets.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



11



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##### Table of Contents

|(3) | Other income (expense) for the fiscal year ended March 26, 2001 includes minority interest income of $376,000 and interest income of $570,000. The fiscal years ended March 29, 2004,
March 31, 2003 and March 25, 2002 includes $140,000, $341,000 and $82,000 of interest income, respectively, as well as other miscellaneous non-operating items.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | We define EBITDA as net income (loss) before extraordinary charges, interest expense, income taxes, depreciation and amortization and other income (expense). EBITDA is not a measure
of performance defined by accounting principles generally accepted in the United States of America (GAAP). EBITDA should not be considered in isolation or as a substitute for net income or cash flows from operating activities, which have
been prepared in accordance with GAAP or as a measure of our operating performance, profitability or liquidity. We believe EBITDA provides useful information regarding our ability to service our debt, and we understand that such information is
considered by certain investors to be an additional basis for evaluating a companys ability to pay interest and repay debt. EBITDA is a widely used performance measure for publishing companies and is provided here as a supplemental measure of
operating performance to operating income calculated in accordance with GAAP. Reconciliation from operating income to EBITDA is as follows:
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                                              |  |                                              |        |   |                                                         |   |         |                                  |  |   |                                  |   |  |                                  |         |   |                                 |   |         |   |  |   |        
|--------------------------------------------- |  | -------------------------------------------- | ------ | - | ------------------------------------------------------- | - | ------- | -------------------------------- |  | - | -------------------------------- | - |  | -------------------------------- | ------- | - | ------------------------------- | - | ------- | - |  | - | -------
|                                              |  | Predecessor Company                          |        |   | The Company                                            
|                                              |  | Six Weeks From March 30, Through May 6, 1999 |        |   | Forty-Six Weeks from May 7, 1999 through March 27, 2000 |   |         | Fiscal Year Ended March 26, 2001 |  |   | Fiscal Year Ended March 25, 2002 |   |  | Fiscal Year Ended March 31, 2003 |         |   | Fiscal YearEnded March 29, 2004
|                                              |  |                                              |        |   | ($s in thousands)                                      |   |         |                                  |  |   |                                  |   |  |                                 
|Net Income (Loss) before Extraordinary Charge |  | $                                            | 587    |   |                                                         | $ | (18,930 | )                                |  | $ | (15,296                          | ) |  | $                                | (21,482 | ) |                                 | $ | 35,416  |   |  | $ | 23,563 
|Add (Deduct):                                 |  |                                              |        |   |                                                         |   |         |                                  |  |   |                                  |   |  |                                  |         |   |                                 |   |         |   |  |   |        
|Interest expense                              |  |                                              | 4,837  |   |                                                         |   | 57,466  |                                  |  |   | 71,742                           |   |  |                                  | 65,167  |   |                                 |   | 60,065  |   |  |   | 75,001 
|Income taxes                                  |  |                                              | 1,365  |   |                                                         |   | 1,361   |                                  |  |   | 6,875                            |   |  |                                  | 3,009   |   |                                 |   | 21,463  |   |  |   | 14,852 
|Depreciation and Amortization                 |  |                                              | 3,703  |   |                                                         |   | 57,209  |                                  |  |   | 76,733                           |   |  |                                  | 88,170  |   |                                 |   | 31,664  |   |  |   | 40,977 
|Other (income) expense, net                   |  |                                              | (25    | ) |                                                         |   | (125    | )                                |  |   | (751                             | ) |  |                                  | 139     |   |                                 |   | (288    | ) |  |   | 185    
|                                              |  |                                              |        |   |                                                         |   |         |                                  |  |   |                                  |   |  |                                  |         |   |                                 |   |         |   |  |   |        
|EBITDA                                        |  | $                                            | 10,467 |   |                                                         | $ | 96,981  |                                  |  | $ | 139,303                          |   |  | $                                | 135,003 |   |                                 | $ | 148,320 |   |  | $ | 154,578
|Management Bonus (1)                          |  |                                              |       |   |                                                         |   |        |                                  |  |   |                                 |   |  |                                  |        |   |                                 |   |        |   |  |   | 2,310  
|Restructuring Charge (2)                      |  |                                              |       |   |                                                         |   |        |                                  |  |   |                                 |   |  |                                  |        |   |                                 |   |        |   |  |   | 2,690  
|Gain on Insurance Settlement (3)              |  |                                              |       |   |                                                         |   |        |                                  |  |   |                                 |   |  |                                  |        |   |                                 |   | (7,613  | ) |  |   |       
|Management Fees (4)                           |  |                                              |       |   |                                                         |   | 750     |                                  |  |   | 750                              |   |  |                                  | 750     |   |                                 |   | 750     |   |  |   | 2,000  
|                                              |  |                                              |        |   |                                                         |   |         |                                  |  |   |                                  |   |  |                                  |         |   |                                 |   |         |   |  |   |        
|Adjusted EBITDA (5)                           |  | $                                            | 10,467 |   |                                                         | $ | 97,731  |                                  |  | $ | 140,053                          |   |  | $                                | 135,753 |   |                                 | $ | 141,457 |   |  | $ | 161,578
|                                              |  |                                              |        |   |                                                         |   |         |                                  |  |   |                                  |   |  |                                  |         |   |                                 |   |         |   |  |   |        

---

|(1) | As noted in Footnote 10 to the consolidated financial statements, net income for the fiscal year ended March 29, 2004, includes a $2.3 million bonus as an expense granted to certain
members of management as part of the recapitalization. This bonus was funded with cash contributed as part of the recapitalization.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | As noted in Footnote 9 to the consolidated financial statements, net income for the fiscal year ended March 29, 2004, includes a $2.7 million restructuring charge.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Net income for the fiscal year ended March 31, 2003, includes a $7.6 million gain on insurance settlement.
|--- | ----------------------------------------------------------------------------------------------------------

|(4) | The management fee increased in fiscal 2004 as a result of the April 17, 2003, recapitalization transaction.
|--- | ------------------------------------------------------------------------------------------------------------

|(5) | Adjusted EBITDA is presented to identify EBITDA add-backs and deductions as required per our Credit Agreement. Adjusted EBITDA is used to determine our compliance with our Credit
Agreement covenant ratios. Accordingly, Adjusted EBITDA is presented as it is a meaningful measurement for our debt compliance.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Item 7.Managements Discussion and Analysis of Financial Condition and Results of Operations



Introduction



The following is a discussion of our financial condition and results of operations for the three fiscal years ended March 29, 2004. This discussion should
be read in conjunction with our consolidated financial statements and the related notes thereto.



Executive Summary



We
are a leading publisher in the field of general interest magazines, publishing National Enquirer, Star, Globe, National Examiner, Weekly World News, Sun, Country Weekly, MIRA!, Muscle & Fitness, Shape, Shape en Espanol, Mens Fitness,
Muscle & Fitness Hers, Flex, Fit Pregnancy, Natural Health and other monthly publications. Among our weekly periodicals, National



12



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##### Table of Contents

Enquirer, Star, and Globe, have the third, fourth and eighth highest weekly single copy circulation,
respectively, of any weekly periodical in the United States. We are the leader in total weekly single copy circulation of magazines in the United States and Canada with approximately 35% of total U.S. and Canadian circulation for audited weekly
publications. Total average circulation per issue is approximately 5.7 million copies for our consumer publications and 2.7 million copies for our tabloid publications, for an aggregate average circulation of 8.4 million copies.



On January 23, 2003, we acquired Weider Publications LLC a newly formed
company to which the magazine business of Weider Publications, Inc. and Weider Interactive Networks, Inc. had been contributed by Weider Health and Fitness, Weider Health and Fitness, LLC and Weider Interactive Networks, Inc. Weider Publications LLC
currently publishes seven magazines, including Muscle & Fitness, Shape, Mens Fitness, Muscle & Fitness Hers, Flex, Fit Pregnancyand Natural Health. Accordingly, our fiscal 2003 results include 8 weeks of operations from
the Weider Properties whereas our fiscal 2004 results include a full 52 weeks of operations from the Weider Properties. For Managements Discussion and Analysis of Financial Condition and Results of Operations we have presented certain
financial and statistical information on a pro forma basis for the Weider acquisition.



In fiscal 2004 and 2003, approximately 65% and 79% of our total operating revenues were from circulation, respectively. Single copy sales accounted for approximately 84% and 88% of such circulation revenues in fiscal
years 2004 and 2003, respectively, and the remainder was from subscription sales.



Our primary operating costs and expenses are comprised of editorial, production, distribution, circulation and other costs of sales and selling, general and administrative expenses. The largest components of our costs
are related to production, which includes printing and paper expenses, and to distribution, circulation and other costs of sales. Distribution, circulation and other costs of sales primarily include the costs associated with operating DSI,
subscription fulfillment and subscription postage.



Results of Operations



The financial information provided in the table below is
pro forma for the Weider acquisition.



|                            |  |                        |         |   |                |   |                |  |   |        
|--------------------------- |  | ---------------------- | ------- | - | -------------- | - | -------------- |  | - | -------
|                            |  | For Fiscal Year Ended 
|                            |  | March 25, 2002         |         |   | March 31, 2003 |   | March 29, 2004
|                            |  | (Dollars in thousands)
|Circulation Revenue         |  | $                      | 355,643 |   |                | $ | 352,968        |  | $ | 335,434
|Advertising Revenue         |  | $                      | 138,900 |   |                | $ | 153,848        |  | $ | 147,933
|Total Revenue               |  | $                      | 516,288 |   |                | $ | 535,235        |  | $ | 515,672
|Operating Expenses          |  | $                      | 459,334 |   |                | $ | 429,842        |  | $ | 402,071
|Interest Expense            |  | $                      | 86,013  |   |                | $ | 77,171         |  | $ | 75,001 
|Net Income (Loss) (1)(2)(3) |  | $                      | (28,768 | ) |                | $ | 17,398         |  | $ | 23,563 

---

|(1) | Net income for the fiscal year ended March 31, 2003, includes a $7.6 million gain on insurance settlement.
|--- | ----------------------------------------------------------------------------------------------------------

|(2) | Net income for the fiscal year ended March 29, 2004, includes a $2.3 million bonus as an expense granted to certain members of management as part of the recapitalization. This bonus
was funded with cash contributed as part of the recapitalization.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Net income for the fiscal year ended March 29, 2004, includes a $2.7 million restructuring charge.
|--- | --------------------------------------------------------------------------------------------------



13



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##### Table of Contents

Circulation.The following table sets forth average circulation and U.S. cover prices for our
publications for the fiscal years 2002, 2003 and 2004 on a pro forma basis for the Weider acquisition.



|                         |  |                                 |       |     |                |   |       |                |  |   |       |    
|------------------------ |  | ------------------------------- | ----- | --- | -------------- | - | ----- | -------------- |  | - | ----- | ---
|                         |  | For Fiscal Year Ended           |      
|                         |  | March 25, 2002                  |       |     | March 31, 2003 |   |       | March 29, 2004 | 
|                         |  | (Circulation data in thousands) |      
|Tabloid Titles           |  |                                 |       |     |                |   |       |                |  |   |       |    
|National Enquirer        |  |                                 |       |     |                |   |       |                |  |   |       |    
|Single Copy Circulation  |  |                                 | 1,498 | (2) |                |   | 1,402 | (3)            |  |   | 1,200 | (4)
|Cover Price              |  | $                               | 1.89  | (1) |                | $ | 2.09  | (1)            |  | $ | 2.35  | (1)
|Globe                    |  |                                 |       |     |                |   |       |                |  |   |       |    
|Single Copy Circulation  |  |                                 | 601   | (2) |                |   | 559   | (3)            |  |   | 482   | (4)
|Cover Price              |  | $                               | 1.89  | (1) |                | $ | 1.99  | (1)            |  | $ | 2.35  | (1)
|National Examiner        |  |                                 |       |     |                |   |       |                |  |   |       |    
|Single Copy Circulation  |  |                                 | 285   |     |                |   | 263   |                |  |   | 217   |    
|Cover Price              |  | $                               | 1.89  | (1) |                | $ | 1.99  | (1)            |  | $ | 2.19  | (1)
|Weekly World News        |  |                                 |       |     |                |   |       |                |  |   |       |    
|Single Copy Circulation  |  |                                 | 207   |     |                |   | 178   |                |  |   | 153   |    
|Cover Price              |  | $                               | 1.69  | (1) |                | $ | 1.79  | (1)            |  | $ | 1.99  | (1)
|Sun                      |  |                                 |       |     |                |   |       |                |  |   |       |    
|Single Copy Circulation  |  |                                 | 141   |     |                |   | 145   |                |  |   | 115   |    
|Cover Price              |  | $                               | 1.69  | (1) |                | $ | 1.79  | (1)            |  | $ | 1.99  | (1)
|Country Weekly           |  |                                 |       |     |                |   |       |                |  |   |       |    
|Single Copy Circulation  |  |                                 | 219   |     |                |   | 215   |                |  |   | 181   |    
|Cover Price              |  | $                               | 2.99  | (1) |                | $ | 3.49  | (1)            |  | $ | 3.49  | (1)
|Consumer Titles          |  |                                 |       |     |                |   |       |                |  |   |       |    
|Star                     |  |                                 |       |     |                |   |       |                |  |   |       |    
|Single Copy Circulation  |  |                                 | 1,205 | (2) |                |   | 1,106 | (3)            |  |   | 943   | (4)
|Cover Price              |  | $                               | 1.89  | (1) |                | $ | 2.09  | (1)            |  | $ | 3.29  | (1)
|Muscle & Fitness         |  |                                 |       |     |                |   |       |                |  |   |       |    
|Total Circulation        |  |                                 | 449   |     |                |   | 428   |                |  |   | 459   |    
|Subscription Circulation |  |                                 | 216   |     |                |   | 218   |                |  |   | 261   |    
|Single Copy Circulation  |  |                                 | 233   |     |                |   | 210   |                |  |   | 198   |    
|Cover Price              |  | $                               | 5.99  |     |                | $ | 5.99  |                |  | $ | 4.99  | (1)
|Shape                    |  |                                 |       |     |                |   |       |                |  |   |       |    
|Total Circulation        |  |                                 | 1,633 |     |                |   | 1,665 |                |  |   | 1,617 |    
|Subscription Circulation |  |                                 | 1,210 |     |                |   | 1,257 |                |  |   | 1,222 |    
|Single Copy Circulation  |  |                                 | 423   |     |                |   | 408   |                |  |   | 395   |    
|Cover Price              |  | $                               | 3.99  |     |                | $ | 3.99  |                |  | $ | 3.99  |    
|Mens Fitness            |  |                                 |       |     |                |   |       |                |  |   |       |    
|Total Circulation        |  |                                 | 595   |     |                |   | 664   |                |  |   | 619   |    
|Subscription Circulation |  |                                 | 504   |     |                |   | 565   |                |  |   | 517   |    
|Single Copy Circulation  |  |                                 | 91    |     |                |   | 99    |                |  |   | 102   |    
|Cover Price              |  | $                               | 3.99  |     |                | $ | 3.99  |                |  | $ | 3.99  |    
|Muscle & Fitness Hers    |  |                                 |       |     |                |   |       |                |  |   |       |    
|Total Circulation        |  |                                 | 264   |     |                |   | 256   |                |  |   | 225   |    
|Subscription Circulation |  |                                 | 68    |     |                |   | 82    |                |  |   | 94    |    
|Single Copy Circulation  |  |                                 | 196   |     |                |   | 174   |                |  |   | 131   |    
|Cover Price              |  | $                               | 3.99  |     |                | $ | 3.99  |                |  | $ | 3.99  |    
|Flex                     |  |                                 |       |     |                |   |       |                |  |   |       |    
|Total Circulation        |  |                                 | 147   |     |                |   | 153   |                |  |   | 146   |    
|Subscription Circulation |  |                                 | 53    |     |                |   | 51    |                |  |   | 54    |    
|Single Copy Circulation  |  |                                 | 94    |     |                |   | 102   |                |  |   | 92    |    
|Cover Price              |  | $                               | 5.99  |     |                | $ | 5.99  |                |  | $ | 4.99  | (1)
|Fit Pregnancy            |  |                                 |       |     |                |   |       |                |  |   |       |    
|Total Circulation        |  |                                 | 518   |     |                |   | 508   |                |  |   | 514   |    
|Subscription Circulation |  |                                 | 416   |     |                |   | 411   |                |  |   | 408   |    
|Single Copy Circulation  |  |                                 | 102   |     |                |   | 97    |                |  |   | 106   |    
|Cover Price              |  | $                               | 4.95  |     |                | $ | 4.95  |                |  | $ | 4.95  |    
|Natural Health           |  |                                 |       |     |                |   |       |                |  |   |       |    
|Total Circulation        |  |                                 | 306   |     |                |   | 327   |                |  |   | 317   |    
|Subscription Circulation |  |                                 | 249   |     |                |   | 272   |                |  |   | 266   |    
|Single Copy Circulation  |  |                                 | 57    |     |                |   | 55    |                |  |   | 51    |    
|Cover Price              |  | $                               | 4.95  |     |                | $ | 4.95  |                |  | $ | 3.95  | (1)

---

|(1) | We increased the U.S. cover price on each of National Enquirer, Star, Globeand National Examiner from $1.79 to $1.89 on March 13, 2001. On April 2, 2002, we expanded
National Enquirerand Starto 60 pages from 48 pages with a price increase for National Enquirerand Star from $1.89 to $2.09. On April 1, 2003, we increased the U.S. cover price on National Enquirerand
Star from $2.09 to $2.19. On November 11, 2003, we increased the U.S. cover price on National Enquirer from $2.19 to $2.35. On April 5, 2004, we expanded Starto 100 pages and nationally rolled out Staras glossy consumer
magazine. Accompanying this rollout, we increased the U.S. cover price on Starfrom $2.19 to $3.29. We increased the U.S. cover price on Globeand National Examiner to $1.99 on April 2, 2002. On April 1, 2003, we expanded the
Globe from a 48 page to a 60 page format, accompanied with a cover price increase from $1.99 to $2.19. On November 11, 2003, we increased the U.S. cover price on Globe from $2.19 to $2.35. On November 11, 2003, we increased the U.S.
cover price on National Examiner from $1.99 to $2.19. We increased the U.S. cover price on Weekly World Newsand Sun from $1.69 to $1.79 on April 2, 2002, then to $1.89 on April 1, 2003 and then to $1.99 on November 11, 2003. We
increased the U.S. cover price on Country Weekly from $2.49 to $2.99 on June 26, 2001, and then to $3.49 on August 6, 2002. We decreased the U.S. cover price on Muscle & Fitnessfrom $5.99 to $4.99 effective with the January 2004
issue. We decreased the U.S. cover price on Flexfrom $5.99 to $4.99 effective with the February 2004 issue. We decreased the U.S. cover price on Natural Health from $4.95 to $3.95 effective with the January 2004 issue.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Amount includes twelve expanded issues for National Enquirer and eleven expanded issues for both Star and Globe that included 72 pages versus a regular issue of
48 pages and priced at $2.89. Excluding these expanded issues, single copy circulation was 1,525,000, 1,222,000 and 607,000 for the National Enquirer, Starand Globe, respectively.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Amount includes eight expanded issues for National Enquirer and nine expanded issues for Star that included 84 pages versus a regular issue of 60 pages and priced at
$2.99. Amount includes thirteen expanded issues for Globe that included 72 pages versus a regular issue of 48 pages and priced at $2.99. Excluding these expanded issues, single copy circulation was 1,405,000, 1,123,000 and 573,000 for the
National Enquirer, Starand Globe, respectively.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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|(4) | Amount includes eight expanded issues for National Enquirer and fifteen expanded issues for Star that included 84 pages versus a regular issue of 60 pages and priced
at $2.99. Additionally, amount includes eleven issues of the glossy version of Star at 96 pages which were distributed only in the New York and Los Angeles markets at a cover price of $3.29. During these eleven weeks, the balance of the
country received the 84 page tabloid version of the Star at a $2.99 cover price. Amount includes eight expanded issues for Globe that included 84 pages versus a regular issue of 60 pages and priced at $2.99. Excluding these expanded
issues, single copy circulation was 1,201,000, 993,000 and 484,000 for the National Enquirer, Starand Globe, respectively.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Comparison of Fiscal Year Ended March 29, 2004 to Fiscal Year Ended March 31, 2003



Please note that our fiscal year ended March 29, 2004 includes 52 weeks of operations versus 53 weeks for the prior fiscal year.
Additionally, our fiscal year ended March 29, 2004 includes 53 issues for our weekly publications due to a change in our on-sale dates to be consistent with our primary competitors.



Revenues



Total operating revenues were $515.7 million for fiscal 2004. Operating revenues increased by $115.9 million or 29.0%, from the prior fiscal year
primarily due to the Weider acquisition ($143.8 million  circulation revenue of $48.6 million; advertising revenue of $88.7 million; other revenue of $6.5 million). This was partially offset by a decline in circulation revenues for the
non-Weider AMI titles of $27.9 million. Advertising and other revenue for the non-Weider AMI titles were in line with the prior fiscal year.



The decline in circulation revenues for the non-Weider AMI titles was primarily due to a 14.9% decline in unit sales (see above table for detail by title
e.g. National Enquirer 14.4%, Star 14.7%, Globe 13.8%) partially offset by an average cover price increase of approximately 5% (net revenue decline of 10%). This compares to an industry wide decline for checkout title units of
approximately 11% versus the prior year. Contributing to the tabloid decline in unit sales were factors including recent strong competition from new launches in the tabloid category, particularly from US Weekly and In Touch, continued
media fragmentation and competition from electronic media, and a less favorable retail environment as people are shopping less frequently at traditional grocery outlets.



Operating Expenses



Total operating expenses for the current fiscal year increased by $119.0 million when compared to the prior fiscal year. This increase was primarily due
to the Weider acquisition and increased operating expenses related to producing the expanded and glossy versions of the Star. The Weider acquisition operating expenses increase was $103.3 million (editorial of $16.6 million; production of
$34.1 million; distribution, circulation and other cost of sales of $18.5 million; depreciation of $1.7 million; amortization of $7.3 million; selling, general and administrative expense of $25.1 million). The increased operating expenses related to
producing the expanded and glossy versions of the Star were $9.9 million, primarily the result of producing 13% more pages in fiscal 2004 versus the prior year. In addition, these incremental pages were produced on coated paper stock whereas
all pages produced in the prior year were on newsprint. This upgrade in paper contributed approximately $2 million of the $9.9 million of incremental expenses. The operating expense increase was also due to a net gain on our insurance settlement
related to the Boca building included as a reduction of operating expenses for the prior fiscal year ($7.6 million). These operating expense increases were offset by an overall workforce reduction at our tabloid publications and corporate office
during fiscal 2004.



