##### Table of Contents

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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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FORM 10-Q



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(Mark One)

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



For the Quarterly Period Ended December 27, 2004



OR



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



Commission file number(s)  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



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



As of February 9, 2005 there
were 7,507 shares of common stock outstanding.



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##### Table of Contents

AMERICAN MEDIA OPERATIONS, INC. AND SUBSIDIARIES

INDEX TO FORM 10-Q

December 27, 2004



|                                                                                              |  |        
|--------------------------------------------------------------------------------------------- |  | -------
|                                                                                              |  | Page(s)
|PART I. FINANCIAL INFORMATION                                                                 |  |        
|                                                                                              | 
|Item 1. Financial Statements (Unaudited) -                                                    |  |        
|Condensed Consolidated Balance Sheets                                                         |  | 3      
|Condensed Consolidated Statements of Income (Loss)                                            |  | 4-5    
|Condensed Consolidated Statements of Comprehensive Income (Loss)                              |  | 6-7    
|Condensed Consolidated Statements of Cash Flows                                               |  | 8      
|Notes to Condensed Consolidated Financial Statements                                          |  | 9-15   
|                                                                                              | 
|Item 2.
Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 16  21
|                                                                                              | 
|Item 3.
Quantitative and Qualitative Disclosures about Market Risk                            |  | 22     
|                                                                                              | 
|Item 4.
Controls and Procedures                                                               |  | 23     
|                                                                                              | 
|PART II. OTHER INFORMATION                                                                    |  |        
|                                                                                              | 
|Item 1.
Legal Proceedings                                                                     |  | 24     
|Item 6.
Exhibits and Reports on Form 8-K                                                      |  | 24     
|                                                                                              | 
|Signatures                                                                                    |  | 25     



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AMERICAN MEDIA OPERATIONS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in 000s, except share information)



|                                                                  |  |                |           |   |                   |   |           |  
|----------------------------------------------------------------- |  | -------------- | --------- | - | ----------------- | - | --------- | -
|                                                                  |  | March 29, 2004 |           |   | December 27, 2004 |  
|ASSETS                                                            |  |                |           |   |                   |   |           |  
|CURRENT ASSETS:                                                   |  |                |           |   |                   |   |           |  
|Cash and cash equivalents                                         |  | $              | 22,192    |   |                   | $ | 15,414    |  
|Receivables, net                                                  |  |                | 66,907    |   |                   |   | 60,862    |  
|Inventories                                                       |  |                | 34,518    |   |                   |   | 21,109    |  
|Prepaid expenses and other                                        |  |                | 11,391    |   |                   |   | 16,099    |  
|                                                                  |  |                |           |   |                   |   |           |  
|Total Current Assets                                              |  |                | 135,008   |   |                   |   | 113,484   |  
|                                                                  |  |                |           |   |                   |   |           |  
|PROPERTY AND EQUIPMENT, at cost:                                  |  |                |           |   |                   |   |           |  
|Land and buildings                                                |  |                | 4,580     |   |                   |   | 4,361     |  
|Machinery, fixtures and equipment                                 |  |                | 41,003    |   |                   |   | 42,802    |  
|Display racks                                                     |  |                | 46,810    |   |                   |   | 52,544    |  
|                                                                  |  |                |           |   |                   |   |           |  
|                                                                  |  |                | 92,393    |   |                   |   | 99,707    |  
|Less  accumulated depreciation                                   |  |                | (47,340   | ) |                   |   | (58,864   | )
|                                                                  |  |                |           |   |                   |   |           |  
|                                                                  |  |                | 45,053    |   |                   |   | 40,843    |  
|                                                                  |  |                |           |   |                   |   |           |  
|LONG TERM NOTE RECEIVABLE, net                                    |  |                | 1,384     |   |                   |   | 1,384     |  
|                                                                  |  |                |           |   |                   |   |           |  
|DEFERRED DEBT COSTS, net                                          |  |                | 24,996    |   |                   |   | 21,634    |  
|                                                                  |  |                |           |   |                   |   |           |  
|OTHER LONG TERM ASSETS                                            |  |                | 1,459     |   |                   |   | 1,993     |  
|                                                                  |  |                |           |   |                   |   |           |  
|GOODWILL, net of accumulated amortization of $74,757              |  |                | 661,639   |   |                   |   | 661,639   |  
|                                                                  |  |                |           |   |                   |   |           |  
|OTHER INTANGIBLES                                                 |  |                | 627,937   |   |                   |   | 617,138   |  
|                                                                  |  |                |           |   |                   |   |           |  
|                                                                  |  | $              | 1,497,476 |   |                   | $ | 1,458,115 |  
|                                                                  |  |                |           |   |                   |   |           |  
|LIABILITIES AND STOCKHOLDERS EQUITY                              |  |                |           |   |                   |   |           |  
|CURRENT LIABILITIES:                                              |  |                |           |   |                   |   |           |  
|Current portion of term loan                                      |  | $              | 5,734     |   |                   | $ | 5,795     |  
|11.625% Senior Subordinated Notes Due 2004                        |  |                | 740       |   |                   |   |          |  
|Accounts payable                                                  |  |                | 42,076    |   |                   |   | 37,812    |  
|Accrued expenses                                                  |  |                | 59,395    |   |                   |   | 45,730    |  
|Deferred revenues                                                 |  |                | 39,614    |   |                   |   | 26,342    |  
|                                                                  |  |                |           |   |                   |   |           |  
|Total current liabilities                                         |  |                | 147,559   |   |                   |   | 115,679   |  
|                                                                  |  |                |           |   |                   |   |           |  
|TERM LOAN AND REVOLVING CREDIT COMMITMENT, net of current portion |  |                | 433,918   |   |                   |   | 419,606   |  
|                                                                  |  |                |           |   |                   |   |           |  
|SUBORDINATED INDEBTEDNESS:                                        |  |                |           |   |                   |   |           |  
|10.25% Senior Subordinated Notes Due 2009                         |  |                | 400,000   |   |                   |   | 400,000   |  
|Bond Premium on 10.25% Senior Subordinated Notes Due 2009         |  |                | 530       |   |                   |   | 452       |  
|8.875% Senior Subordinated Notes Due 2011                         |  |                | 150,000   |   |                   |   | 150,000   |  
|                                                                  |  |                |           |   |                   |   |           |  
|                                                                  |  |                | 550,530   |   |                   |   | 550,452   |  
|                                                                  |  |                |           |   |                   |   |           |  
|DEFERRED INCOME TAXES                                             |  |                | 158,323   |   |                   |   | 162,227   |  
|                                                                  |  |                |           |   |                   |   |           |  
|STOCKHOLDERS EQUITY:                                             |  |                |           |   |                   |   |           |  
|Common stock, $.20 par value; 7,507 shares issued and outstanding |  |                | 2         |   |                   |   | 2         |  
|Additional paid-in capital                                        |  |                | 281,857   |   |                   |   | 281,757   |  
|Accumulated other comprehensive income (loss)                     |  |                | (28       | ) |                   |   | (63       | )
|Accumulated deficit                                               |  |                | (74,685   | ) |                   |   | (71,545   | )
|                                                                  |  |                |           |   |                   |   |           |  
|TOTAL STOCKHOLDERS EQUITY                                        |  |                | 207,146   |   |                   |   | 210,151   |  
|                                                                  |  |                |           |   |                   |   |           |  
|                                                                  |  | $              | 1,497,476 |   |                   | $ | 1,458,115 |  
|                                                                  |  |                |           |   |                   |   |           |  



