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SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
 FORM 10-Q (Mark One) [X]
    
    Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarterly period ended March 31,
2004.  [  ]
    
    Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the transition period from  to . Commission file number: 333-50119  AMERICAN LAWYER MEDIA HOLDINGS, INC.  Delaware
    
    13-3980412(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification Number)345 Park Avenue SouthNew York, New York
    
    10010(Address of principal executive offices)
    
    (Zip Code)
 Registrants telephone number, including area code: (212) 779-9200   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.   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 May 12, 2004, there were 1,320,330 shares of the Registrants common
stock, $.01 par value, outstanding, the majority of which was held by U.S.
Equity Partners, L.P. and its affiliates.




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EXPLANATORY NOTE The Company is not currently required to file reports under the Securities
Exchange Act of 1934, as amended (the Exchange Act) and is not currently an
issuer within the meaning of the Sarbanes-Oxley Act of 2002. The Company is
filing this quarterly report on Form 10-Q pursuant to a covenant contained in
the Indenture dated December 22, 1997 between the Company and The Bank of New
York, as Trustee, governing the Companys 12 1⁄4% Senior Discount Notes.




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AMERICAN LAWYER MEDIA HOLDINGS, INC. INDEX PAGEPART IFINANCIAL INFORMATIONITEM 1. FINANCIAL STATEMENTSConsolidated Balance Sheets at March 31, 2004 (unaudited)
and December 31, 2003
    
    
    1Consolidated Statements of Operations for the Three
Months Ended March 31, 2004 and 2003 (unaudited)
    
    
    2Consolidated Statement of Changes in Stockholders Deficit for the Three Months
Ended March 31, 2004 (unaudited)
    
    
    3Consolidated Statements of Cash Flows for the Three Months
Ended March 31, 2004 and 2003 (unaudited)
    
    
    4Notes to Consolidated Financial Statements at
March 31, 2004 (unaudited)
    
    
    5-12ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    13ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    21ITEM 4. CONTROLS AND PROCEDURES
    
    
    21PART IIOTHER INFORMATIONITEM 1. LEGAL PROCEEDINGS
    
    
    22ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
    
    
    22ITEM 3. DEFAULTS UPON SENIOR SECURITIES
    
    
    22ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    22ITEM 5. OTHER INFORMATION
    
    
    22ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
    
    
    22CERTIFICATIONCERTIFICATIONCERTIFICATION




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PART I 
  
 ITEM 1. FINANCIAL STATEMENTS American Lawyer Media Holdings, Inc. 
 Consolidated Balance Sheets
 (In thousands, except share data)
 March 31,
    
    December 31,2004
    
    2003(unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    1,769
    
    
    $
    1,614Accounts receivable, net of allowance for doubtful accounts and
returns of $2,471 and $2,582, respectively
    
    
    15,971
    
    
    
    15,657Inventories, net
    
    
    720
    
    
    
    592Other current assets
    
    
    2,598
    
    
    
    2,381Total current assets
    
    
    21,058
    
    
    
    20,244Property, plant and equipment, net of accumulated depreciation
and amortization of $25,221 and $24,291, respectively
    
    
    7,971
    
    
    
    8,386Intangible assets, net of accumulated amortization of $68,126
and $66,137, respectively
    
    
    111,041
    
    
    
    113,030Goodwill, net
    
    
    148,242
    
    
    
    148,242Deferred financing costs, net of accumulated amortization of
$6,064 and $4,625, respectively
    
    
    4,330
    
    
    
    4,625Other assets
    
    
    5,999
    
    
    
    5,495Total assets
    
    $
    298,641
    
    
    $
    300,022LIABILITIES AND STOCKHOLDERS DEFICITCurrent liabilities:Accounts payable
    
    $
    5,188
    
    
    $
    5,493Accrued expenses
    
    
    11,229
    
    
    
    10,368Accrued interest payable
    
    
    5,118
    
    
    
    841Deferred income (including deferred subscription income of $18,202
and $17,391, respectively)
    
    
    22,242
    
    
    
    20,752Other current liabilities
    
    
    59
    
    
    
    Total current liabilities
    
    
    43,836
    
    
    
    37,454Long-term debt:Revolving credit facility
    
    
    24,000
    
    
    