Workforce Reduction



During fiscal 2004, we initiated a plan to relocate the Starand
Mira! publications to New York City. Our relocation plan involved the termination of 94 employees. This activity resulted in a charge of $2,600,000 for termination benefits and $139,000 for costs associated with the relocation of existing
employees. Through March 29, 2004 we paid termination benefits totaling $2,228,000 and paid $139,000 of costs associated with relocation of existing employees. We have an accrual at March 29, 2004 of $372,000 for the remaining termination benefits
associated with this action. These severance benefits will be paid out through October 2004. We have fully completed this restructuring plan and estimate that this plan will yield savings of $5 million annually for the Company.



Interest Expense



Interest expense increased for the current fiscal year by $14.9 million to $75.0 million compared to the same prior fiscal
year. This increase in interest expense is primarily due to the $290 million of increased debt related to the Weider acquisition ($15.3 million). In



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addition, the recognition of the fair value and payments received in fiscal 2004 for various interest rate swap
transactions ($4.4 million) compares to $7.3 million received in the prior year for similar interest swap transactions. Offsetting this increase is a lower effective interest rate during fiscal 2004 (average interest rate in fiscal 2004 was 4.0%
versus 5.0% in fiscal 2003).



Income Taxes



Provision for income taxes decreased from fiscal 2003 to fiscal 2004 by
approximately $6.6 million, or 30.8%, due primarily to the overall decrease in pre-tax income.



Comparison of Fiscal Year Ended March 31, 2003 to Fiscal Year Ended March 25, 2002



Please note that our fiscal year ended March 31, 2003 includes 53 weeks of operations versus 52 weeks for the prior fiscal year. The additional 53rd week in the fiscal
year ended March 31, 2003, provided $5.6 million of additional operating revenues. Further, fiscal 2003 includes 8 weeks of operations from the Weider Properties.



Revenues



Total operating revenues were $399.7 million for fiscal 2003. Operating revenues increased by $31.6 million or 8.6%, from the prior year due to the Weider
acquisition ($29.4 million), as well as an increase of $2.2 million from the non-Weider AMI titles. Circulation revenue increased by $5.3 million primarily due to the Weider acquisition. Circulation revenues from the non-Weider AMI titles declined
by $3.5 million primarily due to an increased discount to wholesalers of approximately $9.0 million.



Advertising revenues were $61.3 million for fiscal 2003. Advertising revenues increased by $21.4 million or 53.6%, when compared to the 2002 fiscal year
of $39.9 million. This increase was primarily due to the Weider acquisition ($19.6 million), coupled with a $1.7 million (4%) increase for the non-Weider AMI titles despite a weak industry-wide advertising climate.



Operating Expenses



Total operating expenses for fiscal 2003 decreased by $38.2 million when compared to the prior fiscal year. This decrease
was primarily due to the elimination of the amortization of goodwill and tradenames due to our adoption of SFAS No. 142 during the 2003 fiscal year ($51.9 million), a net gain on our insurance settlement related to the Boca building ($7.6 million)
and production savings for the original AMI titles due to managements negotiation of production related agreements ($2.7 million). These amounts were partially offset by Weiders operating expenses ($24.6 million).



Interest Expense



Interest expense decreased for fiscal 2003 by $5.1 million to $60.1 million compared to the prior fiscal year. This decrease
in interest expense relates to payments received in fiscal 2003 for various interest rate swap transactions ($7.3 million) and also a lower effective interest rate during fiscal 2003 (average interest rate in fiscal 2003 was 5.0% versus 7.5% in
fiscal 2002), partially offset by the increased debt incurred as a result of the Weider acquisition ($3.6 million).



Income Taxes



Provision for income taxes increased from fiscal 2002 to fiscal 2003 by approximately $18.5 million due primarily to the overall increase in pre-tax
income.



Liquidity and Capital Resources



We have substantially increased our indebtedness in connection with the
Weider acquisition. Our liquidity requirements have been significantly increased, primarily due to increased interest and principal payment obligations under the Credit Agreement and our subordinated notes. We believe that the net cash generated
from operating activities and amounts available under the $60.0 million revolving credit facility will be sufficient to fund our debt service requirements under the Credit Agreement and the subordinated notes, to make capital expenditures and to
cover working capital requirements. As of March 29, 2004, there were no amounts outstanding on the revolving credit facility. We believe, however, that based upon our current level of operations and anticipated growth, it will be necessary to
refinance the subordinated notes upon their maturity. To the extent we make future acquisitions, we may require new sources of funding, including additional debt, equity financing or some combination thereof. There can be no assurances that such
additional sources of funding will be available to us on acceptable terms.



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Our ability to make scheduled payments of principal and interest under the Credit Agreement and the
subordinated notes, as well as our other obligations and liabilities, is subject to our future operating performance which is dependent upon general economic, financial, competitive, legislative, regulatory, business and other factors beyond our
control.



At March 29, 2004, we had cash and cash equivalents
of $22.2 million and a working capital deficiency of $12.6 million. We do not consider our working capital deficiency as a true measure of our liquidity position as our working capital needs typically are met by cash generated by our business. Our
working capital deficiencies result principally from our policy of using available cash to reduce borrowings which are recorded as noncurrent liabilities, thereby reducing current assets without a corresponding reduction in current liabilities.



Historically, our primary sources of liquidity have been cash
generated from operations and amounts available under our credit agreements, which have been used to fund shortfalls in available cash. Cash generated from operations for the fiscal year ended March 29, 2004, was used to fund working capital
requirements, fund capital expenditures and to make term loan principal repayments.



We made capital expenditures in the fiscal years ended March 29, 2004 and March 31, 2003 totaling $25.9 million and $24.7 million, respectively.



At March 29, 2004, our outstanding indebtedness totaled $990.4 million, of which $439.7 million represented borrowings under
the Credit Agreement. In connection with the acquisition of the Globe Properties in fiscal 2000, we increased our Credit Agreement borrowing capacity by $90 million. Additionally, in connection with the acquisition of Weider Publications LLC, we
further increased the borrowing capacity on our credit facility by $140 million. The effective interest rate under the Credit Agreement, including amounts borrowed under the term loan commitments and revolving credit commitment, as of March 29,
2004, was 3.9%, and the weighted average interest rates for the fiscal years 2002, 2003 and 2004 were 7.5%, 5.0%, and 4.0%, respectively. On March 22, 2002, we amended our Credit Agreement. This amendment decreased the marginal interest rate on our
term loans by 1% for a fee of $1,050,000. The Credit Agreement was also amended on February 17, 2004, which changed the total leverage ratio covenant from 6.25 to 6.50 for the December 2003 and March 2004 quarters. Additionally, the Credit Agreement
was amended on June 25, 2004, which changed our total leverage ratio covenant and certain interest coverage ratio covenants through June 2006. As a result of the amendment, the total leverage ratio covenant is 6.95 through March 2005, 6.75 from June
2005 to March 2006 and 6.50 from June 2006 and thereafter. The interest coverage ratio remains at 1.75 from March 2004 and thereafter.



We are subject to interest risk on our credit facilities and any future financing requirements. Our fixed rate debt consists primarily of senior
subordinated notes.



Effective March 26, 2002, we entered into
two interest rate swap agreements, which effectively converted a portion of our fixed-rate debt to variable rate debt. The first agreement, which was originally scheduled to expire in May 2004, had a notional amount of $125 million. Under this
agreement, we were to receive a fixed rate of 10.25% and were to pay LIBOR in arrears plus a spread of 5.265%. The second agreement, which was originally scheduled to expire in May 2005, had a notional amount of $25 million. Under this agreement, we
were to receive a fixed rate of 10.25% and we were to pay LIBOR in arrears plus a spread of 4.885%. On June 29, 2002, we received $3,277,000 to terminate these two interest rate swap agreements. This amount received was recognized as a reduction of
interest expense for the fiscal year ended March 31, 2003.



Additionally, effective June 28, 2002, we entered into two new interest rate swap agreements, which effectively converted a portion of fixed-rate debt to variable rate debt. The first agreement, which was originally scheduled to expire in
May 2004, had a notional amount of $125 million. Under this agreement, we were to receive a fixed rate of 10.25% and pay LIBOR in arrears plus a spread of 6.49%. The second agreement, which was originally scheduled to expire in May 2005, had a
notional amount of $25 million. Under this agreement, we were to receive a fixed rate of 10.25% and pay LIBOR in arrears plus a spread of 5.99%. On October 8, 2002, we received $3,978,000 to terminate these two interest rate swap agreements, which
was recognized as a reduction of interest expense for the fiscal year ended March 31, 2003.



Effective August 20, 2003, we entered into an interest rate swap agreement, which effectively converted a portion of our fixed-rate debt to variable debt. The agreement is scheduled to expire in January 2007 and has a
notional amount of $150 million. Under this agreement, we receive a fixed rate of 8.875% and pay LIBOR in arrears plus a spread of 5.38% subject to a collar adjustment. On January 15, 2004, we received $1,635,000 in connection with the interim
settlement of this swap agreement. The next reset date for this swap agreement is July 15, 2004. As of March 29, 2004, the fair value of this swap was $2,813,000. The fair value of this swap



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##### Table of Contents

as of March 29, 2004, along with the cash received on interim settlement has been recognized as a reduction of interest
expense for the fiscal year ended March 29, 2004. At each reset date we either receive or pay money based on the fair value of the swap as of that date.



We have no material assets or operations other than the investments in our subsidiaries. The subordinated notes are unconditionally guaranteed, on a
senior subordinated basis, by all of our material subsidiaries. Each domestic subsidiary that will be organized in the future by us, unless such subsidiary is designated as an unrestricted subsidiary, will jointly, severally, fully and
unconditionally guarantee the subordinated notes on a senior subordinated basis. Note guarantees are joint and several, full and unconditional and general unsecured obligations of the note guarantors. The note guarantors are our wholly owned
domestic subsidiaries. At present, the note guarantors comprise all of our direct and indirect subsidiaries. Note guarantees are subordinated in right of payment to all existing and future senior debt of the note guarantors, including the Credit
Agreement, and are also effectively subordinated to all secured obligations of note guarantors to the extent of the assets securing such obligations, including the Credit Agreement. Furthermore, the notes indenture permits note guarantors to incur
additional indebtedness, including senior debt, subject to certain limitations. We have not presented separate financial statements and other disclosures concerning each of the note guarantors, as these disclosures are not applicable under SEC rules
and regulations.



So long as the factors set forth in the
paragraph immediately above remain true and correct, under applicable SEC rules and regulations, our note guarantors will not need to individually comply with the reporting requirements of the Exchange Act, nor will we have to include separate
financial statements and other disclosures concerning each of the note guarantors in its Exchange Act reports.



The following table and discussion summarizes EBITDA for the fiscal years ended March 25, 2002, March 31, 2003 and March 29, 2004.



|                                 |  |                                  |         |   |                                  |   |         |                                  |  |   |        
|-------------------------------- |  | -------------------------------- | ------- | - | -------------------------------- | - | ------- | -------------------------------- |  | - | -------
|                                 |  | Fiscal Year Ended March 25, 2002 |         |   | Fiscal Year Ended March 31, 2003 |   |         | Fiscal Year Ended March 29, 2004
|                                 |  | ($s in thousands)              
|Net Income (Loss)                |  | $                                | (21,482 | ) |                                  | $ | 35,416  |                                  |  | $ | 23,563 
|Add (deduct):                    |  |                                  |         |   |                                  |   |         |                                  |  |   |        
|Interest expense                 |  |                                  | 65,167  |   |                                  |   | 60,065  |                                  |  |   | 75,001 
|Income taxes                     |  |                                  | 3,009   |   |                                  |   | 21,463  |                                  |  |   | 14,852 
|Depreciation and Amortization    |  |                                  | 88,170  |   |                                  |   | 31,664  |                                  |  |   | 40,977 
|Other (income) expense, net      |  |                                  | 139     |   |                                  |   | (288    | )                                |  |   | 185    
|                                 |  |                                  |         |   |                                  |   |         |                                  |  |   |        
|EBITDA                           |  | $                                | 135,003 |   |                                  | $ | 148,320 |                                  |  | $ | 154,578
|Management Bonus (1)             |  |                                  |        |   |                                  |   |        |                                  |  |   | 2,310  
|Restructuring Charge (2)         |  |                                  |        |   |                                  |   |        |                                  |  |   | 2,690  
|Gain on Insurance Settlement (3) |  |                                  |        |   |                                  |   | (7,613  | )                                |  |   |       
|Management Fees (4)              |  |                                  | 750     |   |                                  |   | 750     |                                  |  |   | 2,000  
|                                 |  |                                  |         |   |                                  |   |         |                                  |  |   |        
|Adjusted EBITDA (5)              |  | $                                | 135,753 |   |                                  | $ | 141,457 |                                  |  | $ | 161,578
|                                 |  |                                  |         |   |                                  |   |         |                                  |  |   |        

---

|(1) | As noted in Footnote 10 to the consolidated financial statements, net income for the fiscal year ended March 29, 2004, includes a $2.3 million bonus as an expense granted to certain
members of management as part of the recapitalization. This bonus was funded with cash contributed as part of the recapitalization. Fiscal 2004 includes 12 months of operations for the Weider titles versus eight weeks in fiscal 2003.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | As noted in Footnote 9 to the consolidated financial statements, net income for the fiscal year ended March 29, 2004, includes a $2.7 million restructuring charge.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Net income for the fiscal year ended March 31, 2003, includes a $7.6 million gain on insurance settlement.
|--- | ----------------------------------------------------------------------------------------------------------

|(4) | The management fee increased in fiscal 2004 as a result of the April 17, 2003, recapitalization transaction.
|--- | ------------------------------------------------------------------------------------------------------------

|(5) | Adjusted EBITDA is presented to identify EBITDA add-backs and deductions as required per our Credit Agreement. Adjusted EBITDA is used to determine our compliance with our Credit
Agreement covenant ratios. Accordingly, Adjusted EBITDA is presented as it is a meaningful measurement for our debt compliance.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



We define EBITDA as net income (loss) before extraordinary charges, interest expense, income taxes, depreciation and amortization and other income
(expense). EBITDA is not a measure of performance defined by GAAP. EBITDA should not be considered in isolation or as a substitute for net income or cash flows from operating activities, which have been prepared in accordance with GAAP or as a
measure of our operating performance, profitability or liquidity. We believe EBITDA provides useful information regarding our ability to service our debt, and we understand that such information is considered by certain investors to be an additional
basis for evaluating a companys ability to pay interest and repay debt. EBITDA is a widely used performance measure for publishing companies and is provided here as a supplemental measure of operating performance to operating income calculated
in accordance with GAAP.



18



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##### Table of Contents

Contractual Obligations



The impact that our aggregate contractual obligations as of March 29, 2004 are expected to have on our liquidity and cash flow in future periods is as
follows (dollars in 000s):



|                              |  |                        |           |                 |   |           |  |           |         |              |   |         |  |   |        
|----------------------------- |  | ---------------------- | --------- | --------------- | - | --------- |  | --------- | ------- | ------------ | - | ------- |  | - | -------
|                              |  | Payments Due by Period
|                              |  | Total                  |           | Less Than1 Year |   | 1-3 Years |  | 4-5 Years |         | After 5Years
|Long-term debt obligations    |  | $                      | 990,392   |                 | $ | 6,474     |  | $         | 327,316 |              | $ | 106,602 |  | $ | 550,000
|Operating lease obligations   |  |                        | 18,827    |                 |   | 6,304     |  |           | 8,607   |              |   | 2,774   |  |   | 1,142  
|Printing agreement obligation |  |                        | 494,419   |                 |   | 64,821    |  |           | 109,737 |              |   | 71,285  |  |   | 248,576
|                              |  |                        |           |                 |   |           |  |           |         |              |   |         |  |   |        
|Total Contractual Obligations |  | $                      | 1,503,638 |                 | $ | 77,599    |  | $         | 445,660 |              | $ | 180,661 |  | $ | 799,718
|                              |  |                        |           |                 |   |           |  |           |         |              |   |         |  |   |        



Printing Agreement



During fiscal 2003, we successfully renegotiated a
new 13-year printing agreement expiring in fiscal 2016 with an unrelated printer to print National Enquirer, Star, Globe, National Examiner, Weekly World News, Sun, Mira, Country Weeklyand Street Performance Compact.We have also
assumed the Weider printing agreement expiring in fiscal 2006 with an unrelated printer to print Shape, Muscle and Fitness, Muscle and Fitness Hers, Mens Fitness, Fit Pregnancy,and Natural Health.The payments due by period in
the table above are based on current pricing and production levels, and pricing adjustments based on changes in the Consumer Price Index.



New Accounting Pronouncements



In November 2002, the Financial Accounting Standards Board (FASB) issued Interpretation No. 45, Guarantors Accounting and
Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others. This Interpretation expands the disclosures to be made by a guarantor about its obligations under certain guarantees and requires that, at the
inception of a guarantee, a guarantor recognize a liability for the fair value of the obligation undertaken in issuing the guarantee. The initial recognition and measurement provisions of this Interpretation are effective for guarantees issued or
modified after December 31, 2002. The adoption of this Interpretation did not have a material effect on our consolidated financial statements.



In January 2003, the FASB issued Interpretation No. 46, Consolidation of Variable Interest Entities (FIN 46), which was amended in
December 2003. This Interpretation requires variable interest entities (commonly referred to as SPEs) to be consolidated by the primary beneficiary of the entity if certain criteria are met. FIN 46 is effective immediately for all new variable
interest entities created or acquired after January 31, 2003. For variable interest entities created or acquired prior to February 1, 2003, the provisions of FIN 46 must be applied for the first interim or annual period beginning after June 15,
2003. The adoption of this Interpretation did not have a material effect on our consolidated financial statements.



In April 2003, the FASB issued Statement of Financial Accounting Standards (SFAS) No. 149, Amendment of Statement 133 on Derivative
Instruments and Hedging Activities. This Statement amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as
derivatives) and for hedging activities under SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities. This Statement is effective for contracts entered into or modified after June 30, 2003. The adoption of SFAS No.
149 did not have a material impact on our consolidated financial statements.



In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity. This Statement establishes standards for how an issuer
classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). This
Statement is effective for financial instruments entered into or modified after May 30, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. The adoption of SFAS No. 150 did not have a material
impact on our consolidated financial statements.



Critical Accounting
Policies and Estimates



Critical accounting policies are
those that are both most important to the portrayal of a companys financial position and results of



19



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operations, and require managements most difficult, subjective or complex judgments. Although not all of the
Companys critical accounting policies require management to make difficult, subjective or complex judgments or estimates, the following policies and estimates are those that the Company deems most critical.



The discussion and analysis of our financial condition and results of
operations is based upon our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements require us to make estimates and assumptions that affect the reported amounts of assets,
liabilities, revenues and expenses and related disclosures of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to allowances for doubtful accounts, reserves for sales returns and allowances
and the recoverability of long-lived assets including excess of purchase price over net assets acquired. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. These
form the basis of our judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates which would affect our reported results from operations. We believe
the following is a description of the critical accounting policies and estimates used in the preparation of our consolidated financial statements.



Allowances for doubtful accounts are estimated losses resulting from our customers failure to make required payments. We continually monitor
collections from customers and provide a provision for estimated credit losses. We aggressively pursue collection efforts on these overdue accounts. If future payments by our customers were to differ from our estimates, we may need to increase or
decrease our allowances for doubtful accounts.



Revenues from
copy sales are net of reserves provided for expected sales returns, which are established in accordance with GAAP after considering such factors as sales history and available market information. We continually monitor the adequacy of the reserves
and make adjustments when necessary.



We record purchase price
allocations for our acquisitions based on preliminary information received at the date of acquisition and based on our acquisition experience. These allocations are subject to adjustments and are finalized once additional information concerning
asset and liability valuations is obtained, typically from an independent appraisal. The final asset and liability fair values may differ from the preliminary allocations. If the final allocations for the acquisitions differ from the preliminary
allocations, we may need to increase or decrease our depreciation and/or amortization expense for the acquired assets.



We periodically evaluate whether events or circumstances have occurred that would indicate that long-lived assets, including property and equipment,
goodwill and other intangible assets, may not be recoverable or that the remaining useful life may be impaired. When such events or circumstances are present, the Company assesses the recoverability of long-lived assets by determining whether the
carrying value will be recovered through the expected future cash flows resulting from the use of the asset. If the results of this testing indicates an impairment of the carrying value of the asset, an impairment loss is recorded. The long-term
nature of these assets requires the estimation of its cash inflows and outflows several years into the future and only takes into consideration circumstances known at the time of the impairment test. Future adverse changes in market conditions or
poor operating results of the related business may indicate an inability to recover the carrying value of the assets, thereby possibly requiring an impairment charge to the carrying value of the asset in the future.



We account for income taxes in accordance with SFAS No. 109, Accounting
for Income Taxes, which requires that deferred tax assets and liabilities be recognized, using enacted tax rates, for the effect of temporary differences between the book and tax basis of recorded assets and liabilities. SFAS No. 109 also
requires that deferred tax assets be reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax assets will not be realized.