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



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##### Table of Contents

AMERICAN MEDIA OPERATIONS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in 000s)



|                                                  |  |                                              |         |   |                                               |   |         |  
|------------------------------------------------- |  | -------------------------------------------- | ------- | - | --------------------------------------------- | - | ------- | -
|                                                  |  | Three Fiscal Quarters Ended December 29,2003 |         |   | Three Fiscal Quarters Ended December 27, 2004 |  
|REVENUES:                                         |  |                                              |         |   |                                               |   |         |  
|Circulation                                       |  | $                                            | 241,362 |   |                                               | $ | 253,252 |  
|Advertising                                       |  |                                              | 105,344 |   |                                               |   | 123,148 |  
|Other                                             |  |                                              | 23,473  |   |                                               |   | 23,002  |  
|                                                  |  |                                              |         |   |                                               |   |         |  
|Total revenues                                    |  |                                              | 370,179 |   |                                               |   | 399,402 |  
|                                                  |  |                                              |         |   |                                               |   |         |  
|OPERATING EXPENSES:                               |  |                                              |         |   |                                               |   |         |  
|Editorial                                         |  |                                              | 42,887  |   |                                               |   | 44,115  |  
|Production                                        |  |                                              | 98,892  |   |                                               |   | 119,659 |  
|Distribution, circulation and other cost of sales |  |                                              | 55,734  |   |                                               |   | 60,261  |  
|Selling, general and administrative expenses      |  |                                              | 62,149  |   |                                               |   | 74,202  |  
|Loss on insurance settlement                      |  |                                              | 200     |   |                                               |   |        |  
|Restructuring expense                             |  |                                              | 2,739   |   |                                               |   |        |  
|Depreciation and amortization                     |  |                                              | 30,325  |   |                                               |   | 33,164  |  
|                                                  |  |                                              |         |   |                                               |   |         |  
|Total operating expenses                          |  |                                              | 292,926 |   |                                               |   | 331,401 |  
|                                                  |  |                                              |         |   |                                               |   |         |  
|OPERATING INCOME                                  |  |                                              | 77,253  |   |                                               |   | 68,001  |  
|                                                  |  |                                             
|INTEREST EXPENSE, net                             |  |                                              | (57,743 | ) |                                               |   | (62,173 | )
|OTHER INCOME (EXPENSE), net                       |  |                                              | (123    | ) |                                               |   | (109    | )
|                                                  |  |                                              |         |   |                                               |   |         |  
|INCOME BEFORE PROVISION FOR INCOME TAXES          |  |                                              | 19,387  |   |                                               |   | 5,719   |  
|                                                  |  |                                             
|PROVISION FOR INCOME TAXES                        |  |                                              | (7,375  | ) |                                               |   | (2,579  | )
|                                                  |  |                                              |         |   |                                               |   |         |  
|NET INCOME                                        |  | $                                            | 12,012  |   |                                               | $ | 3,140   |  
|                                                  |  |                                              |         |   |                                               |   |         |  



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



4



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AMERICAN MEDIA OPERATIONS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(in 000s)



|                                                  |  |                                    |         |   |                                    |   |         |  
|------------------------------------------------- |  | ---------------------------------- | ------- | - | ---------------------------------- | - | ------- | -
|                                                  |  | Fiscal Quarter Ended Dec. 29, 2003 |         |   | Fiscal Quarter Ended Dec. 27, 2004 |  
|REVENUES:                                         |  |                                    |         |   |                                    |   |         |  
|Circulation                                       |  | $                                  | 81,546  |   |                                    | $ | 84,165  |  
|Advertising                                       |  |                                    | 29,176  |   |                                    |   | 37,700  |  
|Other                                             |  |                                    | 7,610   |   |                                    |   | 7,528   |  
|                                                  |  |                                    |         |   |                                    |   |         |  
|Total revenues                                    |  |                                    | 118,332 |   |                                    |   | 129,393 |  
|                                                  |  |                                    |         |   |                                    |   |         |  
|OPERATING EXPENSES:                               |  |                                    |         |   |                                    |   |         |  
|Editorial                                         |  |                                    | 13,780  |   |                                    |   | 14,929  |  
|Production                                        |  |                                    | 33,970  |   |                                    |   | 38,532  |  
|Distribution, circulation and other cost of sales |  |                                    | 17,057  |   |                                    |   | 20,384  |  
|Selling, general and administrative expenses      |  |                                    | 22,072  |   |                                    |   | 23,526  |  
|Restructuring expense                             |  |                                    | 34      |   |                                    |   |        |  
|Depreciation and amortization                     |  |                                    | 10,114  |   |                                    |   | 11,089  |  
|                                                  |  |                                    |         |   |                                    |   |         |  
|Total operating expenses                          |  |                                    | 97,027  |   |                                    |   | 108,460 |  
|                                                  |  |                                    |         |   |                                    |   |         |  
|OPERATING INCOME                                  |  |                                    | 21,305  |   |                                    |   | 20,933  |  
|                                                  |  |                                   
|INTEREST EXPENSE, net                             |  |                                    | (20,054 | ) |                                    |   | (21,198 | )
|OTHER INCOME (EXPENSE), net                       |  |                                    | (63     | ) |                                    |   | (8      | )
|                                                  |  |                                    |         |   |                                    |   |         |  
|INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES   |  |                                    | 1,188   |   |                                    |   | (273    | )
|                                                  |  |                                   
|PROVISION FOR INCOME TAXES                        |  |                                    | (496    | ) |                                    |   | (8      | )
|                                                  |  |                                    |         |   |                                    |   |         |  
|NET INCOME (LOSS)                                 |  | $                                  | 692     |   |                                    | $ | (281    | )
|                                                  |  |                                    |         |   |                                    |   |         |  



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



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AMERICAN MEDIA OPERATIONS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF

COMPREHENSIVE INCOME

(in 000s)



|                                         |  |                                               |        |                                               |   |       |  
|---------------------------------------- |  | --------------------------------------------- | ------ | --------------------------------------------- | - | ----- | -
|                                         |  | Three Fiscal Quarters Ended December 29, 2003 |        | Three Fiscal Quarters Ended December 27, 2004 |  
|Net income                               |  | $                                             | 12,012 |                                               | $ | 3,140 |  
|                                         |  |                                               |        |                                               |   |       |  
|Other comprehensive income (loss)        |  |                                               |        |                                               |   |       |  
|Foreign currency translation adjustments |  |                                               | 70     |                                               |   | (35   | )
|                                         |  |                                               |        |                                               |   |       |  
|Other comprehensive income (loss)        |  |                                               | 70     |                                               |   | (35   | )
|                                         |  |                                               |        |                                               |   |       |  
|Comprehensive income                     |  | $                                             | 12,082 |                                               | $ | 3,105 |  
|                                         |  |                                               |        |                                               |   |       |  



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



6



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##### Table of Contents

AMERICAN MEDIA OPERATIONS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF

COMPREHENSIVE INCOME (LOSS)

(in 000s)



|                                         |  |                                    |     |                                    |   |      |  
|---------------------------------------- |  | ---------------------------------- | --- | ---------------------------------- | - | ---- | -
|                                         |  | Fiscal Quarter Ended Dec. 29, 2003 |     | Fiscal Quarter Ended Dec. 27, 2004 |  
|Net income (loss)                        |  | $                                  | 692 |                                    | $ | (281 | )
|                                         |  |                                    |     |                                    |   |      |  
|Other comprehensive income (loss)        |  |                                    |     |                                    |   |      |  
|Foreign currency translation adjustments |  |                                    | 165 |                                    |   | (10  | )
|                                         |  |                                    |     |                                    |   |      |  
|Other comprehensive income (loss)        |  |                                    | 165 |                                    |   | (10  | )
|                                         |  |                                    |     |                                    |   |      |  
|Comprehensive income (loss)              |  | $                                  | 857 |                                    | $ | (291 | )
|                                         |  |                                    |     |                                    |   |      |  



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



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##### Table of Contents

AMERICAN MEDIA OPERATIONS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in 000s)



|                                                                                   |  |                                           |         |   |                                           |   |         |  
|---------------------------------------------------------------------------------- |  | ----------------------------------------- | ------- | - | ----------------------------------------- | - | ------- | -
|                                                                                   |  | Three Fiscal Quarters Ended Dec. 29, 2003 |         |   | Three Fiscal Quarters Ended Dec. 27, 2004 |  
|Cash Flows from Operating Activities:                                              |  |                                           |         |   |                                           |   |         |  
|Net income                                                                         |  | $                                         | 12,012  |   |                                           | $ | 3,140   |  
|                                                                                   |  |                                           |         |   |                                           |   |         |  
|Adjustments to reconcile net income to net cash provided by operating activities - |  |                                           |         |   |                                           |   |         |  
|Gain on sale of fixed assets                                                       |  |                                           | (57     | ) |                                           |   | (149    | )
|Bond premium amortization                                                          |  |                                           | (78     | ) |                                           |   | (78     | )
|Depreciation of property and equipment and amortization of intangible assets       |  |                                           | 30,325  |   |                                           |   | 33,164  |  
|Deferred debt cost amortization                                                    |  |                                           | 4,757   |   |                                           |   | 4,844   |  
|Non-cash compensation charge                                                       |  |                                           | 66      |   |                                           |   |        |  
|Decrease (increase) in -                                                           |  |                                           |         |   |                                           |   |         |  
|Receivables                                                                        |  |                                           | 6,470   |   |                                           |   | 6,045   |  
|Inventories                                                                        |  |                                           | (16,045 | ) |                                           |   | 13,409  |  
|Prepaid expenses and other                                                         |  |                                           | (3,388  | ) |                                           |   | (4,708  | )
|Other long term assets                                                             |  |                                           |        |   |                                           |   | (534    | )
|Increase (decrease) in -                                                           |  |                                           |         |   |                                           |   |         |  
|Accounts payable                                                                   |  |                                           | (3,893  | ) |                                           |   | (4,264  | )
|Accrued expenses                                                                   |  |                                           | (326    | ) |                                           |   | (1,453  | )
|Accrued interest                                                                   |  |                                           | (6,146  | ) |                                           |   | (5,049  | )
|Accrued income taxes                                                               |  |                                           | (6,084  | ) |                                           |   | (3,258  | )
|Deferred revenues                                                                  |  |                                           | (8,512  | ) |                                           |   | (13,272 | )
|                                                                                   |  |                                           |         |   |                                           |   |         |  
|Total adjustments                                                                  |  |                                           | (2,911  | ) |                                           |   | 24,697  |  
|                                                                                   |  |                                           |         |   |                                           |   |         |  
|Net cash provided by operating activities                                          |  |                                           | 9,101   |   |                                           |   | 27,837  |  
|                                                                                   |  |                                           |         |   |                                           |   |         |  
|Cash Flows from Investing Activities:                                              |  |                                           |         |   |                                           |   |         |  
|Capital expenditures                                                               |  |                                           | (18,023 | ) |                                           |   | (18,192 | )
|Proceeds from the sale of fixed assets                                             |  |                                           | 199     |   |                                           |   | 185     |  
|Payment received on long term note receivable                                      |  |                                           | 31      |   |                                           |   |        |  
|Acquisition of business                                                            |  |                                           | (8,421  | ) |                                           |   |        |  
|                                                                                   |  |                                           |         |   |                                           |   |         |  
|Net cash used in investing activities                                              |  |                                           | (26,214 | ) |                                           |   | (18,007 | )
|                                                                                   |  |                                           |         |   |                                           |   |         |  
|Cash Flows from Financing Activities:                                              |  |                                           |         |   |                                           |   |         |  
|Term loan and revolving credit commitment principal repayments, net of borrowings  |  |                                           | (7,710  | ) |                                           |   | (14,991 | )
|Capital contribution                                                               |  |                                           | 6,138   |   |                                           |   |        |  
|Return of capital contribution                                                     |  |                                           |        |   |                                           |   | (100    | )
|Payment of deferred debt costs                                                     |  |                                           | (736    | ) |                                           |   | (1,482  | )
|                                                                                   |  |                                           |         |   |                                           |   |         |  
|Net cash used in financing activities                                              |  |                                           | (2,308  | ) |                                           |   | (16,573 | )
|                                                                                   |  |                                           |         |   |                                           |   |         |  
|Effect of Exchange Rate Changes on Cash                                            |  |                                           | 70      |   |                                           |   | (35     | )
|                                                                                   |  |                                           |         |   |                                           |   |         |  
|Net Decrease in Cash and Cash Equivalents                                          |  |                                           | (19,351 | ) |                                           |   | (6,778  | )
|Cash and Cash Equivalents at Beginning of Period                                   |  |                                           | 40,475  |   |                                           |   | 22,192  |  
|                                                                                   |  |                                           |         |   |                                           |   |         |  
|Cash and Cash Equivalents at End of Period                                         |  | $                                         | 21,124  |   |                                           | $ | 15,414  |  
|                                                                                   |  |                                           |         |   |                                           |   |         |  
|Supplemental Disclosures of Cash Flow Information:                                 |  |                                           |         |   |                                           |   |         |  
|Cash paid during the period for -                                                  |  |                                           |         |   |                                           |   |         |  
|Income taxes                                                                       |  | $                                         | 6,043   |   |                                           | $ | 542     |  
|Interest                                                                           |  |                                           | 60,941  |   |                                           |   | 60,398  |  