    30,400Senior notes
    
    
    175,000
    
    
    
    175,000Senior discount notes
    
    
    73,810
    
    
    
    71,627Total long-term debt
    
    
    272,810
    
    
    
    277,027Other noncurrent liabilities
    
    
    10,847
    
    
    
    11,284Total liabilities
    
    
    327,493
    
    
    
    325,765Stockholders deficit:Common stock-$.01 par value; 2,000,000 shares authorized;
1,320,330 issued and outstanding at March 31, 2004 and December
31, 2003
    
    
    13
    
    
    
    13Paid-in-capital
    
    
    116,488
    
    
    
    116,488Accumulated deficit
    
    
    (143,713
    )
    
    
    (140,656
    )Accumulated other comprehensive loss
    
    
    (1,640
    )
    
    
    (1,588
    )Total stockholders deficit
    
    
    (28,852
    )
    
    
    (25,743
    )Total liabilities and stockholders deficit
    
    $
    298,641
    
    
    $
    300,022
 The accompanying notes to the consolidated financial statements are an integral part of these statements. 1




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American Lawyer Media Holdings, Inc. 
 Consolidated Statements of Operations
 (In thousands)
 (unaudited)
 For the Three Months EndedMarch 31,2004
    
    2003REVENUES:Periodicals:Advertising
    
    $
    18,273
    
    
    $
    18,555Subscription
    
    
    6,254
    
    
    
    6,038Ancillary products and services
    
    
    10,557
    
    
    
    9,310Total revenues
    
    
    35,084
    
    
    
    33,903OPERATING EXPENSES:Editorial
    
    
    5,145
    
    
    
    5,212Production and distribution
    
    
    5,787
    
    
    
    6,339Selling
    
    
    7,154
    
    
    
    6,817General and administrative
    
    
    9,957
    
    
    
    9,359Depreciation, amortization and other charges
    
    
    2,920
    
    
    
    3,508Total operating expenses
    
    
    30,963
    
    
    
    31,235Operating income
    
    
    4,121
    
    
    
    2,668Interest expense
    
    
    (7,162
    )
    
    
    (7,036
    )Loss before income taxes
    
    
    (3,041
    )
    
    
    (4,368
    )Provision (benefit) for income taxes
    
    
    16
    
    
    
    (820
    )Net loss
    
    $
    (3,057
    )
    
    $
    (3,548
    )
 The accompanying notes to the consolidated financial statements are an integral part of these statements. 2




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American Lawyer Media Holdings, Inc. 
 Consolidated Statement of Changes in Stockholders Deficit
 (In thousands, except share data)
 (unaudited)
 AccumulatedAdditional
    
    
    
    
    
    OtherPar
    
    Paid-In
    
    Accumulated
    
    ComprehensiveShares
    
    Value
    
    Capital
    
    Deficit
    
    Loss
    
    TotalCommon StockBalance at December 31, 2003
    
    
    1,320,330
    
    
    $
    13
    
    
    $
    116,488
    
    
    $
    (140,656
    )
    
    $
    (1,588
    )
    
    $
    (25,743
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,057
    )
    
    
    
    
    
    
    (3,057
    )Unrealized gain on equity securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (52
    )
    
    
    (52
    )Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,057
    )
    
    
    (52
    )
    
    
    (3,109
    )Balance at March 31, 2004
    
    
    1,320,330
    
    
    $
    13
    
    
    $
    116,488
    
    
    $
    (143,713
    )
    
    $
    (1,640
    )
    
    $
    (28,852
    )
 The accompanying notes to the consolidated financial statements are an integral part of these statements. 3




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American Lawyer Media Holdings, Inc. 
 Consolidated Statements of Cash Flows
 (In thousands)
 (unaudited)
 For the Three Months EndedMarch 31,2004
    
    2003CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
    
    $
    (3,057
    )
    
    $
    (3,548
    )Adjustments to reconcile net loss to net cash provided
by (used in) operating activities:Depreciation, amortization and other charges
    
    
    2,920
    
    
    
    3,508Deferred income tax
    
    
    
    
    
    
    (820
    )Non-cash interest
    
    
    294
    
    
    
    294Accretion of interest on senior discount notes
    
    
    2,183
    
    
    