Forward-Looking Statements



Some of the information presented in this Form 10-K constitutes forward-looking statements, including, in particular, the statements about our plans,
strategies and prospects under the heading Managements Discussion and Analysis of Financial Condition and Results of Operations. We have based these forward-looking statements on our current assumptions, expectations and
projections about future events. We caution you that a variety of factors could cause business conditions and results to differ materially from what is contained in the forward-looking statements. These forward-looking statements are subject to
risks, uncertainties and assumptions about us, including, among other things:



| |  | our high degree of leverage and significant debt service obligations,
| | - | ---------------------------------------------------------------------



| |  | our ability to increase circulation and advertising revenues,
| | - | -------------------------------------------------------------



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##### Table of Contents

| |  | market conditions for our publications,
| | - | ---------------------------------------



| |  | our ability to develop new publications and services,
| | - | -----------------------------------------------------



| |  | outcomes of pending and future litigation,
| | - | ------------------------------------------



| |  | the effects of terrorism, including bio-terrorism, on our business,
| | - | -------------------------------------------------------------------



| |  | increasing competition by media companies,
| | - | ------------------------------------------



| |  | lower than expected valuations associated with cash flows and revenues may result in the inability to realize the value of recorded intangibles and goodwill,
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | changes in the costs of paper used by us,
| | - | -----------------------------------------



| |  | any future changes in management,
| | - | ---------------------------------



| |  | general risks associated with the publishing industry,
| | - | ------------------------------------------------------



| |  | declines in spending levels by advertisers and consumers,
| | - | ---------------------------------------------------------



| |  | the ability in a challenging environment to continue to develop new sources of circulation,
| | - | -------------------------------------------------------------------------------------------



| |  | increased costs and business disruption resulting from diminished service levels from our wholesalers, and
| | - | ----------------------------------------------------------------------------------------------------------



| |  | the introduction and increased popularity over the long term of alternative technologies for the provision of news and information.
| | - | -----------------------------------------------------------------------------------------------------------------------------------



Item 7A.Quantitative and Qualitative Disclosures about Market Risks



We are exposed to certain market risks that are inherent in our financial statements. We are subject to interest risk on our credit facilities and any
future financing requirements. Our fixed rate debt consists primarily of senior subordinated notes.



Interest rate changes result in increases or decreases in our income before taxes and cash provided from operating activities. A 1% change in our weighted
interest rate on our variable debt would have resulted in a change of $5.9 million in our interest expense for the year ended March 29, 2004.



Effective March 26, 2002, we entered into two interest rate swap agreements, which effectively converted a portion of our fixed-rate debt to variable rate
debt. The first agreement, which was originally scheduled to expire in May 2004, had a notional amount of $125 million. Under this agreement, we were to receive a fixed rate of 10.25% and were to pay LIBOR in arrears plus a spread of 5.265%. The
second agreement, which was originally scheduled to expire in May 2005, had a notional amount of $25 million. Under this agreement, we were to receive a fixed rate of 10.25% and we were to pay LIBOR in arrears plus a spread of 4.885%. On June 29,
2002, we received $3,277,000 to terminate these two interest rate swap agreements. This amount received was recognized as a reduction of interest expense for the fiscal year ended March 31, 2003.



Additionally, effective June 28, 2002, we entered into two new interest rate
swap agreements, which effectively converted a portion of fixed-rate debt to variable rate debt. The first agreement, which was originally scheduled to expire in May 2004, had a notional amount of $125 million. Under this agreement, we were to
receive a fixed rate of 10.25% and pay LIBOR in arrears plus a spread of 6.49%. The second agreement, which was originally scheduled to expire in May 2005, had a notional amount of $25 million. Under this agreement, we were to receive a fixed rate
of 10.25% and pay LIBOR in arrears plus a spread of 5.99%. On October 8, 2002, we received $3,978,000 to terminate these two interest rate swap agreements, which was recognized as a reduction of interest expense for the fiscal year ended March 31,
2003.



Effective August 20, 2003, we entered into an interest
rate swap agreement, which effectively converted a portion of our fixed-rate debt to variable debt. The agreement is scheduled to expire in January 2007 and has a notional amount of $150 million. Under this agreement, we receive a fixed rate of
8.875% and pay LIBOR in arrears plus a spread of 5.38% subject to a collar adjustment. On January 15, 2004, we received $1,635,000 in connection with the interim settlement of this swap agreement. The next reset date for this swap agreement is July
15, 2004. As of March 29, 2004, the fair value of this swap was $2,813,000. The fair value of this swap as of March 29, 2004, along with the cash received on interim settlement has been recognized as a reduction of interest expense for the fiscal
year ended March 29, 2004.



Our primary market risk exposures
relate to (1) the interest rate risk on long-term and short-term borrowings, (2) our ability to refinance our senior subordinated notes at maturity at market rates, (3) the impact of interest rate movements on our ability to meet interest expense
requirements and comply with financial covenants and (4) the impact of interest rate movements on our ability to obtain adequate financing to fund acquisitions. We manage the interest rate risk on our outstanding long-term and short-term debt
through our use of fixed and variable rate debt. While we cannot predict or manage our ability to refinance existing debt or the impact interest rate movements will have on our ability to refinance existing debt, we continue to evaluate our
financial position on an ongoing basis.



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Item 8.Financial Statements and Supplementary Data



INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



FINANCIAL STATEMENTS:



|                                                                                                                     |  |        
|-------------------------------------------------------------------------------------------------------------------- |  | -------
|                                                                                                                     |  | Page(s)
|Report of Independent Registered Public Accounting Firm                                                              |  | 23     
|Report of Independent Public Accountants                                                                             |  | 24     
|Consolidated Balance Sheets as of March 31, 2003 and March 29, 2004                                                  |  | 25     
|Consolidated Statements of Income (Loss) for the Three Fiscal Years in the Period Ended March 29, 2004               |  | 26     
|Consolidated Statements of Comprehensive Income (Loss) for the Three Fiscal Years in the Period Ended March 29, 2004 |  | 27     
|Consolidated Statements of Stockholders Equity for the Three Fiscal Years in the Period Ended March 29, 2004        |  | 28     
|Consolidated Statements of Cash Flows for the Three Fiscal Years in the Period Ended March 29, 2004                  |  | 29     
|Notes to Consolidated Financial Statements                                                                           |  | 30     



Schedules have been
omitted since the information is not applicable, not required or because the required information is included in the Consolidated Financial Statements or Notes thereto.



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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To the Board of Directors and Stockholder of American Media Operations, Inc.:



We have audited the accompanying consolidated balance sheets of American Media Operations, Inc., a wholly-owned subsidiary of American Media, Inc., and subsidiaries (the Company) as of March 29, 2004 and March 31, 2003, and the
related consolidated statements of income (loss), comprehensive income (loss), stockholders equity, and cash flows for the fiscal years then ended. These consolidated financial statements are the responsibility of the Companys
management. Our responsibility is to express an opinion on the fiscal year 2004 and 2003 consolidated financial statements based on our audits. The Companys consolidated financial statements for the year ended March 25, 2002, before the
inclusion of the revised disclosures discussed in Notes 1 and 3 to the consolidated financial statements, were audited by other auditors who have ceased operations. Those auditors expressed an unqualified opinion on those consolidated financial
statements in their report dated May 10, 2002.



We conducted our audits in
accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.



In our opinion, such 2004 and 2003 consolidated financial statements present fairly, in all material respects, the financial position of the Company as of March 29,
2004 and March 31, 2003 and the results of its operations and its cash flows for the fiscal years then ended, in conformity with accounting principles generally accepted in the United States of America.



As discussed in Notes 1 and 3 to the consolidated financial statements, the Company changed
its method of accounting for goodwill and other intangible assets in fiscal year 2003 to conform to Statement of Financial Accounting Standards No. 142.



As discussed above, the consolidated financial statements of the Company for the year ended March 25, 2002 were audited by other auditors who have ceased operations.
These consolidated financial statements have been revised as follows: (a) as described in Note 3 under the heading Goodwill and Other Intangible Assets, these consolidated financial statements have been revised to include the
transitional disclosures required by Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets, which was adopted by the Company as of March 26, 2002. Our audit procedures with respect to the transitional
disclosures in Note 3 for fiscal year 2002 included (i) agreeing the previously reported net income to the previously issued consolidated financial statements and the adjustments to reported net income representing amortization expense (including
any related tax effects) recognized in those periods to the Companys underlying records obtained from management, and (ii) testing the mathematical accuracy of the reconciliation of adjusted net income to reported net income; and (b) rent
expense for fiscal year 2002 has been disclosed in Note 13. Our audit procedures with respect to rent expense described in Note 13 included agreeing the amounts for fiscal year 2002 to the Companys underlying records obtained from management.
In our opinion, such disclosures are appropriate and have been properly applied. However, we were not engaged to audit, review, or apply any procedures to the fiscal year 2002 consolidated financial statements of the Company other than with respect
to such disclosures and disaggregations, and accordingly, we do not express an opinion or any other form of assurance on the fiscal year 2002 consolidated financial statements taken as a whole.



DELOITTE & TOUCHE LLP

Certified Public Accountants



Fort Lauderdale, Florida

June 25, 2004



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##### Table of Contents

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To
American Media Operations, Inc.:



We have audited the
accompanying consolidated balance sheets of American Media Operations, Inc. (a Delaware corporation) and subsidiaries (the Company) as of March 25, 2002 and March 26, 2001 and the related consolidated statements of income (loss),
comprehensive income (loss), stockholders equity and cash flows for the fiscal years ended March 25, 2002 and March 26, 2001, and for the period from May 7, 1999 through March 27, 2000. We have also audited the accompanying consolidated
statements of income (loss), comprehensive income (loss), stockholders equity and cash flows of the Predecessor Company of American Media Operations, Inc. (the Predecessor Company) for the period from March 30, 1999 through May 6,
1999. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audits.



We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable
basis for our opinion.



In our opinion, the financial
statements referred to above present fairly, in all material respects, the financial position of American Media Operations, Inc. and subsidiaries as of March 25, 2002 and March 26, 2001, and the results of their operations and their cash flows for
the fiscal years ended March 25, 2002 and March 26, 2001 and for the period from May 7, 1999 through March 27, 2000 and the results of the Predecessor Companys operations and cash flows for the period from March 30, 1999 through May 6, 1999 in
conformity with accounting principles generally accepted in the United States.



ARTHUR ANDERSEN LLP



New York, New York

May 10, 2002



NOTE:The report of Arthur
Andersen LLP presented above is a copy of a previously issued Arthur Andersen LLP report. This report has not been reissued by Arthur Andersen LLP nor has Arthur Andersen LLP provided a consent to the inclusion of its report in this Form 10-K.



NOTE:The consolidated financial statements for the
year ended March 25, 2002 have been revised to include: (i) the transitional disclosures required by Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets, which was adopted by the Company as of March 26,
2002 (see Note 3 under the heading Goodwill and Other Intangible Assets); and (ii) the disclosure of rent expense for fiscal year 2002 under the heading Operating Leases in Note 13. The report of Arthur Andersen LLP presented
above does not extend to these changes.



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##### Table of Contents

AMERICAN MEDIA OPERATIONS, INC. AND SUBSIDIARIES



CONSOLIDATED BALANCE SHEETS

As of March 31, 2003 and March 29, 2004

(In 000s, except share information)



|                                                                                                          |  |                |           |   |                |   |           |  
|--------------------------------------------------------------------------------------------------------- |  | -------------- | --------- | - | -------------- | - | --------- | -
|                                                                                                          |  | March 31, 2003 |           |   | March 29, 2004 |  
|ASSETS                                                                                                    |  |                |           |   |                |   |           |  
|CURRENT ASSETS:                                                                                           |  |                |           |   |                |   |           |  
|Cash and cash equivalents                                                                                 |  | $              | 40,475    |   |                | $ | 22,192    |  
|Receivables, net                                                                                          |  |                | 52,553    |   |                |   | 66,907    |  
|Inventories                                                                                               |  |                | 18,422    |   |                |   | 34,518    |  
|Prepaid expenses and other                                                                                |  |                | 9,086     |   |                |   | 11,391    |  
|                                                                                                          |  |                |           |   |                |   |           |  
|Total current assets                                                                                      |  |                | 120,536   |   |                |   | 135,008   |  
|                                                                                                          |  |                |           |   |                |   |           |  
|PROPERTY AND EQUIPMENT:                                                                                   |  |                |           |   |                |   |           |  
|Land and buildings                                                                                        |  |                | 4,104     |   |                |   | 4,580     |  
|Machinery, fixtures and equipment                                                                         |  |                | 34,564    |   |                |   | 41,003    |  
|Display racks                                                                                             |  |                | 43,427    |   |                |   | 46,810    |  
|                                                                                                          |  |                |           |   |                |   |           |  
|                                                                                                          |  |                | 82,095    |   |                |   | 92,393    |  
|Less  accumulated depreciation                                                                           |  |                | (35,987   | ) |                |   | (47,340   | )
|                                                                                                          |  |                |           |   |                |   |           |  
|                                                                                                          |  |                | 46,108    |   |                |   | 45,053    |  
|                                                                                                          |  |                |           |   |                |   |           |  
|LONG TERM NOTE RECEIVABLE, net                                                                            |  |                | 1,415     |   |                |   | 1,384     |  
|                                                                                                          |  |                |           |   |                |   |           |  
|DEFERRED DEBT COSTS, net                                                                                  |  |                | 30,560    |   |                |   | 24,996    |  
|                                                                                                          |  |                |           |   |                |   |           |  
|OTHER LONG TERM ASSETS                                                                                    |  |                | 515       |   |                |   | 1,459     |  
|                                                                                                          |  |                |           |   |                |   |           |  
|GOODWILL, net of accumulated amortization of $74,757                                                      |  |                | 659,052   |   |                |   | 661,639   |  
|                                                                                                          |  |                |           |   |                |   |           |  
|OTHER INTANGIBLES, net of accumulated amortization of $93,938 and $108,142 in 2003 and 2004, respectively |  |                | 642,074   |   |                |   | 627,937   |  
|                                                                                                          |  |                |           |   |                |   |           |  
|                                                                                                          |  | $              | 1,500,260 |   |                | $ | 1,497,476 |  
|                                                                                                          |  |                |           |   |                |   |           |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                      |  |                |           |   |                |   |           |  
|CURRENT LIABILITIES:                                                                                      |  |                |           |   |                |   |           |  
|Current portion of term loan                                                                              |  | $              | 9,813     |   |                | $ | 5,734     |  
|11.63% Senior Subordinated Notes Due 2004                                                                 |  |                |          |   |                |   | 740       |  
|Accounts payable                                                                                          |  |                | 30,730    |   |                |   | 42,076    |  
|Accrued expenses                                                                                          |  |                | 79,914    |   |                |   | 59,395    |  
|Deferred revenues                                                                                         |  |                | 47,217    |   |                |   | 39,614    |  
|                                                                                                          |  |                |           |   |                |   |           |  
|Total current liabilities                                                                                 |  |                | 167,674   |   |                |   | 147,559   |  
|                                                                                                          |  |                |           |   |                |   |           |  
|PAYABLE TO PARENT COMPANY                                                                                 |  |                | 2,173     |   |                |   |          |  
|                                                                                                          |  |                |           |   |                |   |           |  
|LONG TERM DEBT:                                                                                           |  |                |           |   |                |   |           |  
|Term Loan, net of current portion                                                                         |  |                | 458,997   |   |                |   | 433,918   |  
|10.25% Senior Subordinated Notes Due 2009                                                                 |  |                | 400,000   |   |                |   | 400,000   |  
|Bond premium on 10.25% Senior Subordinated Notes Due 2009                                                 |  |                | 633       |   |                |   | 530       |  
|8.875% Senior Subordinated Notes Due 2011                                                                 |  |                | 150,000   |   |                |   | 150,000   |  
|11.63% Senior Subordinated Notes Due 2004                                                                 |  |                | 740       |   |                |   |          |  
|                                                                                                          |  |                |           |   |                |   |           |  
|                                                                                                          |  |                | 1,010,370 |   |                |   | 984,448   |  
|                                                                                                          |  |                |           |   |                |   |           |  
|DEFERRED INCOME TAXES                                                                                     |  |                | 145,123   |   |                |   | 158,323   |  
|                                                                                                          |  |                |           |   |                |   |           |  
|COMMITMENTS AND CONTINGENCIES (Note 16)                                                                   |  |                |           |   |                |   |           |  
|STOCKHOLDERS EQUITY:                                                                                     |  |                |           |   |                |   |           |  
|Common stock, $.20 par value; 7,507 shares issued and Outstanding                                         |  |                | 2         |   |                |   | 2         |  
|Additional paid-in capital                                                                                |  |                | 273,480   |   |                |   | 281,857   |  
|Accumulated other comprehensive income (loss)                                                             |  |                | (314      | ) |                |   | (28       | )
|Retained deficit                                                                                          |  |                | (98,248   | ) |                |   | (74,685   | )
|                                                                                                          |  |                |           |   |                |   |           |  
|Total stockholders equity                                                                                |  |                | 174,920   |   |                |   | 207,146   |  
|                                                                                                          |  |                |           |   |                |   |           |  
|                                                                                                          |  | $              | 1,500,260 |   |                | $ | 1,497,476 |  
|                                                                                                          |  |                |           |   |                |   |           |  



The accompanying notes
to consolidated financial statements

are an integral part of these consolidated statements.



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##### Table of Contents

AMERICAN MEDIA OPERATIONS, INC. AND SUBSIDIARIES



CONSOLIDATED STATEMENTS OF INCOME (LOSS)

For the Three Fiscal Years in the Period Ended March 29,
2004

(in 000s)



|                                                  |  |                                  |         |   |                                  |   |         |                                  |  |   |         |  
|------------------------------------------------- |  | -------------------------------- | ------- | - | -------------------------------- | - | ------- | -------------------------------- |  | - | ------- | -
|                                                  |  | Fiscal Year Ended March 25, 2002 |         |   | Fiscal Year Ended March 31, 2003 |   |         | Fiscal Year Ended March 29, 2004 | 
|OPERATING REVENUES:                               |  |                                  |         |   |                                  |   |         |                                  |  |   |         |  
|Circulation                                       |  | $                                | 308,809 |   |                                  | $ | 314,089 |                                  |  | $ | 335,434 |  
|Advertising                                       |  |                                  | 39,915  |   |                                  |   | 61,303  |                                  |  |   | 147,933 |  
|Other                                             |  |                                  | 19,407  |   |                                  |   | 24,341  |                                  |  |   | 32,305  |  
|                                                  |  |                                  |         |   |                                  |   |         |                                  |  |   |         |  
|                                                  |  |                                  | 368,131 |   |                                  |   | 399,733 |                                  |  |   | 515,672 |  
|                                                  |  |                                  |         |   |                                  |   |         |                                  |  |   |         |  
|OPERATING EXPENSES:                               |  |                                  |         |   |                                  |   |         |                                  |  |   |         |  
|Editorial                                         |  |                                  | 37,027  |   |                                  |   | 39,967  |                                  |  |   | 58,740  |  
|Production                                        |  |                                  | 104,275 |   |                                  |   | 107,687 |                                  |  |   | 141,230 |  
|Distribution, circulation and other cost of sales |  |                                  | 49,914  |   |                                  |   | 56,857  |                                  |  |   | 75,203  |  
|Selling, general and administrative expenses      |  |                                  | 41,912  |   |                                  |   | 54,515  |                                  |  |   | 85,721  |  
|Loss (gain) on insurance settlement               |  |                                  |        |   |                                  |   | (7,613  | )                                |  |   | 200     |  
|Depreciation and amortization                     |  |                                  | 88,170  |   |                                  |   | 31,664  |                                  |  |   | 40,977  |  
|                                                  |  |                                  |         |   |                                  |   |         |                                  |  |   |         |  
|                                                  |  |                                  | 321,298 |   |                                  |   | 283,077 |                                  |  |   | 402,071 |  
|                                                  |  |                                  |         |   |                                  |   |         |                                  |  |   |         |  
|OPERATING INCOME                                  |  |                                  | 46,833  |   |                                  |   | 116,656 |                                  |  |   | 113,601 |  
|INTEREST EXPENSE                                  |  |                                  | (65,167 | ) |                                  |   | (60,065 | )                                |  |   | (75,001 | )
|OTHER INCOME (EXPENSE), net                       |  |                                  | (139    | ) |                                  |   | 288     |                                  |  |   | (185    | )
|                                                  |  |                                  |         |   |                                  |   |         |                                  |  |   |         |  
|INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES   |  |                                  | (18,473 | ) |                                  |   | 56,879  |                                  |  |   | 38,415  |  
|PROVISION FOR INCOME TAXES                        |  |                                  | 3,009   |   |                                  |   | 21,463  |                                  |  |   | 14,852  |  
|                                                  |  |                                  |         |   |                                  |   |         |                                  |  |   |         |  
|NET INCOME (LOSS)                                 |  | $                                | (21,482 | ) |                                  | $ | 35,416  |                                  |  | $ | 23,563  |  
|                                                  |  |                                  |         |   |                                  |   |         |                                  |  |   |         |  



The accompanying notes
to consolidated financial statements are an integral

part of these consolidated statements.



26



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##### Table of Contents

AMERICAN MEDIA OPERATIONS, INC. AND SUBSIDIARIES



CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

For the Three Fiscal Years in the Period
Ended March 29, 2004

(in 000s)



|                                         |  |                                  |         |   |                                  |   |        |                                  |  |   |       
|---------------------------------------- |  | -------------------------------- | ------- | - | -------------------------------- | - | ------ | -------------------------------- |  | - | ------
|                                         |  | Fiscal Year Ended March 25, 2002 |         |   | Fiscal Year Ended March 31, 2003 |   |        | Fiscal Year Ended March 29, 2004
|Net income (loss)                        |  | $                                | (21,482 | ) |                                  | $ | 35,416 |                                  |  | $ | 23,563
|                                         |  |                                  |         |   |                                  |   |        |                                  |  |   |       
|Other comprehensive income (loss):       |  |                                  |         |   |                                  |   |        |                                  |  |   |       
|Interest rate swap adjustment            |  |                                  | (359    | ) |                                  |   | 359    |                                  |  |   |      
|Foreign currency translation adjustments |  |                                  |        |   |                                  |   | (314   | )                                |  |   | 286   
|                                         |  |                                  |         |   |                                  |   |        |                                  |  |   |       
|Other comprehensive income (loss)        |  |                                  | (359    | ) |                                  |   | 45     |                                  |  |   | 286   
|                                         |  |                                  |         |   |                                  |   |        |                                  |  |   |       
|Comprehensive income (loss)              |  | $                                | (21,841 | ) |                                  | $ | 35,461 |                                  |  | $ | 23,849
|                                         |  |                                  |         |   |                                  |   |        |                                  |  |   |       



The accompanying notes
to consolidated financial statements are an integral

part of these consolidated statements.