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



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##### Table of Contents

AMERICAN MEDIA OPERATIONS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

December 27, 2004

(000s omitted in all tables)

(unaudited)



(1) BASIS OF PRESENTATION



The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with GAAP (accounting principles generally accepted in the United
States of America) for interim financial information and with the instructions to Form 10-Q. There has been no material change in the information disclosed in the notes to consolidated financial statements included in the Annual Report on Form 10-K
of American Media Operations, Inc. (a wholly-owned subsidiary of American Media, Inc.) and subsidiaries (the Company) for the fiscal year ended March 29, 2004.



In the opinion of management, all adjustments considered necessary for a fair presentation have been included herein. Operating results for
the fiscal period ended December 27, 2004, are not necessarily indicative of the results that may be expected for future periods.



The preparation of financial statements in conformity with GAAP 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.



(2) ACQUISITIONS



On January 23, 2003, the Company and EMP Group LLC, the owner of 100% of the common stock of American Media, Inc. (Media),
acquired Weider Publications LLC (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 LLC and
Weider Interactive Networks, Inc. The aggregate purchase price was $357.3 million, which includes a post-closing working capital adjustment of $7.3 million.



(3) 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. Revenues and related expenses for our weekly publications and special topic issues are recognized for financial statement purposes after delivery has occurred and all services have been rendered, which coincides with the on-sale
date. Monthly issues revenue and related expenses are recognized at the date the copies are received by our third party wholesalers. 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.



The three fiscal quarters ended December 27, 2004 include 40 issues of our weekly publications versus 39 issues for the prior years comparable three fiscal quarters
due to a change in the scheduled delivery dates of the weekly publications. The delivery of these publications generally moved to a pre-weekend schedule during the quarter ended September 27, 2004. The net impact on revenues was an increase of $7.1
million.



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. Revenues are
also net of product placement costs (retail display allowances) paid to the retailers.



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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.



Deferred revenues are comprised of
the following:



|              |  |                |        |                   |   |       
|------------- |  | -------------- | ------ | ----------------- | - | ------
|              |  | March 29, 2004 |        | December 27, 2004
|Single Copy   |  | $              | 5,590  |                   | $ |      
|Subscriptions |  |                | 32,850 |                   |   | 26,109
|Advertising   |  |                | 1,174  |                   |   | 233   
|              |  |                |        |                   |   |       
|              |  | $              | 39,614 |                   | $ | 26,342
|              |  |                |        |                   |   |       



Other revenues, primarily from
marketing services performed for third parties by Distribution Services, Inc. (DSI), a wholly-owned subsidiary, are recognized when the service is performed.



(4) INVENTORIES



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



|                                                                             |  |                |        |                   |   |       
|---------------------------------------------------------------------------- |  | -------------- | ------ | ----------------- | - | ------
|                                                                             |  | March 29, 2004 |        | December 27, 2004
|Raw materials  paper                                                        |  | $              | 27,070 |                   | $ | 19,487
|Finished product - paper, production and distribution costs of future issues |  |                | 7,448  |                   |   | 1,622 
|                                                                             |  |                |        |                   |   |       
|                                                                             |  | $              | 34,518 |                   | $ | 21,109
|                                                                             |  |                |        |                   |   |       



(5) 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 result in probable future economic
benefits. Direct-response advertising consists of television advertising for subscriptions, product promotional mailings, magazine insert cards, 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. At March 29, 2004 and December 27, 2004, $1,786,000 and $4,209,000, respectively, of
subscription acquisition advertising was reported as assets. Amortization expense related to subscription acquisition advertising for the three quarters ended December 27, 2004, was $4,479,000.



(6) GOODWILL AND OTHER INTANGIBLE ASSETS



Intangible assets not subject to amortization had a carrying value of $557,365,000 as of
March 29, 2004 and December 27, 2004, and consist of tradenames with indefinite lives.



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



|                                      |  |                |  |                     |         |                         |   |         |     |  |                     |        |                         |   |         |     |   |         |   |  |   |       
|------------------------------------- |  | -------------- |  | ------------------- | ------- | ----------------------- | - | ------- | --- |  | ------------------- | ------ | ----------------------- | - | ------- | --- | - | ------- | - |  | - | ------
|                                      |  | March 29, 2004 |  | December 27, 2004  
|                                      |  | Range ofLives  |  | GrossCarryingAmount |         | AccumulatedAmortization |   |         | Net |  | GrossCarryingAmount |        | AccumulatedAmortization |   |         | Net
|Covenants not to compete              |  | 5-10           |  | $                   | 22,500  |                         | $ | (7,466  | )   |  | $                   | 15,034 |                         | $ | 22,500  |     | $ | (9,652  | ) |  | $ | 12,848
|Subscriber lists                      |  | 3-15           |  |                     | 66,238  |                         |   | (24,308 | )   |  |                     | 41,930 |                         |   | 66,171  |     |   | (30,110 | ) |  |   | 36,061
|Advertising relationships             |  | 3              |  |                     | 7,750   |                         |   | (2,865  | )   |  |                     | 4,885  |                         |   | 7,750   |     |   | (4,697  | ) |  |   | 3,053 
|Non-subscriber customer relationships |  | 8              |  |                     | 10,150  |                         |   | (1,427  | )   |  |                     | 8,723  |                         |   | 10,150  |     |   | (2,339  | ) |  |   | 7,811 
|                                      |  |                |  |                     |         |                         |   |         |     |  |                     |        |                         |   |         |     |   |         |   |  |   |       
|                                      |  |                |  | $                   | 106,638 |                         | $ | (36,066 | )   |  | $                   | 70,572 |                         | $ | 106,571 |     | $ | (46,798 | ) |  | $ | 59,773
|                                      |  |                |  |                     |         |                         |   |         |     |  |                     |        |                         |   |         |     |   |         |   |  |   |       



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Amortization expense of intangible assets for the three fiscal quarters ended December 29, 2003 and December 27, 2004,
was $10.6 million and $10.8 million, respectively.