    2,261(Increase) decrease in:Accounts receivable, net
    
    
    (315
    )
    
    
    1,211Inventories
    
    
    (128
    )
    
    
    233Other current assets
    
    
    (217
    )
    
    
    464Other assets
    
    
    13
    
    
    
    (34
    )(Decrease) increase in:Accounts payable
    
    
    (305
    )
    
    
    712Accrued expenses
    
    
    861
    
    
    
    (1,072
    )Other current liabilities
    
    
    59
    
    
    
    Accrued interest payable
    
    
    4,277
    
    
    
    3,939Deferred income
    
    
    910
    
    
    
    (629
    )Other noncurrent liabilities
    
    
    (427
    )
    
    
    3Net cash provided by operating activities
    
    
    7,068
    
    
    
    6,522CASH FLOWS FROM INVESTING ACTIVITIES:Capital expenditures
    
    
    (513
    )
    
    
    (535
    )Deferred purchase price from purchase of business
    
    
    
    
    
    
    (377
    )Net cash used in investing activities
    
    
    (513
    )
    
    
    (912
    )CASH FLOWS FROM FINANCING ACTIVITIES:Payment under revolving credit facility
    
    
    (6,400
    )
    
    
    (6,000
    )Net cash used in financing activities
    
    
    (6,400
    )
    
    
    (6,000
    )Net increase (decrease) in cash
    
    
    155
    
    
    
    (390
    )CASH, beginning of period
    
    
    1,614
    
    
    
    824CASH, end of period
    
    $
    1,769
    
    
    $
    434SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Cash paid during the period:Income taxes
    
    $
    16
    
    
    $
    17Interest
    
    $
    408
    
    
    $
    549
 The accompanying notes to the consolidated financial statements are an integral part of these statements. 4




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American Lawyer Media Holdings, Inc. 
 Notes to Consolidated Financial Statements
 March 31, 2004
 (unaudited)
 1. ORGANIZATION & OPERATIONS American Lawyer Media Holdings, Inc. (we, us, our, or the Company)
is the parent company of American Lawyer Media, Inc. (ALM). We publish
national and regional legal publications, including The American Lawyer, New
York Law Journal, The National Law Journaland Corporate Counsel. Our
operations are based in New York with regional offices in eight states, the
District of Columbia and London, England. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying unaudited consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States for interim financial information. Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, the interim financial statements include all adjustments, which are
of a normal recurring nature, that management considers necessary to fairly
present the financial position and the results of operations for such periods.
Results of operations of interim periods are not necessarily indicative of
results for a full year. These financial statements should be read in
conjunction with the audited consolidated financial statements in our Annual
Report on Form 10-K for December 31, 2003. Principles of Consolidation The
consolidated financial statements include our accounts and the
accounts of our wholly-owned subsidiaries. Intercompany transactions and balances have been eliminated
in consolidation. Use of Estimates The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent 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. Concentrations of Credit Risk Our financial instruments that are exposed to concentration of credit risk
consist primarily of cash and cash equivalents and trade accounts receivable.
We believe that we are not exposed to any significant credit risk related to
cash and cash equivalents. Concentrations of credit risk with respect to trade
accounts receivable are, except for amounts due from legal advertising agents
(Legal Ad Agents), generally limited due to the large number of customers
comprising our
customer base. Receivables from Legal Ad Agents aggregated $1.5 million as
of March 31, 2004. Such Legal Ad Agents do not have significant liquid net
worth and, as a result, we are 5