27



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##### Table of Contents

AMERICAN MEDIA OPERATIONS, INC. AND SUBSIDIARIES



CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY

For the Three Fiscal Years in the Period
Ended March 29, 2004

(In 000s, except share information)



|                                                    |  |              |  |                          |   |                                              |   |         |                            |   |      |       |  |   |          |   |  |   |         |  
|--------------------------------------------------- |  | ------------ |  | ------------------------ | - | -------------------------------------------- | - | ------- | -------------------------- | - | ---- | ----- |  | - | -------- | - |  | - | ------- | -
|                                                    |  | Common Stock |  | AdditionalPaid-InCapital |   | Accumulated OtherComprehensive Income (Loss) |   |         | RetainedEarnings (Deficit) |   |      | Total | 
|                                                    |  | Shares       |  | Amount                   |   |                                              |   |        
|                                                    |  |              |  |                          |   |                                              |   |         |                            |   |      |       |  |   |          |   |  |   |         |  
|Balance, March 26, 2001                             |  | 7,507        |  | $                        | 2 |                                              | $ | 223,298 |                            | $ |     |       |  | $ | (36,807  | ) |  | $ | 186,493 |  
|Net loss                                            |  |             |  |                          |  |                                              |   |        |                            |   |     |       |  |   | (21,482  | ) |  |   | (21,482 | )
|Non-cash compensation charge                        |  |             |  |                          |  |                                              |   | 91      |                            |   |     |       |  |   |         |   |  |   | 91      |  
|Interest rate swap adjustment                       |  |             |  |                          |  |                                              |   |        |                            |   | (359 | )     |  |   |         |   |  |   | (359    | )
|Dividend                                            |  |             |  |                          |  |                                              |   |        |                            |   |     |       |  |   | (75,375  | ) |  |   | (75,375 | )
|                                                    |  |              |  |                          |   |                                              |   |         |                            |   |      |       |  |   |          |   |  |   |         |  
|Balance, March 25, 2002                             |  | 7,507        |  |                          | 2 |                                              |   | 223,389 |                            |   | (359 | )     |  |   | (133,664 | ) |  |   | 89,368  |  
|Net income                                          |  |             |  |                          |  |                                              |   |        |                            |   |     |       |  |   | 35,416   |   |  |   | 35,416  |  
|Non-cash compensation charge                        |  |             |  |                          |  |                                              |   | 91      |                            |   |     |       |  |   |         |   |  |   | 91      |  
|Interest rate swap adjustment                       |  |             |  |                          |  |                                              |   |        |                            |   | 359  |       |  |   |         |   |  |   | 359     |  
|Foreign currency translation adjustments            |  |             |  |                          |  |                                              |   |        |                            |   | (314 | )     |  |   |         |   |  |   | (314    | )
|Capital contribution                                |  |             |  |                          |  |                                              |   | 50,000  |                            |   |     |       |  |   |         |   |  |   | 50,000  |  
|                                                    |  |              |  |                          |   |                                              |   |         |                            |   |      |       |  |   |          |   |  |   |         |  
|Balance, March 31, 2003                             |  | 7,507        |  |                          | 2 |                                              |   | 273,480 |                            |   | (314 | )     |  |   | (98,248  | ) |  |   | 174,920 |  
|Net income                                          |  |             |  |                          |  |                                              |   |        |                            |   |     |       |  |   | 23,563   |   |  |   | 23,563  |  
|Equity contribution resulting from recapitalization |  |             |  |                          |  |                                              |   | 8,311   |                            |   |     |       |  |   |         |   |  |   | 8,311   |  
|Non-cash compensation charge                        |  |             |  |                          |  |                                              |   | 66      |                            |   |     |       |  |   |         |   |  |   | 66      |  
|Foreign currency translation adjustments            |  |             |  |                          |  |                                              |   |        |                            |   | 286  |       |  |   |         |   |  |   | 286     |  
|                                                    |  |              |  |                          |   |                                              |   |         |                            |   |      |       |  |   |          |   |  |   |         |  
|Balance, March 29, 2004                             |  | 7,507        |  | $                        | 2 |                                              | $ | 281,857 |                            | $ | (28  | )     |  | $ | (74,685  | ) |  | $ | 207,146 |  
|                                                    |  |              |  |                          |   |                                              |   |         |                            |   |      |       |  |   |          |   |  |   |         |  



The accompanying notes
to consolidated financial statements are an integral part

of these consolidated statements.



28



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##### Table of Contents

AMERICAN MEDIA OPERATIONS, INC. AND SUBSIDIARIES



CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three Fiscal Years in the Period Ended March 29,
2004

(in 000s)



|                                                                                         |  |                                  |          |   |                                  |   |          |                                  |  |   |         |  
|---------------------------------------------------------------------------------------- |  | -------------------------------- | -------- | - | -------------------------------- | - | -------- | -------------------------------- |  | - | ------- | -
|                                                                                         |  | Fiscal Year Ended March 25, 2002 |          |   | Fiscal Year Ended March 31, 2003 |   |          | Fiscal Year Ended March 29, 2004 | 
|Cash Flows from Operating Activities:                                                    |  |                                  |          |   |                                  |   |          |                                  |  |   |         |  
|Net income (loss)                                                                        |  | $                                | (21,482  | ) |                                  | $ | 35,416   |                                  |  | $ | 23,563  |  
|                                                                                         |  |                                  |          |   |                                  |   |          |                                  |  |   |         |  
|Adjustments to reconcile net income (loss) to net cash provided by operating activities: |  |                                  |          |   |                                  |   |          |                                  |  |   |         |  
|(Gain) loss on sale of assets                                                            |  |                                  | (519     | ) |                                  |   | 89       |                                  |  |   | (80     | )
|Bond premium amortization                                                                |  |                                  |         |   |                                  |   | (117     | )                                |  |   | (103    | )
|Depreciation and amortization                                                            |  |                                  | 88,170   |   |                                  |   | 31,664   |                                  |  |   | 40,977  |  
|Non-cash compensation charge                                                             |  |                                  | 91       |   |                                  |   | 91       |                                  |  |   | 66      |  
|Deferred debt cost amortization                                                          |  |                                  | 3,514    |   |                                  |   | 4,919    |                                  |  |   | 6,621   |  
|Deferred income tax provision (benefit)                                                  |  |                                  | (5,868   | ) |                                  |   | (4,679   | )                                |  |   | 12,088  |  
|Decrease (increase) in  net of acquisition  Receivables                                |  |                                  | (2,719   | ) |                                  |   | (6,291   | )                                |  |   | (14,354 | )
|Inventories                                                                              |  |                                  | (3,913   | ) |                                  |   | 3,613    |                                  |  |   | (16,096 | )
|Prepaid expenses and other                                                               |  |                                  | (476     | ) |                                  |   | (2,909   | )                                |  |   | (3,249  | )
|Increase (decrease) in  net of acquisition  Accounts payable                           |  |                                  | (10,799  | ) |                                  |   | 5,672    |                                  |  |   | 11,346  |  
|Accrued expenses                                                                         |  |                                  | 54       |   |                                  |   | (3,734   | )                                |  |   | (8,909  | )
|Payable to Parent Company                                                                |  |                                  | 117      |   |                                  |   | (54      | )                                |  |   |        |  
|Accrued interest                                                                         |  |                                  | 940      |   |                                  |   | 8,987    |                                  |  |   | 581     |  
|Accrued income taxes                                                                     |  |                                  | (4,246   | ) |                                  |   | 6,693    |                                  |  |   | (5,312  | )
|Deferred revenues                                                                        |  |                                  | (2,541   | ) |                                  |   | 2,746    |                                  |  |   | (7,603  | )
|                                                                                         |  |                                  |          |   |                                  |   |          |                                  |  |   |         |  
|Total adjustments                                                                        |  |                                  | 61,805   |   |                                  |   | 46,690   |                                  |  |   | 15,973  |  
|                                                                                         |  |                                  |          |   |                                  |   |          |                                  |  |   |         |  
|Net cash provided by operating activities                                                |  |                                  | 40,323   |   |                                  |   | 82,106   |                                  |  |   | 39,536  |  
|                                                                                         |  |                                  |          |   |                                  |   |          |                                  |  |   |         |  
|Cash Flows from Investing Activities:                                                    |  |                                  |          |   |                                  |   |          |                                  |  |   |         |  
|Capital expenditures                                                                     |  |                                  | (27,882  | ) |                                  |   | (24,695  | )                                |  |   | (25,870 | )
|Allocable insurance proceeds for carrying value of Boca facility                         |  |                                  |         |   |                                  |   | 3,785    |                                  |  |   |        |  
|Proceeds from retired assets                                                             |  |                                  |         |   |                                  |   | 154      |                                  |  |   | 232     |  
|Payment received on long term note receivable                                            |  |                                  |         |   |                                  |   | 416      |                                  |  |   | 31      |  
|Acquisition of business, net of cash acquired                                            |  |                                  | (1,807   | ) |                                  |   | (339,342 | )                                |  |   | (8,421  | )
|                                                                                         |  |                                  |          |   |                                  |   |          |                                  |  |   |         |  
|Net cash used in investing activities                                                    |  |                                  | (29,689  | ) |                                  |   | (359,682 | )                                |  |   | (34,028 | )
|                                                                                         |  |                                  |          |   |                                  |   |          |                                  |  |   |         |  
|Cash Flows from Financing Activities:                                                    |  |                                  |          |   |                                  |   |          |                                  |  |   |         |  
|Term loan and revolving credit facility principal repayments                             |  |                                  | (110,415 | ) |                                  |   | (18,909  | )                                |  |   | (29,158 | )
|Proceeds from term loan and revolving credit facility borrowings                         |  |                                  | 28,000   |   |                                  |   | 140,000  |                                  |  |   |        |  
|Proceeds from new senior subordinated indebtedness                                       |  |                                  | 150,750  |   |                                  |   | 150,000  |                                  |  |   |        |  
|Dividend payment                                                                         |  |                                  | (75,375  | ) |                                  |   |         |                                  |  |   |        |  
|Capital contribution                                                                     |  |                                  |         |   |                                  |   | 41,250   |                                  |  |   | 6,138   |  
|Payment of deferred debt costs                                                           |  |                                  | (5,917   | ) |                                  |   | (12,652  | )                                |  |   | (1,057  | )
|                                                                                         |  |                                  |          |   |                                  |   |          |                                  |  |   |         |  
|Net cash provided by (used in) financing activities                                      |  |                                  | (12,957  | ) |                                  |   | 299,689  |                                  |  |   | (24,077 | )
|Effect of Exchange Rate Changes on Cash                                                  |  |                                  |         |   |                                  |   | (314     | )                                |  |   | 286     |  
|                                                                                         |  |                                  |          |   |                                  |   |          |                                  |  |   |         |  
|Net Increase (Decrease) in Cash and Cash Equivalents                                     |  |                                  | (2,323   | ) |                                  |   | 21,799   |                                  |  |   | (18,283 | )
|Cash and Cash Equivalents, Beginning of Period                                           |  |                                  | 20,999   |   |                                  |   | 18,676   |                                  |  |   | 40,475  |  
|                                                                                         |  |                                  |          |   |                                  |   |          |                                  |  |   |         |  
|Cash and Cash Equivalents, End of Period                                                 |  | $                                | 18,676   |   |                                  | $ | 40,475   |                                  |  | $ | 22,192  |  
|                                                                                         |  |                                  |          |   |                                  |   |          |                                  |  |   |         |  
|Supplemental Disclosures of Cash Flow Information:                                       |  |                                  |          |   |                                  |   |          |                                  |  |   |         |  
|Cash paid during the period for                                                         |  |                                  |          |   |                                  |   |          |                                  |  |   |         |  
|Income taxes                                                                             |  | $                                | 11,821   |   |                                  | $ | 19,052   |                                  |  | $ | 6,083   |  
|Interest                                                                                 |  | $                                | 60,026   |   |                                  | $ | 46,420   |                                  |  | $ | 70,720  |  
|Non-cash equity contribution resulting from recapitalization                             |  | $                                |         |   |                                  | $ |         |                                  |  | $ | 8,311   |  
|Non-cash equity interest in EMP LLC in connection with the Weider acquisition            |  | $                                |         |   |                                  | $ | 8,750    |                                  |  | $ |        |  



The accompanying notes
to consolidated financial statements are an integral part

of these consolidated statements.



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##### Table of Contents

AMERICAN MEDIA OPERATIONS, INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands in all tables)



(1) Summary of Significant Accounting Policies



Basis of Presentation



The consolidated financial statements include the accounts of American Media
Operations, Inc., a wholly-owned subsidiary of American Media, Inc. (Media), and its subsidiaries (collectively, the Company). Medias parent entity is EMP Group LLC. The Company publishes six weekly publications:
National Enquirer, Star, Globe, National Examiner, Weekly World News, Sun, two bi-weekly publications,Country Weeklyand MIRA, and other monthly magazines. In addition and as a result of the January 2003 acquisition of Weider
Publications LLC (Weider), the Company publishes eight magazines, including Muscle & Fitness, Shape, Shape en Espanol, Mens Fitness, Muscle & Fitness Hers, Flex, Fit Pregnancyand Natural Health. Included in
our fiscal year ended March 31, 2003 are 8 weeks of operations from Weider properties. One of the Companys subsidiaries, Distribution Services, Inc. (DSI), arranges for the placement and merchandising of our publications and third
party publications at retail outlets throughout the United States and Canada. All significant intercompany transactions and balances have been eliminated in consolidation.



Our fiscal year, which ends on the last Monday in March, includes 52 weeks for the fiscal year ended March 29, 2004, 53
weeks for the fiscal year ended March 31, 2003, and 52 weeks for the fiscal year ended March 25, 2002. The additional 53rd week in the fiscal year ended March 31, 2003, provided $5.6 million of additional operating revenues. Additionally, our fiscal
year ended March 29, 2004, includes 53 issues for our weekly publications due to a change in our on-sale dates to be consistent with our primary competitors.



Certain prior year amounts have been reclassified to conform to the fiscal 2004 presentation.



Revenue Recognition



Substantially all publication sales, except subscriptions, are made through unrelated distributors. Issues, other than special topic issues, are placed on
sale approximately one week prior to the issue date for our weekly publications; however, circulation revenues and related expenses are recognized for financial statement purposes on an issue date basis (i.e., off sale date). Special topic and
monthly issues revenue and related expenses are recognized at the on sale date. On or about the date each issue is placed on sale, we receive a percentage of the issues estimated newsstand sales proceeds for our publications as an advance from
the distributors. All of our publications are sold with full return privileges.



Revenues from copy sales are net of reserves provided for expected sales returns, which are established in accordance with accounting principles generally accepted in the United States of America (generally
accepted accounting principles), after considering such factors as sales history and available market information. We continually monitor the adequacy of the reserves and make adjustments when necessary. Revenues are also net of product
placement costs (retail display allowances) paid to the retailers.



Subscriptions received in advance of the issue date are recognized as income over the term of the subscription as they are fulfilled and mailed to the subscriber. Advertising revenues are recognized in the period in
which the related advertising appears in the publications.



Deferred revenues are comprised of the following:



|              |  |      |        |      |   |       
|------------- |  | ---- | ------ | ---- | - | ------
|              |  | 2003 |        | 2004
|Single copy   |  | $    | 7,971  |      | $ | 5,590 
|Subscriptions |  |      | 38,376 |      |   | 32,850
|Advertising   |  |      | 870    |      |   | 1,174 
|              |  |      |        |      |   |       
|              |  | $    | 47,217 |      | $ | 39,614
|              |  |      |        |      |   |       



Other revenues,
primarily from marketing services performed for third parties by DSI, are recognized when the service is performed.



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##### Table of Contents

Editorial Costs



External editorial costs relating to photos, artwork and text are expensed as the issue relating to each specific cost is recognized as revenue.
Internal editorial costs are generally expensed as incurred.



Concentration of Credit Risk



Substantially all of the Companys trade receivables are from single copy distributors and advertising customers located throughout the United States. The Company establishes its credit policies based on an ongoing evaluation of its
customers credit worthiness and competitive market conditions and establishes its allowance for doubtful accounts based on an assessment of exposures to credit losses at each balance sheet date. The Company believes its allowance for doubtful
accounts is sufficient based on the credit exposures outstanding at March 29, 2004.



Barter Transactions



The Company trades
advertisements in its properties in exchange for advertising in properties of other companies. Revenue and related expenses from barter transactions are recorded at fair value in accordance with EITF No. 99-17, Accounting for Advertising
Barter Transactions. Revenue from barter transactions is recognized in accordance with the Companys revenue recognition policies. Expense from barter transactions is recognized as incurred. Revenue from barter transactions for the fiscal
years 2002, 2003 and 2004 were not significant.



The Company
executed a barter agreement during fiscal 2004 in which the Company exchanged certain paperback book inventory items for future credits for broadcast advertising. No revenue was recognized in connection with this transaction. The credits can be used
as a reduction in the invoiced amount of future advertising.



Subscription Acquisition Costs



Subscription acquisition costs are expensed the first time the advertising takes place, except for certain direct-response advertising, the primary purpose of which is to elicit sales from customers who can be shown to have responded
specifically to the advertising and that results in probable future economic benefits. Direct-response advertising consists of product promotional mailings, telemarketing and subscription promotions. These direct-response advertising costs are
capitalized as assets and amortized over the estimated period of future benefit. The direct-response advertising costs are amortized over the related one-year subscription period. Amortization of direct-response advertising, which is included in
distribution, circulation and other cost of sales expenses on the accompanying consolidated statements of income (loss), are not significant for fiscal years 2002, 2003 and 2004.



Internal-Use Software



In compliance with American Institute of Certified Public Accountants
(AICPA) Statement of Position (SOP) 98-1, Accounting for the Costs of Computer Software Developed or Obtained for Internal Use, the Company expenses costs incurred in the preliminary project stage and, thereafter,
capitalizes costs incurred in developing or obtaining of internal use software and includes them in property and equipment, net. Certain costs, such as maintenance and training, are expensed as incurred. Capitalized costs are amortized over a period
of not more than three years using the straight-line method. Capitalized software costs are subject to impairment evaluation in accordance with the provisions of Statement of Financial Accounting Standards (SFAS) No. 144. Internal-use
software costs for fiscal years 2002, 2003 and 2004 were not significant.



Property and Equipment



We use the
straight-line depreciation method for financial reporting. The estimated lives used in computing depreciation for financial reporting purposes are 20 years for buildings, 3 years for display racks and 3 to 10 years for all other depreciable fixed
assets. Depreciation for leasehold improvements is provided using the straight-line method over the shorter of the lease term or the estimated useful lives of the respective assets. Maintenance and repair costs are charged to expense as incurred;
significant renewals and betterments are capitalized.



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##### Table of Contents

Inventories



Inventories are stated at the lower of cost or market. We use the first-in, first-out (FIFO) cost method of valuation, which approximates market value.
Inventories are comprised of the following:



|                                                                             |  |      |        |      |   |       
|---------------------------------------------------------------------------- |  | ---- | ------ | ---- | - | ------
|                                                                             |  | 2003 |        | 2004
|Raw materials  paper                                                        |  | $    | 11,154 |      | $ | 27,070
|Finished product  paper, production and distribution costs of future issues |  |      | 7,268  |      |   | 7,448 
|                                                                             |  |      |        |      |   |       
|                                                                             |  | $    | 18,422 |      | $ | 34,518
|                                                                             |  |      |        |      |   |       



During fiscal 2004,
the Company increased its paper inventory supply to take advantage of favorable paper pricing.



Other Long Term Assets



Other long term assets consist of deposits on leased facilities and equipment that are long term in nature.



Accrued Expenses



Accrued expenses consists of the following:



|                                                          |  |      |        |      |   |       
|--------------------------------------------------------- |  | ---- | ------ | ---- | - | ------
|                                                          |  | 2003 |        | 2004
|Interest                                                  |  | $    | 21,765 |      | $ | 22,346
|Weider Advertising (see footnote 2)                       |  |      | 11,503 |      |   | 10,293
|Retail display allowance                                  |  |      | 10,626 |      |   | 12,753
|Weider acquisition working capital adjustment             |  |      | 7,301  |      |   |      
|Personnel and related costs (see footnote 2)              |  |      | 5,994  |      |   | 2,297 
|Unpaid Subscription Production Allowance (see footnote 2) |  |      | 3,198  |      |   | 616   
|Legal                                                     |  |      | 2,079  |      |   | 384   
|Accrued taxes                                             |  |      | 10,292 |      |   | 4,980 
|Other                                                     |  |      | 7,156  |      |   | 5,726 
|                                                          |  |      |        |      |   |       
|                                                          |  | $    | 79,914 |      | $ | 59,395
|                                                          |  |      |        |      |   |       



Use of Estimates



The preparation of financial statements in conformity
with generally accepted accounting principles requires estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of assets and liabilities at the date of the financial statements, and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ from those estimates.



Cash and Cash Equivalents



Cash and cash equivalents include cash on hand or deposited in demand deposit accounts with financial institutions and highly liquid investments with an original maturity of three months or less. Bank overdrafts of
$15,323,000 and $19,454,000 have been recorded in accounts payable as of March 31, 2003 and March 29, 2004, respectively.



Impairment of Long-Lived Assets



We review long-lived tangible assets and definite-lived intangible assets for impairment whenever events or changes in business circumstances indicate
that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. Each impairment test is based on a comparison of the cash flows to the recorded value of the asset. If an
impairment is indicated, the asset is written down to its estimated fair value on a discounted cash flow basis. Certain useful lives related to the Companys Boca Raton headquarters were determined to be inappropriate by management during the
2002 fiscal year and thus their carrying values were reduced accordingly (see Note 13).



Income Taxes



The Company accounts for
income taxes under the liability method in accordance with SFAS No. 109, Accounting for Income Taxes. The provision for income taxes includes deferred income taxes resulting from items reported in different periods for income tax and
financial statement purposes. Deferred tax assets and liabilities represent the expected future tax consequences of the differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.
The effects of changes in tax rates on deferred tax assets and liabilities are recognized in the period that includes the enactment date.



32



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##### Table of Contents

Advertising Costs



Non-direct response media advertising costs included in selling, general and administrative expense are expensed as incurred. The amounts charged to
operations for media advertising during fiscal 2002, 2003 and 2004 were approximately $5.0 million, $2.1 million and $1.1 million, respectively.