Goodwill and intangibles
with indefinite lives are 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 2004 as of the beginning of the fourth quarter of fiscal 2004 and found no impairment.



Based on the carrying value of identified intangible assets recorded at December 27, 2004, and assuming no subsequent impairment of the underlying assets, annual
amortization expense for the next five fiscal years is expected to be as follows:



|            |  |   |       
|----------- |  | - | ------
|Fiscal Year |  |  
|2005        |  | $ | 14,204
|2006        |  |   | 12,122
|2007        |  |   | 8,269 
|2008        |  |   | 8,114 
|2009        |  |   | 7,466 
|            |  |   |       
|Total       |  | $ | 50,175
|            |  |   |       



(7) 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.



(8) CREDIT AGREEMENT



The Companys bank credit agreement
(the Credit Agreement) is comprised of three separate term loan commitments and a $60 million revolving credit commitment. As of December 27, 2004, the Company had $425.4 million of borrowings under the term loan commitments and there
were no amounts outstanding under the revolving credit commitment. The revolving credit 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. We are required to pay a commitment fee ranging from 3/8% to 1/2% of the unused portion of the revolving commitment.



The Credit Agreement requires the Company to be in compliance with certain maintenance covenants which include but are not limited to, maintaining a total leverage ratio
covenant of 6.95 through March 2005, 6.75 from June 2005 through March 2006 and 6.50 from June 2006 and thereafter. In addition, the Company must maintain an interest coverage ratio of 1.75 through the maturity of the Credit Agreement. 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 in addition to those mentioned above. As of December 27, 2004, the Company was in compliance with all of these covenants and
conditions.



Borrowings under the term loan commitments are payable in varying
quarterly installments through April of 2007. We are required to make Excess Cash Flow payments (as defined), which will be applied ratably to the then outstanding term loans. There were no required Excess Cash Flow payments for the fiscal year
ended March 29, 2004.



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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.



The effective interest rate under the Credit
Agreement, including amounts borrowed under the term loan commitments and revolving credit commitment, as of December 27, 2004 was 4.9% and the weighted average effective interest rates for the three fiscal quarters ended December 29, 2003 and
December 27, 2004 were 4.1% and 4.4%, respectively.



(9) 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 105.125% to 100% of their face amount after April 2004. The indenture under which the notes were issued includes certain restrictive covenants that prohibit payment of dividends and limit, among other things, our ability to incur indebtedness,
give guarantees, make investments, sell assets and merge or consolidate. The notes are guaranteed on a senior subordinated basis by all our current subsidiaries.



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 a premium on the notes of $750,000. The Company used the gross proceeds of the offering (a) to make a $75,375,000 distribution to EMP Group LLC, (b) to
prepay $68,375,000 of the term loans under the Credit Agreement and (c) to 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, the Company 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 a discount on the notes of $4,125,000. 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.



American Media Operations, Inc. has 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 domestic 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. Subordinated note guarantees are joint and several,
full and unconditional and general unsecured obligations of the note guarantors. The note guarantors are our subsidiaries. At present, the note guarantors comprise all of our 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 facility, and are also effectively subordinated to all secured obligations of note guarantors to the extent of the assets securing
such obligations, including the credit facility. Furthermore, the subordinated note 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.



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(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 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. 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 quarter ended June 30,
2003. Additionally, the intercompany payable to American Media, Inc. was eliminated as a result of the recapitalization.



(11) 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 the three fiscal quarters ended December 29, 2003 and December 27, 2004, amortization of deferred debt costs, which is included in interest expense in the accompanying consolidated statements of income, totaled approximately $4.8 million
and $4.8 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 an
increase in the term loan amount of the Credit Agreement of $140 million on January 23, 2003, $3.5 million of debt costs have been deferred and are being amortized as part of interest expense over the life of the Credit Agreement. In connection with
our Credit Agreement amendment on February 17, 2004, $260,000 of debt 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. Additionally, in connection with our Credit Agreement amendment on June 25, 2004, $1.3 million of debt costs have been deferred and are being amortized as part of interest
expense over the life of the amendment. This amendment 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.



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(12) FAIR VALUE OF FINANCIAL INSTRUMENTS



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



|                                        |  |                 |         |                   |   |                 |  |   |            |   |  |   |         |  
|--------------------------------------- |  | --------------- | ------- | ----------------- | - | --------------- |  | - | ---------- | - |  | - | ------- | -
|                                        |  | March 29, 2004  |         | December 27, 2004 |  
|                                        |  | Carrying Amount |         | Fair Value        |   | Carrying Amount |  |   | Fair Value |  
|Term loan, including current portion    |  | $               | 439,652 |                   | $ | 439,652         |  | $ | 425,401    |   |  | $ | 425,401 |  
|Subordinated indebtedness               |  | $               | 550,000 |                   | $ | 561,875         |  | $ | 550,000    |   |  | $ | 581,062 |  
|Interest rate swap receivable (payable) |  | $               | 2,813   |                   | $ | 2,813           |  | $ | (454       | ) |  | $ | (454    | )



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 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 December 27,
2004, the fair value of this swap was a liability of $454,000. The change in the fair value of the swap has been recognized as an addition to interest expense for the three fiscal quarters ended December 27, 2004. On January 15, 2004, we received
$1,635,000 in connection with the interim settlement of this swap agreement. On July 15, 2004, we received $1,166,000 in connection with the interim settlement of this swap agreement. Additionally, on January 18, 2005, we received $213,000 in
connection with the interim settlement of this swap agreement. The next reset date for this swap agreement is July 15, 2005. At each reset date the Company either receives or pays money based on the fair value of the swap as of that date.



(13) FRONTLINE MARKETING



On November 27, 2000, the Company sold its 80% owned subsidiary, 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-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%. No gain or loss was initially recognized on this transaction. As of December 27, 2004, the FMI Notes balance is $1.4 million.



(14) 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. During the three
fiscal quarters ended December 27, 2004, the Company provided $4 million related to legal charges. In the opinion of management, none of the suits and claims currently pending will have a material adverse effect on the Companys financial
statements.



(15) 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 December 27, 2004, the Company has paid all termination benefits and all costs associated with relocation of existing employees. The Company has completed this restructuring plan.