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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) exposed to a certain level of credit concentration risk in this area, for which
we believe we have adequately provided. Revenue Recognition Periodical advertising revenues are generated from the placement of
display and classified advertisements, as well as legal notices, in our
publications. Advertising revenue is recognized upon release of the related
publications. Periodical subscription revenues are recognized on a pro rata basis as
issues of a subscription are served. Internet subscription revenues are
recognized on a pro rata basis as issues of a subscription are served over the
life of the term of the subscription. Ancillary products and services revenues consist principally of newsletter
subscriptions, sales of professional books, seminar and trade show income,
income from a daily fax service of court decisions and web and phone research
and income from electronic products. Book revenues are recognized upon shipment
and are reflected net of estimated returns. Newsletter revenues are recognized
on the same basis as subscription revenues. Seminar and trade show revenues are
recognized when the seminar or trade show is held. Daily fax service and
research revenues are recognized upon fulfillment of orders. Internet advertising revenues are generated from the placement of display
and classified advertisements, as well as directory listings, on our websites.
Display and classified advertising revenue is recognized upon the release of an
advertisement on the particular website. Directory listing revenue is
recognized on a pro-rata basis over the life of the directory listing,
generally one year. Deferred Subscription Income Deferred subscription income results from advance payments or orders for
subscriptions received from subscribers and is amortized on a straight-line
basis over the life of the subscription as issues are served. Subscription
receivables of approximately $2,365,600 and $2,122,200 are included in accounts
receivable in the accompanying consolidated March 31, 2004 and December 31,
2003 balance sheets, respectively. Advertising and Promotional Expenditures Advertising and promotional expenditures totaled approximately $1,871,000
and $1,603,000 for the three months ended March 31, 2004 and 2003,
respectively. These costs are expensed as the related advertisement or
campaign is released. Cash and Cash Equivalents We consider time deposits and certificates of deposit with original
maturities of three months or less to be cash equivalents. 6




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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Cash on our consolidated balance sheet at March 31, 2004 and December 31,
2003 includes $543,000 and $160,000, respectively, of restricted cash collected
in association with managing a technology show on behalf of one of our
customers. Inventories Inventories consist principally of paper and related binding materials
utilized by us and our outside printers and professional books published and
sold by us. Inventories are stated at the lower of cost, as determined by the
average cost method, or market. Property, Plant and Equipment Property, plant and equipment is stated at cost. Significant improvements
are capitalized, while expenditures for maintenance and repairs are charged to
expense as incurred. Depreciation is calculated using the straight-line method
over the following estimated useful lives: Buildings
    
    25 yearsFurniture, machinery and equipment
    
    5-9 yearsComputer equipment and software
    
    3-6 years
 Leasehold improvements are amortized over the shorter of the remaining
lease term or the estimated useful life. In June 2003, we included in depreciation, amortization and other charges
a $1.5 million adjustment to write-off certain leasehold improvements and
furniture relating to office space abandoned during a prior quarter. The lease
was obtained in connection with our acquisition of Law.com, Inc. (Law.com) on
May 1, 2002. Intangible Assets Intangible assets represent advertiser commitments, uniform resource
locators, copyrights, trademarks, customer and subscriber lists and non-compete
agreements. Under SFAS No. 142, Goodwill and Other Intangible Assets, an
acquired intangible asset should be separately recognized apart from goodwill
if the benefit of the intangible is obtained through contractual or other legal
rights, or if the intangible asset can be sold, transferred, licensed, rented,
or exchanged. Intangible assets deemed to have finite lives are amortized on a
straight-line basis over useful lives ranging from 6 months through 30 years. Impairment of Long-Lived Assets We evaluate whether there has been an impairment in any of our long-lived
assets on an annual basis or if certain
circumstances indicate that a possible impairment may exist. An impairment in
value exists when the carrying value of a long-lived asset exceeds its fair
value. If it is determined that an impairment in value has occurred, the
carrying value is written down to its fair value. Goodwill and certain other
intangibles are tested for impairment under FAS No. 142 and all other
long-lived assets are tested for impairment under FAS No. 144, Accounting for
the Impairment or Disposal of Long-Lived Assets. 7




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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Deferred Financing Costs Deferred financing costs are amortized over the life of the related debt
using the straight-line method. Reclassifications Certain amounts have been reclassified to conform with the current year
presentation. Income Taxes Income taxes are accounted for in accordance with SFAS No. 109,
Accounting for Income Taxes, which requires that deferred tax assets and
liabilities be recognized using enacted tax rates for the effect of temporary
differences between the book and tax basis of recorded assets and liabilities. Stock Option Plans We have a stock option plan under which incentive and nonqualified stock
options may be granted periodically to certain of our employees and non-employee
directors. Pursuant to SFAS No. 148, Accounting for Stock-Based
Compensation-Transition and Disclosure, we have elected to continue to account
for employee stock-based compensation under APB Opinion No. 25, Accounting for
Stock Issued to Employees, using an intrinsic value approach to measure
compensation expense. Accordingly, no compensation expense has been recognized
for options granted under our stock option plan since all such options were
granted at exercise prices equal to or greater than fair market value on the
date of grant. The following table summarizes relevant information as to our reported
results under the intrinsic value method of accounting for stock awards, with
supplemental information, as if the fair value recognition provisions of SFAS
No. 123, Accounting for Stock-Based Compensation, had been applied to the
three month periods ended March 31, 2004 and 2003 (in thousands): Three Months EndedMarch 31,2004
    