Deferred Debt Costs



Costs incurred in connection with obtaining financing are deferred and amortized using the effective interest method as a charge to interest expense over
the terms of the related borrowings.



Comprehensive Income (Loss)



SFAS No. 130, Reporting Comprehensive
Income, establishes standards for the reporting and display of comprehensive income (loss) and its components in the financial statements. The following types of items are to be considered in computing comprehensive income: certain derivative
gains/losses, foreign currency translation adjustments, pension liability adjustments and unrealized gains/losses on securities available for sale.



Segment Information



SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information, establishes standards for the way that public enterprises
report information about operating segments in annual and interim financial statements. The Statement requires information to be reported by operating segment on the same basis as that used to evaluate performance internally. We have determined that
all of our operating activities meet the criteria under SFAS No. 131 to be aggregated into one reporting segment.



Derivatives and Hedging



The Company reports all derivative instruments on the balance sheet at their fair value. Changes in the fair value of derivatives are recorded each period
in earnings or comprehensive income, depending on the designation of the derivative. Changes in the fair value of derivatives that are not designated as a hedge are reported immediately in earnings.



Interest earned (payable) under the interest rate swap is credited (charged)
to interest expense using the accrual method. The related accrued receivable or payable is included in accrued interest payable. The fair market value of the interest rate swap agreement is reflected in the accompanying consolidated financial
statements. We do not utilize derivative financial instruments for trading or other speculative purposes.



New Accounting Pronouncements



In November 2002, the Financial Accounting Standards Board (FASB) issued Interpretation No. 45, Guarantors Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees
of Indebtedness of Others. This Interpretation expands the disclosures to be made by a guarantor about its obligations under certain guarantees and requires that, at the inception of a guarantee, a guarantor recognize a liability for the fair
value of the obligation undertaken in issuing the guarantee. The initial recognition and measurement provisions of this Interpretation were effective for guarantees issued or modified after December 31, 2002. The adoption of this Interpretation did
not have a material effect on our consolidated financial statements.



In January 2003, the FASB issued Interpretation No. 46, Consolidation of Variable Interest Entities (FIN 46), which was amended in December 2003. This Interpretation requires variable interest entities (commonly
referred to as SPEs) to be consolidated by the primary beneficiary of the entity if certain criteria are met. FIN 46 is effective immediately for all new variable interest entities created or acquired after January 31, 2003. For variable interest
entities created or acquired prior to February 1, 2003, the provisions of FIN 46 must be applied for the first interim or annual period beginning after June 15, 2003. The adoption of this Interpretation did not have a material effect on our
consolidated financial statements.



In April 2003, the FASB
issued SFAS No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging



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Activities. This Statement amends and clarifies financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts (collectively referred to as derivatives) and for hedging activities under SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities. This Statement is
effective for contracts entered into or modified after June 30, 2003. The adoption of SFAS No. 149 did not have a material impact on our consolidated financial statements.



In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of Both
Liabilities and Equity. This Statement establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial
instrument that is within its scope as a liability (or an asset in some circumstances). This Statement is effective for financial instruments entered into or modified after May 30, 2003, and otherwise is effective at the beginning of the first
interim period beginning after June 15, 2003. The adoption of SFAS No. 150 did not have a material impact on our consolidated financial statements.



(2) Acquisitions



On January 23, 2003, the Company and EMP Group LLC (the Buyers) acquired Weider (the Weider Acquisition), a newly formed company
to which the magazine business of Weider Publications, Inc. and Weider Interactive Networks, Inc. had been contributed by Weider Health and Fitness, Weider Health and Fitness LLC and Weider Interactive Networks, Inc., (collectively, the
Sellers). The aggregate purchase price was $357.3 million, which included a post-closing working capital adjustment of $7.3 million. The Companys consolidated financial statements include the results of operations of Weider
Publications LLC from the date of acquisition.



Prior to the
Weider acquisition, Weider Health and Fitness had contributed its publications and related assets into a newly formed limited liability company, Weider Publications LLC, which now owns all assets relating to the acquired business, including the
capital stock of certain foreign subsidiaries. This was accomplished pursuant to an asset contribution agreement, which provided that subsidiaries of the Sellers retain liability for pre-closing taxes, specified employee benefit matters and debt for
borrowed money related to the acquired business. At the closing, the Sellers retained limited liability company units of Weider Publications LLC were exchanged for limited liability company units of EMP Group LLC.



Under the purchase agreement, the Sellers will, subject to caps and
deductibles, indemnify the Buyers for losses arising from the failure of any representation or warranty made by the Sellers to be true or the failure of any of those entities to perform their obligations under the purchase agreement and the related
documents. The Sellers will also indemnify the Buyers for specified excluded liabilities of the acquired business, including pre-closing taxes. Pursuant to the purchase agreement, the Buyers will indemnify the Sellers for losses arising from
liabilities that the acquired business retains, the failure of any representation or warranty made by us to be true or our failure to perform our obligations under the purchase agreement and the related documents.



In general, the representations and warranties in the purchase agreement
survive closing and expire 18 months after the closing date. The representations and warranties relating to organization and authority, capitalization, tax matters, employee benefits and brokers fees will survive until the expiration of the
applicable statute of limitations.



The Sellers, as well as
their principals, Joe Weider, Ben Weider and Eric Weider, agreed in the purchase agreement not to invest, own, manage, finance, control or otherwise have a material direct or indirect interest in any business involved in publishing of healthy living
or fitness-related publications in any and all media, without the Buyers express written approval, subject to specified limitations. The non-competition agreement will remain in effect for 7 years with respect to Joe Weider and for 5 years
with respect to Ben Weider, Eric Weider and the Sellers.



As
part of the Weider Acquisition, Weider Publications LLC entered into an advertising agreement with Weider Health and Fitness and Weider Nutrition International, Inc. that provides these entities with certain limited access to advertising in the
acquired publications at agreed upon rates for the six years following closing. The agreed upon rates, discounted to present value, for this advertising agreement are below fair market value for the cumulative six-year period by approximately $11.8
million as of the date of the acquisition and $10.3 million as of March 29, 2004. Accordingly, we recognized this liability to provide advertising at below market rates as part of the Weider Acquisition and included it in accrued expenses on the
Consolidated Balance Sheet (Weider Advertising). Based on advertising from Weider Health and Fitness and Weider Nutritional International, Inc., $333,000 and $1,743,000 of this reserve was recognized as income during fiscal 2003 and
2004, respectively.



Also as part of the Weider Acquisition, we
assumed a liability to fulfill subscriptions for which no revenues had been received. The costs to manufacture, fulfill and mail these copies ($3.7 million) were recognized by us as part of the Weider acquisition. The



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remaining balance of this liability of $616,000 as of March 29, 2004, is included in accrued expenses on the Consolidated
Balance Sheet (Unpaid Subscription Production Allowance). We incurred $484,000 and $2,583,000 of costs related to these copies in fiscal 2003 and 2004, respectively, and reduced this reserve accordingly.



In connection with the Weider Acquisition, we entered into an athlete
endorsement agreement with the Sellers, pursuant to which the Sellers will provide the Buyers with continued access to a group of approximately 24 athletes (excluding Joe Weider), or substantially the same number of athletes of substantially the
same quality as those listed in the agreement, for promotional purposes in connection with the acquired business for a period of 24 months. We pay the Sellers $600,000 per year in exchange for this arrangement.



As part of the Weider Acquisition, we entered into a trademark license
agreement with the Sellers pursuant to which the Sellers retained ownership and paid the costs for maintaining the Weider, Team Weider and Joe Weider trademarks in the U.S., Mexico and Canada and grants us the exclusive right to use these trademarks
on the cover and in the editorial content of existing Weider titles of the acquired business and in any future healthy living or fitness-related publications in any media. We were also given the non-exclusive right to use the trade name Joe
Weideron products and services other than publications. We pay Weider Health and Fitness $200,000 per year pursuant to the trademark license agreement. We have the rights to use the Weider, Team Weider and Joe Weider trademarks in most other
foreign countries in the world.



As part of the Weider
acquisition, we incurred employee termination costs of $5.6 million, which were fully paid as of March 29, 2004.



The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition. The Company obtained
third party valuations of certain intangible assets.



|                                            |  |   |         |  
|------------------------------------------- |  | - | ------- | -
|Current assets                              |  | $ | 24,150  |  
|Property and equipment                      |  |   | 6,391   |  
|Other intangible assets                     |  |   | 159,200 |  
|Goodwill                                    |  |   | 214,314 |  
|                                            |  |   |         |  
|Total assets acquired                       |  |   | 404,055 |  
|Current liabilities                         |  |   | (55,963 | )
|                                            |  |   |         |  
|Net assets acquired                         |  |   | 348,092 |  
|Less: Non-cash equity interest issued       |  |   | (8,750  | )
|                                            |  |   |         |  
|Acquisition of Weider, net of cash acquired |  | $ | 339,342 |  
|                                            |  |   |         |  



Of the $159.2 million
of acquired other intangible assets, $122.3 million was assigned to registered trademarks that are not subject to amortization; $10.0 million was assigned to covenants not to compete for certain founders of Weider Publications LLC and are being
amortized over five to seven years; $9.0 million was assigned to subscriber lists and are being amortized over 2.8 years; $7.8 million was assigned to advertising relationships and are being amortized over 3.2 years; and $10.1 million was assigned
to non-subscriber customer relationships and are being amortized over 8.4 years.



The Company anticipates that all of the goodwill and other intangible assets recorded in connection with the Weider acquisition will be deductible for tax purposes.



The following unaudited pro forma financial information gives effect to the
Weider acquisition as if it has occurred as of the beginning of the periods presented:



|                   |  |                                  |         |   |                                  |   |        
|------------------ |  | -------------------------------- | ------- | - | -------------------------------- | - | -------
|                   |  | Fiscal Year Ended March 25, 2002 |         |   | Fiscal Year Ended March 31, 2003
|Operating revenues |  | $                                | 516,288 |   |                                  | $ | 535,235
|Net income (loss)  |  | $                                | (30,680 | ) |                                  | $ | 17,398 



The unaudited pro
forma results of operations are presented for informational purposes only and may not necessarily reflect the future results of operations of the Company or what the results of operations would have been had the Company owned and operated the Weider
properties as of the beginning of each period presented. Had SFAS No. 142 been adopted for the fiscal year ended March 25, 2002, pro forma net income would have been $11.6 million as a result of adding back amortization expense of $42.3 million (net
of tax).



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(3) Goodwill and Other Intangible Assets



The changes in the carrying amount of goodwill for the fiscal years ended March 31, 2003 and March 29, 2004 can be
summarized as follows:



|                                    |  |                |         |   |                |   |        
|----------------------------------- |  | -------------- | ------- | - | -------------- | - | -------
|                                    |  | March 31, 2003 |         |   | March 29, 2004
|Balance, beginning of period        |  | $              | 455,731 |   |                | $ | 659,052
|Acquisition of Weider               |  |                | 211,727 |   |                |   | 2,587  
|Reduction for deferred income taxes |  |                | (8,406  | ) |                |   |       
|                                    |  |                |         |   |                |   |        
|Balance, end of period              |  | $              | 659,052 |   |                | $ | 661,639
|                                    |  |                |         |   |                |   |        



The increase in
goodwill for the fiscal year March 29, 2004, primarily relates to the recognition of deferred tax liabilities and additional employee termination costs incurred in connection with the Weider acquisition. During the fiscal year ended March 31, 2003,
goodwill increased due to the acquisition of Weider and decreased due to approximately $8.4 million of deferred income taxes for contingencies originally recorded in business combinations that will not ultimately be realized.



We have adopted the provisions of SFAS No. 141, Business
Combinations, which requires all business combinations initiated after June 30, 2001 to be accounted for using the purchase method, eliminating the pooling of interests method. Additionally, acquired intangible assets are separately recognized
if the benefit of the intangible asset is obtained through contractual or other legal rights, or if the intangible asset can be sold, transferred, licensed, rented or exchanged, regardless of the acquirers intent to do so. Our principal
identifiable intangible assets are tradenames, customer lists, covenants not to compete, advertising relationships and non-subscriber customer relationships.



Effective March 26, 2002, we also adopted the provisions of SFAS No. 142, Goodwill and Other Intangible Assets. Goodwill and tradenames were
amortized primarily over twenty years on a straight-line basis until March 25, 2002. Effective March 26, 2002, such amortization ceased. Other intangibles continue to be amortized primarily over 2.8 to 15.0 years.



Pro forma net income adjusted to eliminate historical amortization of
goodwill and intangibles with indefinite lives is as follows:



|                                                                                |  |                                  |         |   |                                  |   |                                  |  |   |       
|------------------------------------------------------------------------------- |  | -------------------------------- | ------- | - | -------------------------------- | - | -------------------------------- |  | - | ------
|                                                                                |  | Fiscal Year Ended March 25, 2002 |         |   | Fiscal Year Ended March 31, 2003 |   | Fiscal Year Ended March 29, 2004
|Reported net income (loss)                                                      |  | $                                | (21,482 | ) |                                  | $ | 35,416                           |  | $ | 23,563
|Add: amortization of goodwill and intangibles with indefinite lives, net of tax |  |                                  | 41,034  |   |                                  |   |                                 |  |   |      
|                                                                                |  |                                  |         |   |                                  |   |                                  |  |   |       
|Pro forma net income                                                            |  | $                                | 19,552  |   |                                  | $ | 35,416                           |  | $ | 23,563
|                                                                                |  |                                  |         |   |                                  |   |                                  |  |   |       



As required by SFAS
No. 142, the Company completed impairment tests as of March 26, 2002 for goodwill and intangibles with indefinite lives. The test for goodwill includes determining the fair value of the reporting unit, as defined by SFAS No. 142, and comparing it to
the carrying value of the net assets allocated to the reporting unit. No impairment charges resulted from the required impairment tests. Goodwill and intangibles with indefinite lives will be tested for impairment annually or more frequently when
events or circumstances indicate that an impairment may have occurred. The Company uses the beginning of its fiscal fourth quarter as the date for its annual impairment tests. The Company performed its annual impairment test for fiscal 2003 and 2004
as of the beginning of the fourth quarter of each of these years and found no impairment.



Intangible assets not subject to amortization had a carrying value of $557,365,000 as of March 31, 2003 and March 29, 2004, and consist of tradenames with
indefinite lives.



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Intangible assets subject to amortization after the adoption of SFAS No. 142 consist of the following:



|                                      |  |               |  |                     |         |                         |   |         |     |  |                     |        |                         |   |         |     |   |         |   |  |   |       
|------------------------------------- |  | ------------- |  | ------------------- | ------- | ----------------------- | - | ------- | --- |  | ------------------- | ------ | ----------------------- | - | ------- | --- | - | ------- | - |  | - | ------
|                                      |  |               |  | March 31, 2003      |         | March 29, 2004         
|                                      |  | Range ofLives |  | GrossCarryingAmount |         | AccumulatedAmortization |   |         | Net |  | GrossCarryingAmount |        | AccumulatedAmortization |   |         | Net
|Covenants not to compete              |  | 5-10          |  | $                   | 22,500  |                         | $ | (4,551  | )   |  | $                   | 17,949 |                         | $ | 22,500  |     | $ | (7,466  | ) |  | $ | 15,034
|Subscriber lists                      |  | 3-15          |  |                     | 66,171  |                         |   | (16,678 | )   |  |                     | 49,493 |                         |   | 66,238  |     |   | (24,308 | ) |  |   | 41,930
|Advertising relationships             |  | 3             |  |                     | 7,750   |                         |   | (423    | )   |  |                     | 7,327  |                         |   | 7,750   |     |   | (2,865  | ) |  |   | 4,885 
|Non-subscriber customer relationships |  | 8             |  |                     | 10,150  |                         |   | (210    | )   |  |                     | 9,940  |                         |   | 10,150  |     |   | (1,427  | ) |  |   | 8,723 
|                                      |  |               |  |                     |         |                         |   |         |     |  |                     |        |                         |   |         |     |   |         |   |  |   |       
|                                      |  |               |  | $                   | 106,571 |                         | $ | (21,862 | )   |  | $                   | 84,709 |                         | $ | 106,638 |     | $ | (36,066 | ) |  | $ | 70,572
|                                      |  |               |  |                     |         |                         |   |         |     |  |                     |        |                         |   |         |     |   |         |   |  |   |       



Amortization expense
of intangible assets for the fiscal years ended March 25, 2002, March 31, 2003, and March 29, 2004 was $57.3 million, $6.9 million and $14.2 million, respectively. Based on the carrying value of identified intangible assets recorded at March 29,
2004, and assuming no subsequent impairment of the underlying assets, the annual amortization expense is expected to be as follows:



|            |  |   |       
|----------- |  | - | ------
|Fiscal Year |  |  
|2005        |  | $ | 14,204
|2006        |  |   | 12,122
|2007        |  |   | 8,269 
|2008        |  |   | 8,114 
|2009        |  |   | 7,446 
|Thereafter  |  |   | 20,417
|            |  |   |       
|            |  | $ | 70,572
|            |  |   |       



(4) Fair Value of Financial
Instruments:



The estimated fair value of our financial
instruments as of year-end is as follows:



|                                     |  |                 |         |            |   |                 |  |            |         |  |   |        
|------------------------------------ |  | --------------- | ------- | ---------- | - | --------------- |  | ---------- | ------- |  | - | -------
|                                     |  | 2003            |         | 2004      
|                                     |  | Carrying Amount |         | Fair Value |   | Carrying Amount |  | Fair Value
|Term loan, including current portion |  | $               | 468,810 |            | $ | 468,810         |  | $          | 439,652 |  | $ | 439,652
|Subordinated indebtedness            |  | $               | 550,000 |            | $ | 595,625         |  | $          | 550,000 |  | $ | 561,875
|Interest rate swap receivable        |  |                 |        |            |   |                |  | $          | 2,813   |  | $ | 2,813  



The fair value of our
financial instruments is estimated based on the quoted market prices for the same or similar issues or on the current rate offered to us for financial instruments of the same remaining maturities. The carrying amount for cash and cash equivalents,
accounts receivable, accounts payable and accrued expenses approximates fair value because of the short maturity of those instruments.



Effective March 26, 2002, we entered into two interest rate swap agreements, which effectively converted a portion of fixed-rate debt to variable-rate
debt. The first agreement, which was originally scheduled to expire in May 2004, had a notional amount of $125 million. Under this agreement, the Company was to receive a fixed rate of 10.25% and pay LIBOR in arrears plus a spread of 5.265%. The
second agreement, which was to expire in May 2005, had a notional amount of $25 million. Under this agreement, the Company was to receive a fixed rate of 10.25% and pay LIBOR in arrears plus a spread of 4.885%. On May 1, 2002, we received $438,000
under these agreements. On June 29, 2002, we received $3,277,000 to terminate these two interest rate swap agreements. This amount received was reported as a reduction of interest expense for the fiscal year ended March 31, 2003.



Effective March 26, 2002, we entered into an interest rate cap transaction,
which capped LIBOR at 5% through May 7, 2002 on $50 million of variable-rate debt. This cap expired without any financial impact on the Company.



Additionally, effective June 28, 2002, we entered into two new interest rate swap agreements, which effectively converted a portion of fixed-rate debt to
variable rate debt. The first agreement, which was originally scheduled to expire in May 2004, had a notional amount of $125 million. Under this agreement, we were to receive a fixed rate of 10.25% and pay LIBOR in arrears plus a spread of 6.49%.
The second agreement, which was originally scheduled to expire in May 2005, had a notional amount of $25 million. Under this agreement, the Company was to receive a fixed rate of 10.25% and pay LIBOR in arrears plus a spread of 5.99%. On October 8,
2002, we received $3,978,000 to terminate these two interest rate swap agreements, which is reported as a reduction of interest expense for the fiscal year ended March 31, 2003.



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Effective August 20, 2003, we entered into an interest rate swap agreement, which effectively converted a
portion of our fixed-rate debt to variable rate debt. The agreement is scheduled to expire in January 2007 and has a notional amount of $150 million. Under this agreement, we received a fixed rate of 8.875% and pay LIBOR in arrears plus a spread of
5.38% subject to a collar adjustment. As of March 29, 2004, the fair value of this swap was approximately $2.8 million. This amount has been recognized as a reduction of interest expense for the fiscal year ended March 29, 2004. On January 15, 2004,
we received $1,635,000 in connection with the interim settlement of this swap agreement. The next reset date for this swap agreement is July 15, 2004. At each reset date the Company either receives or pays money based on the fair value of the swap
as of that date.