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The following summarizes the cumulative activity in the Companys reserve related to this activity as of December
27, 2004 (in thousands):



|                     |  |                      |       |              |   |        |                            |  |   |  
|-------------------- |  | -------------------- | ----- | ------------ | - | ------ | -------------------------- |  | - | -
|                     |  | RestructuringExpense |       | CashPayments |   |        | Balances December 27. 2004
|Accrued liabilities: |  |                      |       |              |   |        |                            |  |   |  
|Severance            |  | $                    | 2,600 |              | $ | (2,600 | )                          |  | $ | 
|Relocation           |  |                      | 139   |              |   | (139   | )                          |  |   | 
|                     |  |                      |       |              |   |        |                            |  |   |  
|                     |  | $                    | 2,739 |              | $ | (2,739 | )                          |  | $ | 
|                     |  |                      |       |              |   |        |                            |  |   |  



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.



(16) NEW
ACCOUNTING PRONOUNCEMENTS



In January 2003, the Financial Accounting
Standards Board (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.



In December 2004, the FASB issued SFAS No. 123(R), Share-Based Payment. This Statement revises FASB Statement No. 123, Accounting for Stock-Based
Compensation and supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees. SFAS No. 123(R) focuses primarily on the accounting for transactions in which an entity obtains employee services in share-based payment
transactions. SFAS No. 123(R) requires companies to recognize in the statement of operations the cost of employee services received in exchange for awards of equity instruments based on the grant-date fair value of those awards (with limited
exceptions). This Statement is effective as of the first reporting period that begins after June 15, 2005. Accordingly, the Company will adopt SFAS 123(R) in its first quarter of fiscal 2006. The Company is currently evaluating the provisions of
SFAS 123(R) and has not yet determined the impact that this Statement will have on its results of operations or financial position.



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##### Table of Contents

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



Executive Summary



We are a nationally distributed publisher in the fields of weekly celebrity journalism and health and fitness magazines. We publish the following magazines: Star, Shape, Mens Fitness, Muscle & Fitness,
Flex, Muscle & Fitness Hers, Fit Pregnancy, Natural Health, Shape en Espanol, National Enquirer, Globe, National Examiner, Weekly World News, Sun, Country WeeklyandMIRA!, as well as other special topic magazines.



Due to a change in the scheduled delivery dates of our weekly publications, our three fiscal
quarters ended December 27, 2004 include 40 issues of our weekly publications versus 39 issues for the prior years comparable three fiscal quarters. The net impact on revenues and operating expenses for the three fiscal quarters ended December
27, 2004 was an increase of $7.1 million and $3.8 million, respectively. The fiscal quarter ended December 27, 2004 and the fiscal quarter ended December 29, 2003 each contained 13 issues of our weekly publications.



In April of 2004, we nationally re-launched the Star tabloid newspaper as a 100-page
glossy magazine. Since its re-launch, the Starmagazine has realized an increase in revenues and also an increase in operating costs relating to the publication of the magazine. Also since the re-launch of Star, we were able to
increase its cover price as well as realize an increase in subscription and advertising revenues. Related to the re-launch of Star,revenues increased $6.4 million and $25.6 million for the three and nine month periods ended December 27,
2004, respectively. Also related to the re-launch of Star, operating expenses increased $7.4 million and $27.1 million for the three and nine month periods ended December 27, 2004, respectively. We believe that we will be able to increase
future revenues relating to Star while maintaining a similar cost structure.



Results of Operations



Fiscal Quarter Ended
December 27, 2004 vs. Fiscal Quarter Ended December 29, 2003



Revenues



Total revenues were $129.4 million for the current
fiscal quarter ended December 27, 2004. Revenues increased by $11.1 million, or 9.3%, from the prior years comparable fiscal quarter. This increase is primarily due to an increase in circulation revenues of $2.6 million and an increase in
advertising revenues of $8.5 million. The increase in circulation revenues is primarily related to an increase in the cover price for the Starwhich resulted in an increase in circulation revenues of $7.3 million for the quarter. This
increase in circulation revenues was partially offset by a 7.2% decline in circulation unit sales for AMIs weekly publications, a decrease of $4.1 million for the quarter. Contributing to the decline in unit sales were factors including recent
strong competition in the weekly magazine market. Advertising revenues increased $8.5 million or 29.2% when compared to the prior year fiscal quarter. This increase in advertising revenues was primarily related to the Starand Shapemagazines which increased 70% and 36%, respectively.



Operating Expenses



Total operating expenses for the current fiscal quarter increased by
$11.4 million, or 11.8% versus the prior years comparable fiscal quarter. This increase was primarily due to increased operating expenses related to Star in the current fiscal quarter of $7.4 million. The increase in Staroperating expenses included $2.5 million related to upgraded paper, $1.3 million related to an increase in subscription copies, $1.6 million related to subscription fulfillment and acquisition costs and $0.7 million related to promotional launch
costs. The additional increase in operating expenses for the quarter were due to an increase in depreciation expense of $0.8 million, increased subscription fulfillment and acquisition costs for Shape and Mens Fitness of $1.1
million and an increase in advertising sales costs of $1.7 million.



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Interest Expense



Interest expense increased for the current fiscal quarter by $1.1 million to $21.2 million compared to the prior years comparable fiscal quarter. Included in
interest expense for the current fiscal quarter was an increase in interest expense of $0.8 million related to our interest rate swap agreement. Included in interest expense for the prior years comparable fiscal quarter was a decrease in
interest expense of $0.2 million related to our interest swap agreement. Additionally, there was a higher effective interest rate during the current fiscal quarter of 4.4% as compared to 4.1% in the prior years comparable fiscal quarter.



Income Taxes



The provision for income taxes decreased for the current fiscal quarter by $488,000 to
$8,000 compared to the prior years comparable fiscal quarter. This decrease was primarily due to the overall decrease in pre-tax income.



Three Fiscal Quarters Ended December 27, 2004 vs. Three Fiscal Quarters Ended December 29, 2003



Please note that our three fiscal quarters ended December 27, 2004 include 40 issues of
our weekly publications versus 39 issues for the prior years comparable three fiscal quarters due to a change in the scheduled delivery dates of the weekly publications. The net impact on revenues and operating expenses for the three fiscal
quarters ended December 27, 2004 was an increase of $7.1 million and $3.8 million, respectively.



Revenues



Total revenues were $399.4
million for the three current fiscal quarters ended December 27, 2004. Revenues increased by $29.2 million, or 7.9%, over the prior year comparative period. This increase was primarily due to an increase in circulation revenues of $11.9 million and
an increase in advertising revenues of $17.8 million, which includes the net impact of the issue delivery changes of $7.1 million as mentioned above. The increase in circulation revenues was primarily related to an increase in the cover price for
the Starwhich resulted in an increase in circulation revenues of $23.4 million for the three current fiscal quarters. These increases in circulation revenues were partially offset by an 8.4% decline in circulation unit sales for AMIs
weekly publications, a decrease of $11.4 million for the three current fiscal quarters. Contributing to the decline in unit sales were factors including recent strong competition in the weekly magazine market. Advertising revenues increased $17.8
million or 16.9% when compared to the prior year period. This increase in advertising revenues was primarily related to the Starand Shape which increased 50.8% and 31.4%, respectively, when compared to the prior year period.