    2003Reported net loss
    
    $
    (3,057
    )
    
    $
    (3,548
    )Stock-based employee compensation expense
determined under the fair value method
    
    
    (43
    )
    
    
    (104
    )Pro forma net loss
    
    $
    (3,100
    )
    
    $
    (3,652
    )
 8




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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Pension Costs The components of the net periodic benefit costs realized for the periods
ended March 31, 2004 and 2003 are as follows (in thousands): Three Months EndedMarch 31,2004
    
    2003Interest cost
    
    $
    78
    
    
    $
    72Expected return on plan assets
    
    
    (65
    )
    
    
    (55
    )Amortization of net (gain) loss
    
    
    25
    
    
    
    26Net periodic benefit costs
    
    $
    38
    
    
    $
    43
 For the year ending December 31, 2004, we expect to contribute $563,000 to
our retirement plans. As of March 31, 2004, we have contributed $43,000 to our
retirement plans. 3. DEBT In December 1997, we issued $63,275,000 aggregate principal amount at
maturity of 12 1⁄4% Senior Discount Notes due 2008 (the Discount Notes), at
a discount rate of $553.14 per Discount Note. The Discount Notes accrete
interest compounded semi-annually at a rate of 12.25% to an aggregate principal
amount of $63,275,000 by December 2002. Commencing in June 2003, cash interest
would have been payable semi-annually until maturity each June 15 and December
15 if not for the waiver and consent entered into described in the next
paragraph. The Discount Notes are senior, unsecured obligations. The Discount
Notes may be redeemed at any time by us, in whole or in part, at various
redemption prices that include accrued and unpaid interest as well as any
existing liquidating damages. The Discount Notes contain certain covenants
that, among other things, limit the incurrence of additional indebtedness, by
us and our subsidiaries, the payment of dividends and other restricted payments
by us and our subsidiaries, restrictions on distributions from certain
restricted subsidiaries, asset sales, transactions with affiliates, incurrence
of liens and mergers and consolidations. Financing costs, totaling $1,693,000,
have been capitalized and are being amortized over the term of the Discount
Notes. Assuming that there is no redemption of the Discount Notes prior to
maturity, the entire principal will be payable on December 15, 2008. On February 27, 2003, we entered into a waiver and consent with the
holders of the Discount Notes due 2008, which provides for the waiver of cash payments
by us of semi-annual interest that was to begin in June 2003. The Discount
Notes will now become cash-pay in December 2004, with the first interest
payment due on June 15, 2005. The Discount Notes will continue to accrete
until December 2004, at which time the aggregate principal amount of the
Discount Notes will be $80,260,705. Beginning on December 15, 2004, cash
interest on the Discount Notes will accrue at the rate of 12.25% per annum. As
of March 31, 2004, Bruce Wasserstein and certain of his affiliates own
approximately 48.9% of the Discount Notes issued by us. On December 22, 1997, ALM issued $175,000,000 aggregate principal amount
of 93⁄4% Senior Notes (the Notes) due December 15, 2007. The Notes
accrue interest at 9.75% which is payable in cash semi-annually on June 15 and
December 15 of each year. The Notes are unsecured 9