(5) Income Taxes:



We file a consolidated Federal income tax return with Media and calculate
our income tax on a separate return basis. The provision for income taxes consists of the following:



|               |  |      |        |   |      |   |        |      |  |   |        |  
|-------------- |  | ---- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | -
|               |  | 2002 |        |   | 2003 |   |        | 2004 | 
|Current:       |  |      |        |   |      |   |        |      |  |   |        |  
|Federal        |  | $    | 8,139  |   |      | $ | 20,855 |      |  | $ | 899    |  
|State          |  |      | 738    |   |      |   | 1,892  |      |  |   | (330   | )
|Foreign        |  |      |       |   |      |   |       |      |  |   | 455    |  
|               |  |      |        |   |      |   |        |      |  |   |        |  
|Total current  |  |      | 8,877  |   |      |   | 22,747 |      |  |   | 1,024  |  
|               |  |      |        |   |      |   |        |      |  |   |        |  
|Deferred:      |  |      |        |   |      |   |        |      |  |   |        |  
|Federal        |  |      | (5,380 | ) |      |   | (1,177 | )    |  |   | 12,681 |  
|State          |  |      | (488   | ) |      |   | (107   | )    |  |   | 1,147  |  
|               |  |      |        |   |      |   |        |      |  |   |        |  
|Total deferred |  |      | (5,868 | ) |      |   | (1,284 | )    |  |   | 13,828 |  
|               |  |      |        |   |      |   |        |      |  |   |        |  
|               |  | $    | 3,009  |   |      | $ | 21,463 |      |  | $ | 14,852 |  
|               |  |      |        |   |      |   |        |      |  |   |        |  



A reconciliation of
the expected income tax provision (benefit) at the statutory Federal income tax rate of 35% to the reported income tax provision (benefit) is as follows:



|                                                          |  |      |        |   |      |   |        |  |   |       
|--------------------------------------------------------- |  | ---- | ------ | - | ---- | - | ------ |  | - | ------
|                                                          |  | 2002 |        |   | 2003 |   | 2004  
|Expected income tax provision (benefit) at statutory rate |  | $    | (6,466 | ) |      | $ | 19,908 |  | $ | 13,445
|Nondeductible goodwill amortization                       |  |      | 9,100  |   |      |   |       |  |   |      
|State income taxes, net of Federal benefit                |  |      | 333    |   |      |   | 1,160  |  |   | 532   
|Meals and entertainment                                   |  |      |        |   |      |   |       |  |   | 410   
|Other, net                                                |  |      | 42     |   |      |   | 395    |  |   | 465   
|                                                          |  |      |        |   |      |   |        |  |   |       
|                                                          |  | $    | 3,009  |   |      | $ | 21,463 |  | $ | 14,852
|                                                          |  |      |        |   |      |   |        |  |   |       



Deferred taxes reflect
the tax impact of temporary differences between the amount of assets and liabilities for financial reporting purposes and such amounts as measured by tax laws and regulations. The net deferred tax assets and liabilities are comprised of the
following:



|                                              |  |      |          |   |      |   |          |  
|--------------------------------------------- |  | ---- | -------- | - | ---- | - | -------- | -
|                                              |  | 2003 |          |   | 2004 |  
|Gross non-current deferred income tax assets  |  | $    | 1,539    |   |      | $ | 3,754    |  
|                                              |  |      |          |   |      |   |          |  
|Intangibles                                   |  |      | (144,386 | ) |      |   | (158,465 | )
|Accelerated depreciation                      |  |      | (1,837   | ) |      |   | (2,339   | )
|Book over tax basis of non-depreciable assets |  |      | (439     | ) |      |   | (1,273   | )
|                                              |  |      |          |   |      |   |          |  
|Gross non-current deferred tax liabilities    |  |      | (146,662 | ) |      |   | (162,077 | )
|                                              |  |      |          |   |      |   |          |  
|Net non-current deferred tax liabilities      |  | $    | (145,123 | ) |      | $ | (158,323 | )
|                                              |  |      |          |   |      |   |          |  



In accordance with
SFAS No. 109, Accounting for Income Taxes, deferred taxes are recognized for temporary differences related to identified intangible assets other than goodwill. The temporary difference is calculated based on the difference between the
new book carrying values of the amounts allocated to identified intangible assets and their historical tax bases.



Included in prepaid expenses and other and in accrued expenses in the accompanying consolidated balance sheet for fiscal 2003 is a net current deferred
tax asset of $1,167,000 and current taxes payable of $10,292,000, respectively. Included in prepaid expenses and other and in accrued expenses in the accompanying consolidated balance sheet for fiscal 2004 is a net current deferred tax asset of
$551,000 and current taxes payable of $4,980,000, respectively.



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(6) Credit Agreement



The Companys bank credit agreement (the Credit Agreement), which was comprised of a $340 million term loan commitment, was amended on
November 1, 1999 to increase the term loan amount to $430 million and provide a $60 million revolving credit commitment. We also amended the Credit Agreement on February 14, 2002, in connection with the subordinated notes, which is discussed in Note
7. The amendment included changes to the interest rates discussed below, as well as changes to certain financial covenants. The Company amended the Credit Agreement on May 22, 2002. This amendment restructured the marginal interest rate on the
Companys term loans. Additionally, the Company amended the Credit Agreement on January 23, 2003, in connection with the Weider Acquisition to increase the term loan amount by $140 million. The Company also amended the Credit Agreement on
February 17, 2004, which changed the total leverage ratio covenant from 6.25 to 6.50 for the December 2003 and March 2004 quarters. Additionally, the Credit Agreement was amended on June 25, 2004, which changed the Companys total leverage
ratio covenant and certain interest coverage ratio covenants through June 2006. As a result of the amendment, the total leverage ratio covenant is 6.95 through March 2005, 6.75 from June 2005 to March 2006 and 6.50 from June 2006 and thereafter. The
interest coverage ratio remains at 1.75 from March 2004 and thereafter.



(a) Borrowings under the term loan commitments are payable in varying quarterly installments from July 2001 through April 2007. We are required to make Excess Cash Flow payments (as defined), which will be applied
ratably to the then outstanding term loans. Included in the current portion of the term loan in the accompanying Consolidated Balance Sheet is $3,274,000 of required Excess Cash Flow relating to fiscal 2003. There was no required Excess Cash Flow
payment for fiscal 2004.



(b) Revolving
Credit Commitment  The Credit Agreement also provides for additional borrowings up to a maximum of $60 million. This commitment, which expires in April 2006, allows funds to be borrowed and repaid from time to time with permanent
reductions in the revolving credit commitment permitted at our option. As of March 29, 2004, no amounts were outstanding under the revolving credit facility.



(c) Commitment Fees  We are required to pay a commitment fee ranging from 3/8% to 1/2% of the unused portion of the
revolving commitment. Commitment fee payments under the Credit Agreement totaled $292,000, $379,000, and $229,000 for fiscal 2002, 2003 and 2004, respectively.



(d) Guarantees, Collateral and Financial Covenants  Our obligations under the Credit Agreement are guaranteed by all of
our subsidiaries and by Media. The obligations and such guarantees are secured by (i) a pledge by the Company of all of the capital stock of its subsidiaries, (ii) a pledge of all of the capital stock of the Company and (iii) a security interest in
substantially all of the assets of the Companys subsidiaries.



In addition to the above, the Credit Agreement also contains certain covenants that, among others, restrict paying cash dividends, incurring additional indebtedness, entering into certain mergers or consolidations, making capital
expenditures and selling or otherwise disposing of assets. We are also required to satisfy certain financial tests relating to operating cash flow and debt coverage ratios.



As permitted under the covenants of the Credit Agreement, management fees to affiliates totaled $750,000 for fiscal years
2002 and 2003. These fees are included in selling, general and administrative expenses. In connection with the recapitalization of the Company as discussed in footnote 10, our management fees increased to $2 million per annum for fiscal 2004.



The effective interest rate under the Credit Agreement,
including amounts borrowed under the term loan commitments and revolving credit commitment, as of March 29, 2004 was 3.9% and the weighted average effective interest rates for the fiscal years 2002, 2003 and 2004 were 7.5%, 5.0%, and 4.0%,
respectively.



(7) Subordinated Indebtedness



On May 7, 1999, the Company issued $250,000,000 in aggregate principal
amount of 10.25% Senior Subordinated Notes, which mature on May 1, 2009. Interest on these notes is payable in semi-annual installments on May 1st and November 1st of each year. These notes are redeemable at our option at prices ranging from 105.1%
to 100% of their face amount after April 2004. The indenture under which the notes were issued includes certain restrictive covenants that limit, among other things, our ability to incur indebtedness, give guarantees, pay dividends, make
investments, sell assets and merge or consolidate.



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On February 14, 2002, the Company issued $150,000,000 in aggregate principal amount of 10.25% Series B
Senior Subordinated Notes due 2009 through a private placement. The gross proceeds from the offering were $150,750,000 including the premium on the notes. The Company used the gross proceeds of the offering to (a) make a $75,375,000 distribution to
EMP Group LLC, (b) prepay $68,375,000 of the term loans under the Credit Agreement and (c) pay transaction costs. The notes are unsecured and subordinated in right of payment to all our existing and future senior indebtedness. The notes rank equally
with all our existing and future senior subordinated indebtedness. The notes are guaranteed on a senior subordinated basis by all our current subsidiaries.



On January 23, 2003, we issued $150,000,000 in aggregate principal amount of 8.875% Senior Subordinated Notes due 2011 through a private placement. The
net proceeds from the offering were $145,875,000, including the discount on the notes. We used the net proceeds of the offering to (a) fund the acquisition of Weider Publications LLC, and (b) pay the transaction costs. These notes are unsecured and
subordinated in right of payment to all our existing and future senior indebtedness. The notes rank equally with all our existing and future senior subordinated indebtedness. The notes are guaranteed on a senior subordinated basis by all our current
subsidiaries.



Payments of principal due under the Credit
Agreement (excluding any amounts that may be borrowed under the credit commitment or required to be prepaid under the excess cash flow provision), the subordinated notes and other long-term indebtedness follows:



|            |  |   |        
|----------- |  | - | -------
|Fiscal Year |  |  
|2005        |  | $ | 6,474  
|2006        |  |   | 5,996  
|2007        |  |   | 321,320
|2008        |  |   | 106,602
|2009        |  |   |       
|Thereafter  |  |   | 550,000
|            |  |   |        
|            |  | $ | 990,392
|            |  |   |        



The Company has no
material assets or operations other than investments in its subsidiaries. The subordinated notes are unconditionally guaranteed, on a senior subordinated basis, by all of its domestic subsidiaries. Each domestic subsidiary that will be organized in
the future by the Company, unless such subsidiary is designated as an unrestricted subsidiary, will jointly, severally, fully and unconditionally guarantee the subordinated notes on a senior subordinated basis. Subordinated note guarantees are joint
and several, full and unconditional and general unsecured obligations of the note guarantors. The subordinated note guarantors are the Companys wholly owned domestic subsidiaries. At present, the note guarantors comprise all of the
Companys direct and indirect domestic subsidiaries. Note guarantees are subordinated in right of payment to all existing and future senior debt of the note guarantors, including the Credit Agreement, and are also effectively subordinated to
all secured obligations of note guarantors to the extent of the assets securing such obligations, including the Credit Agreement. Furthermore, the subordinated notes indentures permit note guarantors to incur additional indebtedness, including
senior debt, subject to certain limitations. We have not presented separate financial statements and other disclosures concerning each of the note guarantors, as these disclosures are not applicable under SEC rules and regulations.



So long as the factors set forth in the paragraph immediately above remain
true and correct, under applicable SEC rules and regulations, the Companys note guarantors will not need to individually comply with the reporting requirements of the Securities Exchange Act of 1934 (Exchange Act), nor will the
Company have to include separate financial statements and other disclosures concerning each of the note guarantors in its Exchange Act reports.



(8) Deferred Debt Costs



Certain costs incurred in connection with the issuance of our long-term debt have been deferred and are amortized as part of interest expense over periods
from 1 to 10 years. For fiscal years 2002, 2003 and 2004, amortization of deferred debt costs, which is included in interest expense in the accompanying consolidated statements of income (loss), totaled approximately $3.5 million, $4.9 million and
$6.6 million, respectively.



In connection with the
Companys issuance of $150 million of 10.25% Series B Senior Subordinated Notes due 2009 on February 14, 2002, $7.0 million of issuance costs have been deferred and are being amortized as part of interest expense over the life of the notes. In
connection with our issuance of $150 million of 8.875% Senior Subordinated Notes due 2011 on January 23, 2003, $7.9 million of issuance costs have been deferred and are being amortized as part of interest expense over the life of the notes. In
connection with our increase in the Credit Agreement of $140 million on January 23, 2003, $3.5 million of issuance costs have been deferred and are being amortized as part of interest expense over the life of the Credit Agreement. Additionally, in
connection with



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our Credit Agreement amendment on February 17, 2004, $260,000 of issuance costs have been deferred and were amortized as
part of interest expense over the life of the amendment. This amendment provided for an increase in the leverage ratio from 6.25 to 6.50 for the fiscal quarters ended December 29, 2003 and March 29, 2004.



(9) Restructuring Activities



During the fiscal year ended March 29, 2004, the Company initiated a plan to
relocate the Starand Mira! publications to New York City. The Companys relocation plan involved the termination of 94 employees. This activity resulted in a charge of $2,600,000 for termination benefits and $139,000 for costs
associated with the relocation of existing employees. Through March 29, 2004, the Company has paid termination benefits totaling $2,228,000 and paid $139,000 of costs associated with relocation of existing employees. The Company has an accrual at
March 29, 2004 of $372,000 for the remaining termination benefits associated with this action. These severance benefits will be paid out through October 2004. The Company has completed this restructuring plan.



The following summarizes the activity in the Companys reserve related
to this activity for the fiscal year ended March 29, 2004 (in thousands):



|                     |  |                      |       |              |   |        |                         |  |   |    
|-------------------- |  | -------------------- | ----- | ------------ | - | ------ | ----------------------- |  | - | ---
|                     |  | RestructuringExpense |       | CashPayments |   |        | Balances March 29, 2004
|Accrued liabilities: |  |                      |       |              |   |        |                         |  |   |    
|Severance            |  | $                    | 2,600 |              | $ | (2,228 | )                       |  | $ | 372
|Relocation           |  |                      | 139   |              |   | (139   | )                       |  |   |   
|                     |  |                      |       |              |   |        |                         |  |   |    
|                     |  | $                    | 2,739 |              | $ | (2,367 | )                       |  | $ | 372
|                     |  |                      |       |              |   |        |                         |  |   |    



In connection with the
relocation of Star magazine, the Company entered into an agreement to lease an additional 33,000 square feet in its One Park Avenue building in New York City. The lease term for this additional space is from November 2003 to March 2010. The
annual base rent for this additional space is approximately $940,000.



(10)
Recapitalization of Equity



On April 17, 2003, the
Company completed a series of transactions whereby principals and affiliates of Evercore Partners LLP (Evercore) and Thomas H. Lee Company (T.H. Lee), David J. Pecker (the Chief Executive Officer of the Company), other
members of Company management and certain other investors contributed approximately $434.6 million in cash and existing ownership interests, valued at approximately $73.3 million, of EMP Group LLC, our ultimate parent, to a merger entity which was
then merged with and into EMP Group LLC in exchange for newly issued ownership interests of EMP Group LLC.



Upon completion of the merger, EMP Group LLCs existing limited liability company agreement was amended and restated in its entirety. Under the new
agreement, the board of managers of EMP Group LLC consists of three designees of Evercore, three designees of T.H. Lee, one of whom is subject to Evercores prior approval, and the Chief Executive Officer of American Media, Inc., who is subject
to the approval of Evercore and T.H. Lee. While Evercore and T.H. Lee jointly control EMP Group LLC, the new limited liability company agreement requires that certain significant actions of EMP Group LLC be approved by David J. Pecker and a majority
of the other investors of EMP Group LLC.



In addition, in
connection with the merger, David J. Pecker and American Media, Inc. entered into a new employment agreement, which governs the terms of David J. Peckers employment as Chief Executive Officer of American Media, Inc. for a term of five years.
Also, American Media, Inc., THL Managers V, L.L.C., an affiliate of T.H. Lee, and Evercore Advisors L.P., an affiliate of Evercore, have entered into a Management Agreement pursuant to which THL Managers V, L.L.C. and Evercore Advisors L.P. will
provide certain management and advisory services to American Media, Inc. for an annual fee of $1.0 million each. The fee of this Management Agreement is amortized to expense by the Company over the annual period. Additionally, $2.3 million of
management bonuses were granted as part of the recapitalization. These bonuses were charged to expense by the Company during the fiscal year ended March 29, 2004, and were fully funded by the proceeds from the recapitalization. Additionally, the
intercompany payable to American Media, Inc. was eliminated as a result of the recapitalization.



(11) Frontline Marketing



On November 27, 2000, we sold Frontline Marketing, Inc. (FMI) to the minority shareholder for a $2.5 million note receivable (the FMI Note). The FMI Note initially had a short-term component of $500,000, which amount
has been paid in full, and a long



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term component of $2,000,000 which is payable to us based on defined cash flow of FMI. The FMI Note bears interest at 9%.
Due to the uncertainty of FMIs ability to generate defined cash flow for the repayment of the FMI Note, the Company initially reserved $1.6 million of the FMI Note. No gain or loss was initially recognized on this transaction. As of March 29,
2004, the FMI Notes balance was $1.4 million due to payments received from FMI. During the fiscal years ended March 25, 2002 and March 31, 2003, the Company reversed $0.5 million and $0.6 million, respectively, of the original $1.6 million
reserve based on managements belief that FMI will generate the cash flow to make future payments on this amount. The reversal of this reserve is a reduction in selling, general and administrative expenses for the fiscal years ended March 25,
2002 and March 31, 2003.



(12) Non-Cash Compensation Charge



The Companys common stock is owned by Media and all of Medias
common stock is owned by EMP Group LLC. The ownership interests in EMP Group LLC are represented by units of various classes. The units of EMP Group LLC are exchangeable for the common stock of Media under certain circumstances and with
restrictions. Certain members of management purchased non-voting units in EMP Group LLC at an amount below appraised fair market value. Additionally, certain members of management were granted another non-voting class of units in EMP Group LLC,
which vest over a five-year period, at below appraised fair market value. Included in selling, general and administrative expense in the accompanying consolidated statements of income (loss) for each of the fiscal years ended 2002, 2003 and 2004 is
a non-cash compensation charge of $91,000, $91,000 and $66,000, respectively, which represents the vested portion of the appraised fair value of these units over the amount paid. As of March 29, 2004, these units were fully vested and the remaining
portion of the appraised value of these units over the amount paid was charged to expense during fiscal 2004. Since these expenses result from a transaction in the ownership interests of EMP Group LLC, such amounts have been treated as a
contribution to capital.



(13) Anthrax Incident



The Companys Boca Raton headquarters, which housed substantially all
of the Companys operations (including its photo, clipping and research libraries), executive offices and certain administrative functions, was closed on October 7, 2001 by the Palm Beach County Department of Health when traces of anthrax were
found on a computer keyboard following the death of a photo editor of the Sunfrom inhalation anthrax. The Company entered into a two-year lease for a 53,000 square foot facility two blocks from its current Boca Raton headquarters which was
due to expire in February 2004. During February 2004, we extended this lease until 2007. In February 2002, the Palm Beach County of Health quarantined the building for an additional 18 months. During fiscal 2002, the Company changed the estimated
useful lives of the buildings contents to zero and prospectively changed the depreciation. This change in estimate resulted in an additional $8.5 million of depreciation expense in fiscal 2002.



In May 2002, the Company and its insurance carrier reached a final compromise
regarding the Companys insurance claim and the Company received a compromised payment. The insurance proceeds resulted in a net gain on the insurance settlement of $7,613,000 for the fiscal year ended March 31, 2003. During the fiscal year
ended March 31, 2003, the Company incurred costs for maintaining the Boca facility such as security and utilities, which have been netted against the gain on insurance settlement. The Company expensed these costs as incurred.



On April 17, 2003, the Company sold its anthrax-contaminated headquarters in
Boca Raton, Florida to 5401 Broken Sound LLC. 5401 Broken Sound LLC paid $40,000 as consideration for the transfer of ownership. During fiscal year ended March 29, 2004, compensation expense totaling $200,000 was paid in connection with the sale of
this facility and was recorded as loss on insurance settlement in the consolidated statement of income.



(14) Benefit Plans



Substantially all of the Companys full-time employees are eligible to participate in a defined contribution retirement plan. The expense recognized for this plan was approximately $230,000, $396,000 and $540,000 in fiscal years 2002,
2003 and 2004, respectively.



(15) Investment in Unconsolidated Subsidiary



In June 2001, the Company formed a joint venture
(The Joint Venture) with Fashion Wire Daily, Inc. (FWD) to publish and distribute a fashion magazine titled Style 24/7 for a four issue test period. As of March 29, 2004, all issues have been completed and The
Joint Venture has been terminated. The Company has no remaining debts or obligations for The Joint Venture as of March 29, 2004. The Company and FWD each had a 50 percent ownership interest in The Joint Venture. Pursuant to the terms of the joint



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venture agreement, the Company and FWD each contributed $669,000 to The Joint Venture. The Company accounted for its
investment under the equity method of accounting since it had no controlling influence over The Joint Venture. The Joint Venture had a net loss of $1,104,000, $16,000 and $0 for the fiscal years ended 2002, 2003 and 2004, respectively, of which 50
percent is included in our consolidated statements of income (loss).



(16)
Commitments and Contingencies



Litigation



Various suits and claims arising in the ordinary course of business have
been instituted against us. We have insurance policies available to recover potential legal costs. We periodically evaluate and assess the risks and uncertainties associated with litigation independent from those associated with our potential claim
for recovery from third party insurance carriers. At present, in the opinion of management, after consultation with outside legal counsel, the liability resulting from litigation, if any, will not have a material effect on our consolidated financial
statements.



Printing Agreement



During fiscal 2003, we successfully renegotiated a new 13-year printing
agreement expiring in fiscal 2016 with an unrelated printer to print National Enquirer, Star, Globe, National Examiner, Weekly World News, Sun, Mira, Country Weeklyand Street Performance Compact.We have also assumed the Weider
printing agreement expiring in fiscal 2006 with an unrelated printer to print Shape, Muscle and Fitness, Muscle and Fitness Hers, Mens Fitness, Fit Pregnancy,and Natural Health.Based on current pricing and production levels,
these contracts, which require pricing adjustments based on changes in the Consumer Price Index, are estimated to cost approximately $494.4 million over their remaining life as follows:



|            |  |   |        
|----------- |  | - | -------
|Fiscal Year |  |  
|2005        |  | $ | 64,821 
|2006        |  |   | 61,684 
|2007        |  |   | 48,053 
|2008        |  |   | 35,378 
|2009        |  |   | 35,907 
|Thereafter  |  |   | 248,576
|            |  |   |        
|            |  | $ | 494,419
|            |  |   |        



Operating Leases



Minimum annual commitments under non-cancelable
operating leases at March 29, 2004 are as follows:



|            |  |   |       
|----------- |  | - | ------
|Fiscal Year |  |  
|2005        |  | $ | 6,304 
|2006        |  |   | 4,737 
|2007        |  |   | 3,870 
|2008        |  |   | 1,630 
|2009        |  |   | 1,144 
|Thereafter  |  |   | 1,142 
|            |  |   |       
|            |  | $ | 18,827
|            |  |   |       



Rent expenses under
real property and equipment leases were $2.2 million, $3.7 million and $5.2 million for fiscal 2002, 2003 and 2004, respectively.