Operating Expenses



Total operating expenses for the three current fiscal quarters increased by $38.5 million,
or 13.1%, when compared to the prior year. This increase was primarily due to an increase in operating expenses related to the Star for the three current fiscal quarters of $27.1 million. The increase in Starrelated expenses included
$10.5 million related to upgraded paper, $4.1 million related to an increase in subscription copies, $2.7 million relating to subscription fulfillment and acquisition costs and promotional launch costs of $4.2 million. The additional increases in
operating expenses were due to increased legal charges of $2.1 million, an increase in depreciation expense of $2.7 million, an increase in advertising sales costs of $4.3 million and additional issue delivery changes of $3.8 million as mentioned
above. These increases were offset by a $2.7 million restructuring charge during the prior years comparable three fiscal quarter period.



Interest Expense



Interest expense increased for the three current fiscal quarters by $4.4 million to $62.2 million compared to the prior year. This increase in interest expense relates to increased interest expense of $2.1 million for
the three current fiscal quarters related to our interest rate swap agreement versus a decline of $1.7 million in the prior years results. Additionally, there was a higher effective interest rate during the current fiscal quarter of 4.4% as
compared to 4.1% in the prior years comparable fiscal quarter.



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Income Taxes



The provision for income taxes decreased for the three current fiscal quarters by $4.8 million to $2.6 million compared to the prior years comparable three fiscal
quarters. This decrease was primarily due to lowered pre-tax income. The effective tax rate for the nine months ended December 27, 2004 and December 29, 2003 was 45% and 38%, respectively. The effective tax rate for the nine months ended December
27, 2004 increased from the prior year as a result of the impact of permanent deductions as a percentage of income before provision for income taxes being greater during the current period.



LIQUIDITY AND CAPITAL RESOURCES



Our primary sources of liquidity are cash generated from operations and amounts available to
be borrowed under our Credit Agreement. As of December 27, 2004, we had cash and cash equivalents of $15.4 million, borrowing capacity of $60.0 million under the revolving credit facility and a working capital deficiency of $2.2 million. Our working
capital deficiency resulted principally from our policy of using available cash to reduce borrowings under our Credit Agreement which are recorded as noncurrent liabilities, thereby reducing current assets without a corresponding reduction in
current liabilities.



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 provide the liquidity necessary to meet our financial commitments for at least the next twelve months. As of December 27, 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 Credit Agreement by June 2006 and 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.



Cash provided by operating activities was
$27.8 million for the three fiscal quarters ended December 27, 2004. Cash provided by operating activities for the three fiscal quarters ended December 27, 2004 benefited from our usage of existing paper inventories for the production of
publications over the current three fiscal quarter period. Our inventory decreased from $34.5 million as of March 29, 2004 to $21.1 million as of December 27, 2004. Cash used in investing activities was $18.0 million for the three fiscal quarters
ended December 27, 2004. During this three quarter period we used $14.2 million for capital expenditures related to rack acquisitions and $4.0 million related to all other capital expenditures.



Cash used in financing activities was $16.6 million for the three fiscal quarters ended
December 27, 2004. During this three quarter period we made term loan repayments of $15.0 million and incurred deferred debt costs of $1.5 million. 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 December 27, 2004, our outstanding indebtedness totaled $975.9
million, of which $425.4 million represented borrowings under the Credit Agreement and $0.5 million represents unamortized bond premium. At February 9, 2005, our outstanding indebtedness totaled $974.5 million, of which $424.0 million represented
borrowings under the Credit Agreement. As of December 27, 2004, the Companys effective interest rate on borrowings under the Credit Agreement was 4.9%. The effective rate for borrowings under the Credit Agreement averaged 4.4% for the three
fiscal quarters ended December 27, 2004. The effective rate for borrowings under the Credit Agreement averaged 4.1% for the three fiscal quarters ended December 29, 2003.



The Company has 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 domestic



18



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##### Table of Contents

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. Subordinated note guarantees are joint and several, full and unconditional and general unsecured obligations of the note guarantors. The
note guarantors are our subsidiaries. At present, the note guarantors comprise all of our 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 facility, and are also effectively subordinated to all secured obligations of note guarantors to the extent of the assets securing such obligations, including the credit facility. Furthermore, the subordinated note 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.



Earnings before
Interest, Taxes, Depreciation and Amortization (EBITDA)



The
following table and discussion summarizes EBITDA for the three months and nine months ended December 29, 2003 and December 27, 2004 (dollars in 000s). Adjusted EBITDA is presented to identify EBITDA add-backs and deductions as required under
the terms of 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.



|                                                  |  |                                        |        |                                        |   |        |                                               |  |                                               |         |  |   |        
|------------------------------------------------- |  | -------------------------------------- | ------ | -------------------------------------- | - | ------ | --------------------------------------------- |  | --------------------------------------------- | ------- |  | - | -------
|                                                  |  | Fiscal Quarter Ended December 29, 2003 |        | Fiscal Quarter Ended December 27, 2004 |   |        | Three Fiscal Quarters Ended December 29, 2003 |  | Three Fiscal Quarters Ended December 27, 2004
|Net income (loss) (5)                             |  | $                                      | 692    |                                        | $ | (281   | )                                             |  | $                                             | 12,012  |  | $ | 3,140  
|Add -                                             |  |                                        |        |                                        |   |        |                                               |  |                                               |         |  |   |        
|Interest expense                                  |  |                                        | 20,054 |                                        |   | 21,198 |                                               |  |                                               | 57,743  |  |   | 62,173 
|Income taxes                                      |  |                                        | 496    |                                        |   | 8      |                                               |  |                                               | 7,375   |  |   | 2,579  
|Depreciation and Amortization                     |  |                                        | 10,114 |                                        |   | 11,089 |                                               |  |                                               | 30,325  |  |   | 33,164 
|Other (income) expense, net                       |  |                                        | 63     |                                        |   | 8      |                                               |  |                                               | 123     |  |   | 109    
|                                                  |  |                                        |        |                                        |   |        |                                               |  |                                               |         |  |   |        
|EBITDA (5)                                        |  |                                        | 31,419 |                                        |   | 32,022 |                                               |  |                                               | 107,578 |  |   | 101,165
|Management bonus (1)                              |  |                                        |       |                                        |   |       |                                               |  |                                               | 2,310   |  |   |       
|Restructuring expense (2)                         |  |                                        |       |                                        |   |       |                                               |  |                                               | 2,705   |  |   |       
|Management fees (3)                               |  |                                        | 500    |                                        |   | 500    |                                               |  |                                               | 1,500   |  |   | 1,500  
|Star re-launch and new titles launch expenses (4) |  |                                        | 731    |                                        |   | 1,109  |                                               |  |                                               | 1,266   |  |   | 7,444  
|                                                  |  |                                        |        |                                        |   |        |                                               |  |                                               |         |  |   |        
|Adjusted EBITDA (5)                               |  | $                                      | 32,650 |                                        | $ | 33,631 |                                               |  | $                                             | 115,359 |  | $ | 110,109
|                                                  |  |                                        |        |                                        |   |        |                                               |  |                                               |         |  |   |        