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3. DEBT (continued) general senior obligations and are fully and unconditionally guaranteed, on a
joint and several and senior unsecured basis, by each of ALMs existing and
future subsidiaries. Separate financial statements of, and other disclosures
concerning, the guarantors are not included herein because of the guarantors
full and unconditional guarantee of the Notes and ALMs determination that
separate financial statements and other disclosures concerning the guarantors
are not material and would not provide any additional meaningful disclosure.
The Notes may be redeemed at any time by ALM, in whole or in part, at various
redemption prices that include accrued and unpaid interest. The Notes contain
certain covenants that, among other things, limit the incurrence of additional
indebtedness by ALM and its subsidiaries, the payment of dividends and other
restricted payments by ALM and its subsidiaries, asset sales, transactions with
affiliates, the incurrence of liens, and mergers and consolidations. Financing
costs, totaling $7,236,000, were capitalized and are being amortized over the
term of the Notes. Amortization of deferred financing costs is recorded as
interest expense. Assuming there is no redemption of the Notes prior to
maturity, the entire principal will be payable on December 15, 2007. As of
March 31, 2004, Bruce Wasserstein and certain affiliates own approximately
4% of the Notes issued by ALM. On May 1, 2002, we, The New York Law Publishing Company (NYLP) and ALM
entered into a credit agreement, dated as of May 1, 2002, with GE Corporate
Finance (GECC) and the lenders signatory thereto under which GECC has
provided our operating subsidiary, NYLP, with
a $40 million revolving credit facility (the GECC Facility). The GECC
Facility replaces our prior revolving credit facility and proceeds from the
GECC Facility were used to refinance existing indebtedness, provide working
capital and finance capital expenditures. The obligations of NYLP under the
GECC Facility are guaranteed by us, ALM and all of our domestic subsidiaries,
and are secured by all of the assets of us, ALM and our domestic subsidiaries
(including the stock of all our domestic subsidiaries and 65% of the stock of
our first-tier foreign subsidiaries). The GECC Facility bears interest at a
fluctuating rate determined by reference to (i) the index rate plus a margin of
2.00%, or (ii) the Eurodollar Rate (LIBOR) plus a margin of 3.5%. We are also
required to pay customary fees with respect to the GECC Facility, including an
up-front arrangement fee, monthly administrative agency fees and commitment
fees on the unused portion of the GECC Facility. The GECC Facility includes
both affirmative and negative covenants that include meeting certain financial
ratios. The term of the GECC Facility is 60 months. On November 13, 2002, the GECC Facility was amended to clarify language in
the GECC credit agreement, as well as to allow us to assume a lease by and
between 1140 Associates, Inc. and Law.com. In addition, on February 27, 2003,
the GECC Facility was amended to modify the covenants relating to the total
leverage ratio, interest coverage ratio and fixed charge ratio until December
2004. These covenants now provide alternative compliance levels and associated
incremental interest rates. In addition, the GECC facility was amended to
allow for the transaction described below regarding the Discount Notes due 2008.
Also, on December 15, 2003, the GECC Facility was amended to consent to the
acquisition of MA3000 and amend our terms of the lease by and between 1140
Associates, Inc. and Law.com. At March 31, 2004, the amount outstanding under the GECC Facility was
$24.0 million. The available balance under the unused commitment reduced by
our letters of credit outstanding totaled $13.6 million. A 10% increase in the
average interest rate of borrowing under the GECC 10




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3. DEBT (continued) Facility during the year ended December 31, 2003 would have increased our net
loss to approximately $3.1 million. 4. RESTRUCTURING CHARGE During 2002, upon the decision to restructure certain of our operations,
we accrued approximately $1.5 million of restructuring charges. These charges
primarily related to severance arrangements for approximately 55 employees in
various regions and divisions and were included
in operating income. As of March 31, 2004, approximately $0.2 million,
representing the unpaid charges, is included in accrued expenses. The following is a summary of our restructuring charge activity (in
thousands): Unpaid restructuring charge accrual at
December 31, 2003
    