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(17) Valuations and Qualifying Account



The table below summarizes the activity in the valuation account, allowance for possible uncollectible accounts receivable
for the periods indicated:



|                                             |  |                              |       |                    |   |                                                   |  |   |                             |   |  |                        |      |   |  |   |      
|-------------------------------------------- |  | ---------------------------- | ----- | ------------------ | - | ------------------------------------------------- |  | - | --------------------------- | - |  | ---------------------- | ---- | - |  | - | -----
|                                             |  | Balance, Beginning of Period |       | Charges to Expense |   | Purchase Accounting Additions, (Utilization), Net |  |   | Deductions, Write-Offs, Net |   |  | Balance, End of Period
|Trade Accounts Receivable Valuation Account: |  |                              |       |                    |   |                                                   |  |   |                             |   |  |                        |      |   |  |   |      
|For the fiscal year ended March 25, 2002     |  | $                            | 366   |                    | $ | 261                                               |  | $ | (65                         | ) |  | $                      | (149 | ) |  | $ | 413  
|For the fiscal year ended March 31, 2003     |  | $                            | 413   |                    | $ | 772                                               |  | $ | 3,302                       |   |  | $                      | (587 | ) |  | $ | 3,900
|For the fiscal year ended March 29, 2004     |  | $                            | 3,900 |                    | $ | 123                                               |  | $ | (2,941                      | ) |  | $                      | (202 | ) |  | $ | 880  



(18) Selected Quarterly Financial
Data (Unaudited)



Quarterly financial data for fiscal 2004
and 2003 is as follows (table in thousands):



|                   |  |         |         |         |   |         |  |            |         |       |   |         |  |   |        
|------------------ |  | ------- | ------- | ------- | - | ------- |  | ---------- | ------- | ----- | - | ------- |  | - | -------
|                   |  | Q1 2004 |         | Q2 2004 |   | Q3 2004 |  | Q4 2004    |         | Total
|Operating revenues |  | $       | 124,974 |         | $ | 126,873 |  | $          | 118,332 |       | $ | 145,493 |  | $ | 515,672
|Operating income   |  |         | 28,890  |         |   | 27,058  |  |            | 21,305  |       |   | 36,348  |  |   | 113,601
|Net income         |  |         | 5,382   |         |   | 5,938   |  |            | 692     |       |   | 11,551  |  |   | 23,563 
|                   |  |         |         |         |  
|                   |  | Q1 2003 |         | Q2 2003 |   | Q3 2003 |  | Q4 2003(1) |         | Total
|Operating revenues |  | $       | 88,823  |         | $ | 92,092  |  | $          | 90,670  |       | $ | 128,148 |  | $ | 399,733
|Operating income   |  |         | 24,964  |         |   | 25,407  |  |            | 26,034  |       |   | 40,251  |  |   | 116,656
|Net income         |  |         | 8,052   |         |   | 7,986   |  |            | 6,915   |       |   | 12,463  |  |   | 35,416 

---

|(1) | Q4 2003 includes operations of Weider for eight weeks and a $7.6 million gain on insurance settlement.
|--- | ------------------------------------------------------------------------------------------------------



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Item 9.Changes In and Disagreements with Accountants on Accounting and Financial Disclosure



None



Item 9A.Evaluation of Disclosure Controls and Procedures



As of March 29, 2004, the Company performed an evaluation, under the supervision and participation of management, of the effectiveness of the design and
operation of its disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that these disclosure controls are effective in
providing them with material information relating to the Company as required to be disclosed in the Companys periodic filings with the Commission.



Appearing immediately following the signatures section of this annual report are certificates by our Chief Executive Officer and Chief Financial Officer,
which are required by Section 302 of the Sarbanes-Oxley Act of 2002. The information set forth in this Item 14 should be read in conjunction with these Section 302 certificates. Additionally, our Chief Executive Officer and Chief Financial Officer
have provided certain certificates to the Commission pursuant to Section 906 of Sarbanes-Oxley. These certificates are filed as exhibits to this annual report.



PART III



Item 10.Directors and Executive Officers



The following table sets forth the directors and executive officers of Holdings and the Company after the Recapitalization as of June 28, 2004. All officers serve at the pleasure of the applicable Board of Directors.



|                  |  |     |  |                                                                                                                |  |                          
|----------------- |  | --- |  | -------------------------------------------------------------------------------------------------------------- |  | -------------------------
|Name              |  | Age |  | Position(s)                                                                                                    |  | Director or Officer Since
|David J. Pecker   |  | 52  |  | Chairman, Chief Executive Officer, Chief Operating Officer, President and Director of Holdings and the Company |  | May 1999                 
|Austin M. Beutner |  | 44  |  | Director of Holdings and the Company                                                                           |  | May 1999                 
|Neeraj Mital      |  | 37  |  | Director of Holdings and the Company                                                                           |  | May 1999                 
|Lucille Salhany   |  | 57  |  | Director of Holdings and the Company                                                                           |  | April 2003               
|Anthony J. DiNovi |  | 41  |  | Director of Holdings and the Company                                                                           |  | April 2003               
|Soren L. Oberg    |  | 33  |  | Director of Holdings and the Company                                                                           |  | April 2003               
|Michael Garin     |  | 57  |  | Director of Holdings and the Company                                                                           |  | April 2003               
|John A. Miley     |  | 48  |  | Executive Vice President and Chief Financial Officer of Holdings and the Company                               |  | October 1999             
|Michael B. Kahane |  | 43  |  | Senior VP and General Counsel                                                                                  |  | August 2001              
|Michael J. Porche |  | 47  |  | Chief Executive Officer and President of DSI                                                                   |  | May 1999                 
|Bonnie Fuller     |  | 47  |  | Executive VP and Chief Editorial Director                                                                      |  | July 2003                



David J. Peckerbecame Chairman, Chief Executive Officer, Chief Operating Officer, President and a Director of Holdings and the Company upon consummation of the 1999 Acquisition on May 7, 1999. Prior to that, Mr. Pecker had been the Chief Executive Officer
since 1992, and President since 1991, of Hachette. Prior to 1991, he was Executive Vice President/Publishing and Chief Operating and Chief Financial Officer of Hachette. Mr. Pecker has 25 years of publishing industry experience having worked as the
Director of Financial Reporting at CBS, Inc. Magazine Group and as the Vice President and Controller of Diamandis Communications Inc. Mr. Pecker currently serves as a director of the Magazine Publishers Association of America, and as a
director of the Madison Square Boys and Girls Club of New York. Mr. Pecker received an honorary doctorate degree in Commercial Science from Pace University in 1998, and is a director of the Federal Drug Enforcement Foundation.



Austin M. Beutneris co-founder and President of Evercore, Chairman of
Evercore Capital Partners, and Chairman and CEO of Evercore Ventures. From 1994 to 1996, Mr. Beutner was Chief Executive Officer and President of the U.S. Russia Investment Fund, and in January 1997, Mr. Beutner was named Vice Chairman of its Board
of Directors. Before his affiliation with the U.S. Russia Investment Fund, he was a General Partner of The Blackstone Group. Mr. Beutner is currently a director of Business.com, Continental Energy Services, Inc., eCompanies L.L.C., Telenet Holdings
N.V. and Vertis, Inc. He also serves as a Trustee of the California Institute of the Arts and is a member of the Council on Foreign Relations.



Neeraj Mitalis a Senior Managing Director of Evercore. Prior to joining Evercore, Mr. Mital was at The Blackstone Group from 1992 to 1998, most
recently as a Managing Director. Prior to joining The Blackstone Group, he was at Salomon Brothers Inc.



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Lucille Salhanyis currently President and Chief Executive Officer of her own consulting company,
JHMedia. Additionally, Ms. Salhany is currently a partner in a film distribution company, Echo Bridge Entertainment. Ms. Salhany has consulted for such clients as Macys, NASA and Chris Craft Industries. From 1999 to March 2002 Ms. Salhany held
the position of President and Chief Executive Officer of LifeFX Networks, Inc. In 2002, LifeFX Networks filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code. In 1995, Ms. Salhany launched UPN (United Paramount
Network). Prior to UPN, Ms. Salhany was Chairman of Twentieth Television and Fox Broadcasting from January 1993 to July 1994. Ms. Salhany is a Director of the Hewlett-Packard Company and is a trustee of Emerson College and Hillside School.



Anthony J. DiNoviis a Managing Director of Thomas H.
Lee Partners, L.P., a Boston- based private equity firm with $12 billion of assets under management. Prior to joining T.H. Lee in 1988, Mr. DiNovi was in the corporate finance departments of Goldman, Sachs & Co. and Wertheim Schroder & Co.,
Inc. Mr. DiNovi currently serves as a director of Endurance Specialty Holdings, Inc.; Eye Care Centers of America, Inc.; FairPoint Communications, Inc.; Fisher Scientific International, Inc.; National Waterworks, Inc.; US LEC Corporation; Vertis,
Inc., Michael Foods, Inc. and various private corporations. Mr. DiNovi holds an A.B. in Social Studies from Harvard College and an M.B.A. from Harvard Graduate School of Business Administration.



Soren L. Obergis a Vice President of Thomas H. Lee Partners, L.P., a
Boston based private equity firm with $12 billion of assets under management. Prior to joining T.H. Lee in 1993, Mr. Oberg worked at Morgan Stanley & Co., Inc. in the Merchant Banking Division. Mr. Oberg holds an A.B. in Applied Mathematics from
Harvard College and an M.B.A. from Harvard Graduate School of Business Administration. Mr. Oberg serves on the board of National Waterworks, Inc. Vertis, Inc. and various private corporations.



Michael Garinis the Chief Executive Officer of Central European Media
Enterprises, which operates the leading group of TV networks and stations across Central and Eastern Europe. Mr. Garin is a director and member of the Audit Committees of American Media, Inc. and Cablecom (Switzerland), and AMC Theatres where he is
also a member of the Compensation Committee; and is a Deputy Director of Canal+ Nordic (Scandinavia). From 1999 to 2001, Mr. Garin was President and Chief Operating Officer of Digital Convergence Corporation, an Internet technology company. In March
2002, Digital Convergence filed a voluntary petition for bankruptcy under Chapter 7 of the U.S. Bankruptcy Code. Previously, Mr. Garin spent 11 years as the Global Head of Media, Telecommunications and Information Services Investment Banking at ING
Barings, LLC. Mr. Garin co-founded Lorimar Telepictures Corporation in 1978 and served as a Director until 1988. Mr. Garin also worked in numerous roles for Time Inc.



John A. Mileyjoined the Company in October 1999 as Executive Vice President and Chief Financial Officer. Prior to
joining the Company, Mr. Miley held the position of Vice President-Controller at Hachette. Mr. Miley has over 25 years of publishing industry experience.



Michael Kahaneis Executive Vice President, Corporate Secretary and General Counsel to the Company. Prior to joining the Company, Mr. Kahane was
Executive Vice President and General Counsel to Globe Communications Corp. and, prior to that, Mr. Kahane was a partner in the Chicago law firm of Deutsch, Levy & Engel, Chtd., where Mr. Kahane specialized in representing print and broadcast
media clients.



Michael J. Porcheis the Chief Executive
Officer and President of DSI. Prior to joining the Company, Mr. Porche worked for Globe Communications Corp. for six years in various positions including District and Regional Manager. American Media Operations, Inc. acquired Globe Communications
Corp. on November 1, 1999.



Bonnie Fuller joined the
Company in July 2003 as Executive Vice President and Chief Editorial Director. Prior to joining the Company, Ms. Fuller was the Editor In Chief of US Weekly, Glamour, Marie Claire and YM. Ms. Fuller is a graduate of the
University of Toronto.



Audit Committee Financial Expert



Our Board of Directors has determined that Michael
Garin, a member of the audit committee of our Board of Directors, is an audit committee financial expert as defined by the SEC for purposes of this Item 10 and that Mr. Garin is independent, as that term is used in Item 7(d)(3)(iv) of Schedule 14A
under the Exchange Act.



Code of Ethics



We have adopted a code of ethics that applies to our Chairman of the Board
and Chief Executive Officer (principal executive officer), our Executive Vice President and Chief Financial Officer (principal financial officer) and Vice President-Finance (principal accounting officer). The full text of our code of ethics has been
filed with the SEC as Exhibit 14 to this Annual Report on Form 10-K. As of the date hereof, there has not been any amendment or waiver of any provision of the code of ethics since it was adopted.



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Item 11.Executive Compensation



The following table sets forth the compensation paid by us to our chief executive officer and our three most highly compensated executive officers at March 29, 2004 for services rendered during the fiscal years 2004,
2003 and 2002.



Summary Compensation Table



|                                                            |  |              |  |                             |  |                       |           |  |                               |  |                           |  |                            |          
|----------------------------------------------------------- |  | ------------ |  | --------------------------- |  | --------------------- | --------- |  | ----------------------------- |  | ------------------------- |  | -------------------------- | ---------
|                                                            |  |              |  | Annual Compensation         |  | Long-Term Options     |           |  |                              
|Name and Principal Position                                 |  | Fiscal Year  |  | Salary ($)                  |  | Bonus ($)             |           |  | Other Annual Compensation ($) |  | Shares Underlying Options |  | All Other Compensation ($) |          
|David J. PeckerChairman, President &Chief Executive Officer |  | 200420032002 |  | 1,500,0001,347,1151,407,692 |  | 1,600,00000           | (1)       |  | 000                           |  | 000                       |  | 51,83253,619138,392        | (3)(3)(3)
|                                                            |  |              |  |                             |  |                      
|John A. MileyExecutive VP &Chief Financial Officer          |  | 200420032002 |  | 250,000250,000250,000       |  | 320,000200,000250,000 | (1)(2)(2) |  | 000                           |  | 000                       |  | 005,278                    | (3)      
|                                                            |  |              |  |                             |  |                      
|Michael B. KahaneSenior VP & General Counsel                |  | 200420032002 |  | 431,539300,000295,692       |  | 375,00075,000269,635  | (1)(2)(2) |  | 000                           |  | 000                       |  | 000                        |          
|                                                            |  |              |  |                             |  |                      
|Michael J. PorcheChief Executive Officer& President of DSI  |  | 200420032002 |  | 251,923225,000225,000       |  | 135,00075,00075,000   | (1)(2)(2) |  | 000                           |  | 000                       |  | 000                        |          
|                                                            |  |              |  |                             |  |                      
|Bonnie FullerExecutive VP & Chief Editorial Director        |  | 2004         |  | 1,096,154                   |  | 500,000               |           |  | 0                             |  | 0                         |  | 4,885                      | (4)      

---

|(1) | Amounts of $1,600,000, $130,000, $175,000 and $25,000 paid to Messrs. Pecker, Miley, Kahane and Porche, respectively, relates to bonuses granted as part of the recapitalization of
the Company on April 17, 2003. The remaining bonus amounts of $190,000 and $110,000 paid to Messrs. Miley and Porche relate to annual bonuses. The remaining bonus amount of $200,000 paid to Mr. Kahane relates to a one-time transaction bonus.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Comprised of annual bonus for Messrs. Miley, Kahane and Porche.
|--- | ---------------------------------------------------------------

|(3) | Amounts related to Messrs. Pecker and Miley relate to taxable employment benefits, including reimbursements for travel and other expenses.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Amount related to Mrs. Fuller relates to taxable employment benefits, including reimbursement for COBRA premiums.
|--- | -----------------------------------------------------------------------------------------------------------------



All of our common stock is owned by Media and all of Medias common
stock is owned by EMP Group LLC (the LLC). Equity interests in the LLC are owned by Evercore, Thomas H. Lee and certain investors, including Mr. Pecker and certain members of management. For a discussion of the distributions Mr. Pecker
and the other Executive Officers listed above may receive as the owners of certain units in the LLC as compensation for their employment, see Item 13. Certain Relationships and Related Transactions.



Our executive officers are elected by our Board of Directors and serve at the
discretion of our Board of Directors or pursuant to an employment agreement. In February 2003, Media entered into an amended and restated employment agreement with Mr. Pecker that has a five-year term expiring April 17, 2008 and, after the initial
term, will be automatically extended each year for successive one-year periods, unless either party provides 60 days prior written notice before the next extension date. In April 2003, we paid Mr. Pecker a one-time bonus in the amount of
$1,600,000 pursuant to the employment agreement. During his term of employment, Mr. Pecker is entitled to (i) a base salary equal to $1,500,000, (ii) annual bonus opportunity of $250,000 (the Discretionary Bonus) and (iii) certain other
customary employee benefits. Under Mr. Peckers previous employment agreement, the LLC paid approximately $4.2 million to Mr. Pecker as make-whole payments related to compensation forfeited from his previous employer, portions of which were
paid in fiscal 1999 and 2001. Upon termination of employment by Media without cause or by Mr. Pecker for good reason, Mr. Pecker is entitled to the following subject to certain restrictions: (a) continued payment of base salary and continued health,
life insurance and disability benefits until the latter of (i) twelve months following such termination, or (ii) April 17, 2008; (b) immediate vesting of plan benefits; (c) outplacement services for 12 months following such termination; (d) the
Discretionary Bonus for the year in which termination occurs (determined by the Company based on the achievement of relevant performance criteria), and (e) a golden parachute excise tax gross-up payment, if applicable, in connection with a
change in control (as defined in the employment agreement); and (f) such employee benefits as to which Mr. Pecker may be entitled under the employee benefit plans and arrangements of Media.



Media is party to an employment agreement with Mr. Miley, which calls for (i)
base salary of $250,000, (ii) annual bonus



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opportunity of $250,000 and (iii) certain other customary employee benefits. Media is party to an employment agreement
with Mr. Kahane, which calls for (i) base salary of $500,000, (ii) annual bonus opportunity of $500,000 and (iii) certain other customary employee benefits. The term of Mr. Kahanes contract expires on July 31, 2006. Media is party to an
employment agreement with Mr. Porche, which calls for (i) base salary of $325,000, (ii) annual bonus opportunity of $175,000 and (iii) certain other customary employee benefits. The term of Mr. Porches contract expires on December 21, 2008.



Compensation Committee Interlocks and Insider Participation



Our Compensation Committee is comprised of Mr. Pecker and Mr. Beutner.
The Compensation Committee of our Board of Directors determines compensation policies applicable to our executive officers. Mr. Pecker is an executive officer of the Company.



Compensation of Directors



We reimburse directors for out-of-pocket travel expenses incurred in connection with attending meetings of the Board of Directors. In addition, Ms.
Salhany receives a fee of $2,500 per Board meeting attended.



Item 12.Security Ownership of Certain Beneficial Owners and Management



All of our common stock is owned by Media and all of Medias common stock is owned by the LLC. Equity interests in the LLC are owned by Evercore,
T.H. Lee and certain investors, including Mr. Pecker, as well as certain members of management. Pursuant to the LLC Agreement (as defined herein), the board of managers of EMP Group LLC consists of three designees of Evercore, three designees of
T.H. Lee, one of whom is subject to Evercores prior approval, and the Chief Executive Officer of American Media, Inc., who is subject to the approval of Evercore and T.H. Lee. While Evercore and T.H. Lee jointly control EMP Group LLC, the
limited liability company agreement requires that certain significant actions of EMP Group LLC be approved by David J. Pecker and a majority of the other investors of EMP Group LLC. See Item 13. Certain Relationships and Related
Transactions.



The following table presents, as of June
28, 2004, information relating to the beneficial ownership of the LLC (the parent of the Company and Media), held by each director of the Company, by each executive officer of the Company named in the Summary Compensation Table above and by all of
the executive officers and directors of the Company as a group.



|                                                             |  |                |  |                 |  |                  |  
|------------------------------------------------------------ |  | -------------- |  | --------------- |  | ---------------- | -
|Name and Address of Beneficial Owner                         |  | Title of Class |  | Number of Units |  | Percent of Class |  
|Evercore Partners II LLC(1),(2)                              |  | Class A        |  | 119,930         |  | 23.6             | %
|65 East 55th Street                                          |  |                |  |                 |  |                  |  
|New York, New York 10022                                     |  |                |  |                 |  |                  |  
|Austin M. Beutner(1),(2)                                     |  |                |  |                 |  |                  |  
|                                                             |  |                | 
|Thomas H. Lee Equity Fund V. L.P.(2),(3)                     |  | Class A        |  | 301,946         |  | 59.5             | %
|75 State Street                                              |  |                |  |                 |  |                  |  
|Boston, MA 02109                                             |  |                |  |                 |  |                  |  
|Anthony DiNovi(2),(3)                                        |  |                |  |                 |  |                  |  
|Soren Oberg(2),(3)                                           |  |                |  |                 |  |                  |  
|                                                             |  |                | 
|David J. Pecker                                              |  | Class A        |  | 25,081          |  | 4.9              | %
|                                                             |  | Class B        |  | 58,039          |  | 80.0             | %
|John A. Miley                                                |  | Class A        |  | 949             |  | .2               | %
|                                                             |  | Class B        |  | 900             |  | 1.2              | %
|Michael B. Kahane                                            |  | Class A        |  | 286             |  | .1               | %
|                                                             |  | Class B        |  | 675             |  | .9               | %
|Michael J. Porche                                            |  | Class A        |  | 151             |  |                 |  
|                                                             |  | Class B        |  | 330             |  | .5               | %
|Bonnie Fuller                                                |  | Class A        |  |                |  |                 |  
|                                                             |  | Class B        |  | 970             |  | 1.3              | %
|All executive officers and directors as a group (10 persons) |  | Class A        |  | 448,343         |  | 88.3             | %
|                                                             |  | Class B        |  | 60,914          |  | 83.9             | %

---

|(1) | Class A Units shown as beneficially owned by Evercore Partners II LLC are held by Evercore Capital Partners II and Evercore Co-Investment Partnership II L.P. Evercore Partners II
LLC is the general partner of Evercore Capital Partners II L.P., and the managing member of Evercore Co-Investment G.P. II LLC (which in turn is the general partner of Evercore Co-Investment Partnership II L.P.). The managing members of Evercore
Partners II LLC include Mr. Beutner, who also is a director of Media and the Company. Mr. Beutner may be deemed to share beneficial ownership of the Class A Units shown as beneficially owned by Evercore Partners II LLC. Mr. Beutner disclaims
beneficial ownership of such units.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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|(2) | The LLC Agreement provides that the LLC will be managed by a Board of Managers, a majority of which will be appointed by Evercore and T.H. Lee. All action by such Board of Managers
is made by a vote of the majority of each of the following: (i) the Board of Managers, (ii) the managers appointed by Evercore, and (iii) the managers appointed by T.H. Lee. In addition, Evercore and T.H. Lee have the right to appoint a majority of
the Board of Directors of Media.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Class A Units shown as beneficially owned by Thomas H. Lee Equity Fund V, L.P. are held by Thomas H. Lee Equity Fund V., L.P., Thomas H. Lee Parallel Fund V, L.P., Thomas H. Lee
Cayman Fund V, L.P., State Street Bank and Trust Company as Trustee under the 1997 Thomas H. Lee Nominee Trust, Thomas H. Lee Investors Limited Partnership, Putnam Investments Employees Securities Co. I LLC, Putnam Investments Employees
Securities Co. II LLC, and Putnam Investments Holdings, LLC. Mr. DiNovi is a managing director of Thomas H. Lee Advisors, LLC, the general partner of Thomas H. Lee Partners, L.P. Mr. Oberg is a Vice President of Thomas H. Lee Partners, L.P. Each of
Messrs. DiNovi and Oberg disclaims beneficial ownership of any of the Class A Units referred to above, except to the extent of their pecuniary interest therein.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Unless otherwise indicated, beneficial owners listed above may be contacted at the Companys corporate address at 1000
American Media Way, Boca Raton, FL 33464. Under the rules of the SEC, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or to direct the voting of such security, or
investment power, which includes the power to dispose of or to direct the disposition of such security. A person is also deemed to be the beneficial owner of any securities of which that person has the right to acquire beneficial ownership within 60
days. Under these rules, more than one person may be deemed to be a beneficial owner of the same securities and a person may be deemed to be a beneficial owner of securities as to which that person has no beneficial interest.