---

|(1) | Net income for the three fiscal quarters ended December 29, 2003 includes a $2.3 million bonus as an expense granted to certain members of management as part of the Companys
recapitalization on April 17, 2003. This bonus was funded with cash contributed as part of the recapitalization.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Net income for the three fiscal quarters ended December 29, 2003 includes $2.7 million of severance and relocation expenses relating to the relocation of publications to our New
York facility.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | The Companys amended Credit Agreement allows for the add-back of management fees.
|--- | ----------------------------------------------------------------------------------

|(4) | The Companys amended Credit Agreement allows for the add-back of certain non-recurring Star re-launch costs and expenses relating to the launch of new magazine titles
to the extent such charges and expenses were incurred during such quarters.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Includes $4.0 million for significant legal charges for the three fiscal quarters ended December 27, 2004.
|--- | ----------------------------------------------------------------------------------------------------------



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.



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New Accounting Pronouncements



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.



In December 2004, the FASB issued SFAS No. 123(R), Share-Based
Payment. This Statement revises FASB Statement No. 123, Accounting for Stock-Based Compensation and supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees. SFAS No. 123(R) focuses primarily on the
accounting for transactions in which an entity obtains employee services in share-based payment transactions. SFAS No. 123(R) requires companies to recognize in the statement of operations the cost of employee services received in exchange for
awards of equity instruments based on the grant-date fair value of those awards (with limited exceptions). This Statement is effective as of the first reporting period that begins after June 15, 2005. Accordingly, the Company will adopt SFAS 123(R)
in its first quarter of fiscal 2006. The Company is currently evaluating the provisions of SFAS 123(R) and has not yet determined the impact that this Statement will have on its results of operations or financial position.



Critical Accounting Policies and Estimates



During the fiscal quarter ended December 27, 2004, there were no significant changes related
to the Companys critical accounting policies and estimates as disclosed in the Companys Annual Report on Form 10-K for the fiscal year ended March 29, 2004.



Forward-Looking Statements



Some of the information presented in this Form 10-Q 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,
| | - |  | ---------------------------------------------------------------------



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| |  |  | our ability to refinance existing debt,
| | - |  | ---------------------------------------



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



| |  |  | 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,
| | - |  | ------------------------------------------------------------------------------------------------------



| |  |  | our ability to increase future revenues relating to Star while maintaining a similar cost structure, and
| | - |  | --------------------------------------------------------------------------------------------------------



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



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##### Table of Contents

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



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 $1.4 million in our interest expense for the fiscal
quarter ended December 27, 2004.



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 December 27, 2004, the fair value of this swap was a liability of $454,000. The change in the fair value of the swap has been recognized as an
addition to interest expense for the fiscal quarter ended December 27, 2004. On January 15, 2004, we received $1,635,000 in connection with the interim settlement of this swap agreement. On July 15, 2004, we received $1,166,000 in connection with
the interim settlement of this swap agreement. Additionally, on January 18, 2005, we received $213,000 in connection with the interim settlement of this swap agreement. The next reset date for this swap agreement is July 15, 2005. At each reset date
the Company either receives or pays money based on the fair value of the swap as of that date.



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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##### Table of Contents

ITEM 4. CONTROLS AND PROCEDURES



(a) Disclosure Controls and Procedures:



The
Companys management, with the participation of the Companys Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Companys disclosure controls and procedures as of the end of the period covered
by this report. Based on such evaluation, the Companys Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Companys disclosure controls and procedures are effective in recording,
processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934, as amended.



(b) Internal Control Over Financial Reporting:



During the three month period ended December 27, 2004, there have not been
any changes in the Companys internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Companys internal control over financial reporting.



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PART II. OTHER INFORMATION



Item 1. Legal Proceedings



See footnote 14 of
Part I, Item I.



Item 6. Exhibits



*Exhibit 10.1 Agreement
dated June 11, 2002, by and between American Media, Inc. (AMI) and R.R. Donnelley & Sons Company (Donnelley).



*Exhibit 10.2 Contract Change No. 1 made as of November 10, 2004 and entered into on November 18, 2004, by and between AMI and Donnelley.



*Exhibit 10.3 Printing Agreement dated as of December 2, 2004, between AMI and Quad/Graphics,
Inc.



Exhibit 10.4 Employment Agreement between the Registrant and Thomas E.
Severson, Jr. dated December 15, 2004.



Exhibit 31.1 Certification of Chief
Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.



Exhibit 31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.



Exhibit 32 Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

---

|* | Portions of the above exhibits have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------



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SIGNATURES



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



| |  |                                
| |  | -------------------------------
| |  | AMERICAN MEDIA OPERATIONS, INC.
| |  | Registrant                     



Date: February 9, 2005



/s/ DAVID J. PECKERDavid J. PeckerChairman of the Board, President,Chief Executive Officer and Director(Principal Executive Officer)




Date: February
9, 2005



/s/ THOMAS E. SEVERSON, JRThomas E. SeversonSenior Vice President andChief Financial Officer(Principal Financial Officer)




Date: February
9, 2005



/s/ MARK J. BROCKELMANMark J. BrockelmanVice President of Finance(Principal Accounting Officer)




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Exhibit Index



|              |  |                                                                                                                                
|------------- |  | -------------------------------------------------------------------------------------------------------------------------------
|Exhibit No.   |  | Description                                                                                                                    
|*Exhibit 10.1 |  | Agreement dated June 11, 2002, by and between American Media, Inc. (AMI) and R.R. Donnelley & Sons Company (Donnelley).    
|              | 
|*Exhibit 10.2 |  | Contract Change No. 1 made as of November 10, 2004 and entered into on November 18, 2004, by and between AMI and Donnelley.    
|              | 
|*Exhibit 10.3 |  | Printing Agreement dated as of December 2, 2004, between AMI and Quad/Graphics, Inc.                                           
|              | 
|Exhibit 10.4  |  | Employment Agreement between the Registrant and Thomas E. Severson, Jr. dated December 15, 2004.                               
|              | 
|Exhibit 31.1  |  | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                            
|              | 
|Exhibit 31.2  |  | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                            
|              | 
|Exhibit 32    |  | Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

---

|* | Portions of the above exhibits have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------





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