Item 13.Certain Relationships and Related Transactions



As part of the Recapitalization, Evercore, T.H. Lee and the other investors and Media, entered into an amended and restated LLC Agreement (the LLC
Agreement). Interests in the LLC are represented by units of two classes. Evercore, T.H. Lee and the other investors, including Mr. Pecker and certain other members of management, own Class A Units. Class A Units are the only units with voting
power. The other class of units, Class B Units, is owned by Mr. Pecker and other members of management. Holders of Class B Units are eligible to share in the profits of the LLC, pro rata, only after all the holders of the Class A Units have received
the return of their aggregate investment in such classes of units.



The units of the LLC are exchangeable for the common stock of Media under certain circumstances, including pursuant to demand and piggyback registration rights granted to Evercore and certain other investors, including Mr. Pecker, under the
LLC Agreement. The LLC Agreement grants each investor certain demand registration rights with respect to common stock of Media, the exercise of which, in general, is controlled by Evercore and grants unlimited piggyback registration rights.



In general, the investors, including Mr. Pecker, may not
transfer their interests in the LLC without the consent of Evercore and T.H. Lee after the exchange of units of the LLC into common stock of media. Below a certain ownership percentage, if Evercore transfers its common stock of Media, all the other
investors are required to transfer a pro rata number of securities on the same terms as the Evercore transfer.



Under the LLC Agreement, the board of managers of the LLC consists of (i) three designees of Evercore, (ii) three designees of T.H. Lee, one of whom is
subject to Evercores prior approval, and (iii) the Chief Executive Officer of the Company, who is subject to the approval of Evercore and T.H. Lee. While Evercore and T.H. Lee jointly control the LLC, the LLC Agreement requires that certain
significant actions of the LLC be approved by Mr. Pecker and a majority of the other co-investors.



In addition, in connection with the Recapitalization, Mr. Pecker and the Company entered into a new employment agreement, which governs the terms of Mr.
Peckers employment as Chief Executive Officer of the Company for a term of five years. Also, the LLC, the Company, THL Managers V, an affiliate of Evercore, and Evercore Advisors L.P., an affiliate of Evercore, have entered into a Management
Agreement pursuant to which THL Managers V, LLC and Evercore Advisors L.P. will provide certain management and advisory services to the Company. Each will receive $1.0 million annually for these certain management services.



On January 23, 2003, the Company and LLC (the Buyers) acquired
Weider Publications LLC (the Acquisition), a newly formed company to which the magazine business of Weider Publications, Inc. and Weider Interactive Networks, Inc. were contributed from Weider Health and Fitness, Weider Health and
Fitness LLC and Weider Interactive Networks, Inc. (the Sellers). The aggregate purchase price was $357,300,000, which includes a post-closing working capital adjustment of $7.3 million.



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Weider Health and Fitness contributed its publications and related assets into a newly formed limited
liability company, Weider Publications LLC, which contained all assets relating to the acquired business, including the capital stock of foreign subsidiaries. This was accomplished pursuant to an asset contribution agreement, which provided that
subsidiaries of Weider Health and Fitness retain liability for pre-closing taxes, specified employee benefit matters and debt for borrowed money related to the acquired business. At the closing, the sellers retained limited liability company
units of Weider Publications LLC were exchanged for limited liability company units of the LLC, Medias parent entity.



Under the purchase agreement, Weider Health and Fitness and its selling subsidiaries will, subject to caps and deductibles, indemnify the buyers for
losses arising from the failure of any representation or warranty made by Weider Health and Fitness and its selling subsidiaries to be true or the failure of any of those entities to perform their obligations under the purchase agreement and the
related documents. Weider Health and Fitness and its selling subsidiaries will also indemnify the buyers for specified excluded liabilities of the acquired business, including pre-closing taxes. Pursuant to the purchase agreement, the buyers will
indemnify Weider Health and Fitness and its selling subsidiaries for losses arising from liabilities that the acquired business retains, the failure of any representation or warranty made by us to be true or our failure to perform our obligations
under the purchase agreement and the related documents.



In
general, the representations and warranties in the purchase agreement survive closing and expire 18 months after the closing date. The representations and warranties relating to organization and authority, capitalization, tax matters, employee
benefits and brokers fees will survive until the expiration of the applicable statute of limitations.



Weider Health and Fitness, Joe Weider, Ben Weider and Eric Weider agreed in the purchase agreement not to invest, own, manage, finance, control or
otherwise have a material direct or indirect interest in any business involved in publishing of healthy living or fitness-related publications in any and all media, without the Buyers express written approval, subject to specified limitations.
The non-competition agreement will remain in effect for 7 years with respect to Joe Weider and for 5 years with respect to Ben Weider, Eric Weider and Weider Health and Fitness.



As part of the Acquisition, Weider Publications LLC entered into an advertising agreement with Weider Health and Fitness and
Weider Nutrition International, Inc. that provides these entities with certain limited access to advertising in the acquired publications at agreed upon rates for the six years following closing.



In connection with the Acquisition, the Buyers entered into an athlete
endorsement agreement with the Sellers pursuant to which the Sellers will provide the Buyers with continued access to a group of approximately 24 athletes (excluding Joe Weider), or substantially the same number of athletes of substantially the same
quality as those listed in the agreement, for promotional purposes in connection with the acquired business for a period of 24 months from the acquisition date. The Buyers will pay the Sellers $600,000 per year in exchange for this arrangement.



As part of the Acquisition, the Buyers entered into a
trademark license agreement with the Sellers pursuant to which the Sellers will retain ownership and pay the costs for maintaining the Weider, Team Weider and Joe Weider trademarks in the U.S., Mexico and Canada and will grant the Buyers the
exclusive right to use these trademarks on the cover and in the editorial content of existing Weider titles of the acquired business and in any future healthy living or fitness-related publications in any media. The Buyers will also be given the
non-exclusive right to use the trade name Joe Weideron products and services other than publications. The Buyers will pay the Sellers $200,000 per year pursuant to the trademark license agreement. The Buyers have the rights to use the
Weider, Team Weider and Joe Weider trademarks in most other foreign countries in the world.



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Item 14.Principal Accountant Fees and Services



The following table sets forth the aggregate fees billed to the Company for the fiscal years ended March 31, 2003 and March 29, 2004 by the Companys principal accounting firm, Deloitte & Touche LLP, the
member firms of Deloitte Touche Tohmatsu, and their respective affiliates (collectively, Deloitte & Touche):



|                       |  |      |           |      |   |        
|---------------------- |  | ---- | --------- | ---- | - | -------
|                       |  | 2003 |           | 2004
|Audit Fees (1)         |  | $    | 798,000   |      | $ | 350,000
|Audit Related Fees (2) |  |      | 33,000    |      |   |       
|Tax Fees (3)           |  |      | 140,000   |      |   | 100,000
|All Other Fees (4)     |  |      | 87,000    |      |   |       
|                       |  |      |           |      |   |        
|Total Fees             |  | $    | 1,058,000 |      | $ | 450,000
|                       |  |      |           |      |   |        

---

|(1) | Fiscal 2003 includes fees related to the audit of an acquired companys financial statements. Additionally, included in fiscal 2003 are fees related to our registration
statement and offering memorandum for a debt issuance.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Includes fees related to the audit of our employee benefit plan.
|--- | ----------------------------------------------------------------

|(3) | Includes tax compliance, planning and advice services.
|--- | ------------------------------------------------------

|(4) | Includes fees related to services performed in connection with the assessment of the performance for certain of our third party service providers.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------



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PART IV



Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K



The following documents are filed with, or incorporated by reference in, and as part of, this Annual Report on Form 10-K.



1. Financial Statements



For a complete list of the Financial Statements filed with this Annual Report on Form 10-K, see the Index to Consolidated
Financial Statements.



|               |  |   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|-------------- |  | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit Number |  |   |  | Description of Exhibit                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|               |  |  
|*2.1           |  |  |  | Agreement and Plan of Merger dated as of February 16, 1999, by and between EMP Acquisition Corp., a Delaware corporation, and American Media, Inc., a Delaware corporation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|               |  |  
|*2.2           |  |  |  | Certificate of Merger of EMP Acquisition Corp. with and into American Media, Inc. (Under Section 251 of the General Corporation Law of the State of Delaware).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|               |  |  
|**2.3          |  |  |  | Stock and Asset Purchase Agreement, dated as of November 1, 1999, among Mike Rosenbloom, Globe International Publishing, Inc., Globe International, Inc., EMP Group LLC and American Media
Operations, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|               |  |  
|*****2.4       |  |  |  | Purchase and Contribution Agreement dated as of November 26, 2002 by and among Weider Health and Fitness, Weider Interactive Networks, Inc., Weider Health and Fitness, LLC, Weider
Publications, LLC, EMP Group LLC and American Media Operations, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                              
|               |  |  
|******2.5      |  |  |  | Agreement and Plan of Merger, dated February 24, 2003, by and among EMP Group LLC and EMP Merger Corporation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|               |  |  
|******2.6      |  |  |  | Amendment No. 1 to the Agreement and Plan of Merger, dated April 14, 2003, by and between EMP Group LLC and EMP Merger Corporation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|               |  |  
|******2.7      |  |  |  | Contribution Agreement, dated as of February 24, 2003, by and among EMP Merger Corporation and the persons set forth on the signature pages thereto.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|               |  |  
|******2.8      |  |  |  | Amendment No. 1 to the Contribution agreement, dated April 14, 2003, by and among EMP Merger Corporation and the persons set forth on the signature pages thereto.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|               |  |  
|3.1            |  |  |  | Certificate of Incorporation of Enquirer/Star, Inc. and amendments thereto (incorporated by reference to the Companys Registration Statement on Form S-1, Registration No. 33-46676, Part
II, Item 16, Exhibit 3.5, as filed on March 25, 1992).(1)                                                                                                                                                                                                                                                                                                                                                                                                                                  
|               |  |  
|3.2            |  |  |  | Amended By-Laws of Enquirer/Star, Inc. (incorporated by reference to the Companys Registration Statement on Form S-1, Registration No. 33-46676, Part II, Item 16, Exhibit 3.6, as filed
on March 25, 1992).(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|               |  |  
|3.3            |  |  |  | Amendment of Certificate of Incorporation of the Company dated November 7, 1994 changing its name to American Media Operations, Inc. from Enquirer/Star, Inc. (incorporated by reference from
the Companys Annual Report on Form 10-K for the year ended March 27, 1995, filed as Exhibit 3.3, File No. 1-11112).                                                                                                                                                                                                                                                                                                                                                                    
|               |  |  
|*4.1           |  |  |  | Indenture dated as of May 7, 1999, among American Media Operations, Inc., National Enquirer, Inc., Star Editorial, Inc., SOM Publishing, Inc., Weekly World News, Inc., Country Weekly, Inc.,
Distribution Services, Inc., Fairview Printing, Inc., NDSI, Inc., Biocide, Inc., American Media Marketing, Inc., and Marketing Services, Inc., and The Chase Manhattan Bank, a New York banking corporation, as trustee.                                                                                                                                                                                                                                                                
|               |  |  
|*4.2           |  |  |  | Indemnity, Subrogation and Contribution Agreement dated as of May 7, 1999, among American Media Operations, Inc., each subsidiary of American Media, Inc. listed on Schedule I thereto and The
Chase Manhattan Bank, as collateral agent for the Secured Parties (as defined in the Security Agreement).                                                                                                                                                                                                                                                                                                                                                                              
|               |  |  
|*4.3           |  |  |  | Pledge Agreement dated as of May 7, 1999, among American Media Operations, Inc., American Media, Inc., each subsidiary of Holdings listed on Schedule I thereto and The Chase Manhattan Bank,
as collateral agent for the Secured Parties                                                                                                                                                                                                                                                                                                                                                                                                                                             
|               |  |  
|*4.4           |  |  |  | Security Agreement dated as of May 7, 1999, among American Media Operations, Inc., American Media, Inc., each subsidiary of Holdings listed on Schedule I thereto and The Chase Manhattan Bank,
as collateral agent for the Secured Parties (as defined herein).                                                                                                                                                                                                                                                                                                                                                                                                                      
|               |  |  
|**4.5          |  |  |  | Credit Agreement dated as of May 7, 1999, as Amended and Restated as of November 1, 1999, among American Media, Inc., American Media Operations, Inc., the Lenders party hereto and The Chase
Manhattan Bank, as Administrative Agent.                                                                                                                                                                                                                                                                                                                                                                                                                                                
|               |  |  
|****4.6        |  |  |  | Amendment, dated as of February 11, 2002 to the Credit Agreement, dated as of May 7, 1999, among American Media, Inc., American Media Operations, Inc., the Lenders party thereto, and JP
Morgan Chase Bank (formerly known a The Chase Manhattan Bank), as Administrative Agent.                                                                                                                                                                                                                                                                                                                                                                                                     
|               |  |  
|****4.7        |  |  |  | Indenture, dated as of February 14, 2002, among American Media Operations, Inc., AM Auto World Weekly, Inc., American Media Consumer Entertainment, Inc., American Media Consumer Magazine
Group, Inc., American Media Distribution & Marketing Group, Inc., American Media Property Group, Inc., American Media Mini Mags, Inc., American Media Newspaper Group, Inc., Country Music Media Group, Inc., Distribution Services, Inc., Globe
Communications Corp., Globe Editorial, Inc., Mira! Editorial, Inc., National Enquirer, Inc., National Examiner, Inc., NDSI, Inc., Star Editorial, Inc., and JP Morgan Chase Bank (formerly known as The Chase Manhattan Bank), as
Trustee.



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|             |  |   |  |                                                                                                                                                                                                                                                                                                                                          
|------------ |  | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|             |  |  
|*****4.8     |  |  |  | Indenture dated as of January 23, 2003 by and among American Media Operations, Inc., the guarantors party thereto and JP Morgan Trust Company, National Association.                                                                                                                                                                     
|             |  |  
|*****4.9     |  |  |  | Amendment and Restatement Agreement, dated as of January 23, 2003, among American Media Operations, Inc., American Media, Inc., the lenders party thereto, and JP Morgan Chase Bank, as
Administrative Agent, under the Credit Agreement, dated as of May 7, 1999, as amended and restated as of May 21, 2002, among the parties thereto.
|             |  |  
|*******4.10  |  |  |  | Reaffirmation and Amendment Agreement, as of January 23, 2003, among American Media Operations, Inc., American Media, Inc., the Subsidiary Loan Parties and JP Morgan Chase Bank, as
Administrative Agent and Collateral Agent under the Restated Credit Agreement.                                                                      
|             |  |  
|*******4.11  |  |  |  | Amendment No. 1 dated as of March 5, 2003 to the Amended and Restated Credit Agreement dated as of January 23, 2003, among American Media, Inc., American Media Operations, Inc., the lenders
party thereto and JP Morgan Chase Bank, as Administrative Agent.                                                                           
|             |  |  
|********4.12 |  |  |  | Amendment No. 2 dated as of February 17, 2004, to the Amended and Restated Credit Agreement dated as of January 23, 2003, among American Media Operations, Inc., American Media Inc., the
Lenders party thereto, and JP Morgan Chase Bank, as Administrative Agent.                                                                      
|             |  |  
|********4.13 |  |  |  | Amendment No. 3 dated as of June 25, 2004, to the Amended and Restated Credit Agreement dated as of January 23, 2003, among American Media Operations, Inc., American Media Inc., the Lenders
party thereto, and JP Morgan Chase Bank, as Administrative Agent.                                                                          
|             |  |  
|10.1         |  |  |  | Tax Sharing Agreement dated as of March 31, 1992, among Enquirer/Star Group, Inc. and its subsidiaries (incorporated by reference from our Annual Report on Form 10-K for the year ended March
30, 1992, filed as Exhibit 10.15, File No. 1-10784).(1)                                                                                   
|             |  |  
|*******10.2  |  |  |  | Management Agreement dated as of April 17, 2003, by and American Media, Inc., T.H. Lee Managers V, LLC and Evercore Advisors L.P.                                                                                                                                                                                                        
|             |  |  
|*******10.3  |  |  |  | Amended and Restated Employment Agreement of David J. Pecker dated February 24, 2003.                                                                                                                                                                                                                                                    
|             |  |  
|***10.4      |  |  |  | Side Letter regarding David J. Pecker Employment Agreement dated as of April 13, 1999.                                                                                                                                                                                                                                                   
|             |  |  
|**10.5       |  |  |  | Mike Rosenbloom Employment Agreement, dated as of November 1, 1999.                                                                                                                                                                                                                                                                      
|             |  |  
|********12   |  |  |  | Computation of Ratio of Earnings to Fixed Charges.                                                                                                                                                                                                                                                                                       
|             |  |  
|14           |  |  |  | Code of Ethics for the Principal Executive Officer and Senior Financial Officers.                                                                                                                                                                                                                                                        
|             |  |  
|********21   |  |  |  | Subsidiaries of American Media Operations, Inc.                                                                                                                                                                                                                                                                                          
|             |  |  
|31.1         |  |  |  | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002.                                                                                                                                                                                                                                      
|             |  |  
|31.2         |  |  |  | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002.                                                                                                                                                                                                                                      
|             |  |  
|32           |  |  |  | Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes Oxley Act of 2002.                                                                                                                                                                                                          

---

|(1) | Enquirer/Star, Inc. is now named American Media Operations, Inc.; Enquirer/Star Group, Inc. is now named American Media, Inc.
|--- | -----------------------------------------------------------------------------------------------------------------------------

|*  Incorporated | by reference to our Registration Statement on Form S-4, filed June 28, 1999.
|--------------- | ----------------------------------------------------------------------------

|**  Incorporated | by reference to our March 27, 2000 Form 10-K for fiscal 2000 filed June 26, 2000.
|---------------- | ---------------------------------------------------------------------------------

|***  Incorporated | by reference to our March 29, 1999 Form 10-K for fiscal 1999 filed June 28, 1999.
|----------------- | ---------------------------------------------------------------------------------

|****  Incorporated | by reference to our Registration Statement on Form S-4, filed April 23, 2002.
|------------------ | -----------------------------------------------------------------------------

|*****  Incorporated | by reference to our Form 8-K filed January 27, 2003.
|------------------- | ----------------------------------------------------

|******  Incorporated | by reference to our Form 8-K filed April 24, 2003.
|-------------------- | --------------------------------------------------

|*******  Incorporated | by reference to our March 31, 2003 Form 10-K for fiscal 2003 filed June 6, 2003.
|--------------------- | --------------------------------------------------------------------------------

|********  Incorporated | by reference to our March 29, 2004 Form 10-K filed June 28, 2004.
|---------------------- | -----------------------------------------------------------------



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3. Form 8-K



Form 8-K filed February 19, 2004, (Items 7 and 12), announcing American Media Operations, Inc.s financial results for the quarter ended December 29, 2003.



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.



No annual report or proxy material has been sent to security holders in fiscal year 2004.



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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s behalf by the undersigned, thereto duly authorized on August 5, 2004.



AMERICAN MEDIA OPERATIONS, INC.By:

/s/ DAVID J. PECKERDavid J. PeckerChairman of the Board, President andChief Executive Officer




Pursuant to the
requirements of the Securities Exchange Act of 1934, this report has been signed below on behalf of the registrant and in the capacities indicated on August 3, 2004.



|                                         |  |                                                                                                     
|---------------------------------------- |  | ----------------------------------------------------------------------------------------------------
|Signature                                |  | Title                                                                                               
|                                         | 
|/s/ DAVID J. PECKERDavid J. Pecker       |  | Chairman of the Board, President, Chief Executive Officer and Director (Principal Executive Officer)
|                                         | 
|/s/ JOHN A. MILEYJohn A. Miley           |  | Executive Vice President and Chief Financial Officer (Principal Financial Officer)                  
|                                         | 
|/s/ MARK J. BROCKELMANMark J. Brockelman |  | Vice President of Finance (Principal Accounting Officer)                                            
|                                         | 
|/s/ AUSTIN M. BEUTNERAustin M. Beutner   |  | Director                                                                                            
|                                         | 
|/s/ NEERAJ MITALNeeraj Mital             |  | Director                                                                                            
|                                         | 
|/s/ LUCILLE SALHANYLucille Salhany       |  | Director                                                                                            
|                                         | 
|/s/ ANTHONY J. DINOVIAnthony J. DiNovi   |  | Director                                                                                            
|                                         | 
|/s/ SOREN L. OBERGSoren L. Oberg         |  | Director                                                                                            
|                                         | 
|/s/ MICHAEL GARINMichael Garin           |  | Director                                                                                            



55



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##### Table of Contents

Exhibit Index



|            |  |                                                                                                                                
|----------- |  | -------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                    
|            | 
|14          |  | Code of Ethics for the Principal Executive Officer and Senior Financial Officers.                                              
|            | 
|31.1        |  | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002.                            
|            | 
|31.2        |  | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002.                            
|            | 
|32          |  | Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes Oxley Act of 2002.



56