    $
    281Less: Payments during the three months ended
March 31, 2004
    
    
    (40
    )Unpaid restructuring charge accrual at
March 31, 2004
    
    $
    241
 5. SEGMENT INFORMATION Operating segments represent components of our business that are evaluated
regularly by our chief operating decision makers in assessing performance and
resource allocation. We have determined that our reportable segments consist of
our regional newspapers (the Regional Newspapers), national businesses (the
National Businesses) and our online business, Law.com
(Online). We have
also reflected unallocated costs related to our corporate and administrative
functions as a separate unit (Corporate) so as to not distort our other
segments. For the years presented herein, the Regional Newspapers are comprised of
the following: New York Law Journal; The National Law Journal; and fifteen
other daily and weekly regional newspapers. The economic characteristics,
products, services, production processes, customer type and distribution
methods are substantially similar. The National Businesses are comprised of the following: our magazine group
which includes The American Lawyerand eight other magazines; our newsletters;
our hard and soft cover books; our trade shows and seminars; our licensing and
syndication business; our litigation services division; our international
operations and our MA3000 business. These businesses share substantially the
same customer type and geographic regions. Online is comprised of Law.com, which primarily includes web content,
seminars and practice and continuing legal education
(CLE) areas. Corporate overhead is comprised of: unallocated costs relating to our
administrative offices, which include executive management, legal, human
resources, accounting, information systems, business development, office
services, government affairs and public relations. In addition, Corporate
includes us, ALM and ALM Properties, Inc., one of ALMs subsidiaries. 11




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5. SEGMENT INFORMATION (continued) We evaluate performance based on the segments income (loss) from
operations before unallocated corporate overhead and interest expense. The
accounting policies of the reportable segments are the same as those described
in Note 2. Our operations on a segmented basis were as follows (in thousands): For the Three Months EndedMarch 31, 2004Regional
    
    NationalNewspapers
    
    Businesses
    
    OnlineTotal net revenue
    
    
    20,901
    
    
    $
    12,515
    
    
    $
    1,668Segment operating
income
    
    $
    7,090
    
    
    $
    2,006
    
    
    $
    49
 For the Three Months EndedMarch 31, 2003Regional
    
    NationalNewspapers
    
    Businesses
    
    OnlineTotal net revenue
    
    $
    22,232
    
    
    $
    10,454
    
    
    $
    1,217Segment operating
income (loss)
    
    $
    6,791
    
    
    $
    2,088
    
    
    $
    (858
    )
 A
reconciliation of combined segment operating income to consolidated net loss is as
follows (in thousands): For the Three Months EndedMarch 31,2004
    
    2003Total segment operating income
    
    $
    9,145
    
    
    $
    8,021Unallocated amounts:Corporate expenses
    
    
    (5,024
    )
    
    
    (5,353
    )Interest expense
    
    
    (7,162
    )
    
    
    (7,036
    )Provision (benefit) for
income taxes
    
    
    16
    
    
    
    (820
    )Net loss
    
    $
    (3,057
    )
    
    $
    (3,548
    )
 12




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS The following discussion should be read in conjunction with our historical
consolidated financial statements, including the notes thereto, included
elsewhere in this Form 10-Q. Any statements in this quarterly report concerning our business outlook or
future economic performance, anticipated profitability, revenues, expenses or
other financial items, together with other statements that are not historical
facts, are forward-looking statements as that term is defined under the
federal securities laws. Forward-looking statements are subject to risks,
uncertainties and other factors that could cause actual results to differ
materially from those stated in such statements. Such risks, uncertainties and
factors include, but are not limited to, changes in the levels of advertising
revenues, changes and delays in new product introductions, customer acceptance
of new products and general economic conditions, as well as other risks
detailed in our filings with the Securities and Exchange Commission. Business Overview The following discussion compares our financial results for the three
months ended March 31, 2004 to the three months ended March 31, 2003. In June 2003, we included in depreciation, amortization and other charges
a $1.5 million adjustment to write-off certain leasehold improvements and
furniture relating to office space abandoned during a prior quarter. The lease
was obtained in connection with our acquisition of Law.com on May 1, 2002. On December 31, 2003, our wholly-owned subsidiary, The New York Law
Publishing Company, acquired the assets, certain liabilities and the business
of delivering electronic court calendar information via a product called MA3000
(MA3000) from RealLegal, LLC. The purchase price for this acquisition,
including direct acquisition costs, totaled $2.2 million. With this
acquisition, we recorded $2.7 million of goodwill and $1.3 million of
intangibles. We and RealLegal share substantially all of the same common
stockholders. The purchase price was determined based on an independent third
party valuation undertaken in 2003. GAAP refers to accounting principles generally accepted in the United
States of America. Throughout this Managements Discussion and Analysis of
Financial Condition and Results of Operations (MD&A), management discusses
financial measures in accordance with GAAP and also on a non-GAAP basis. All
references in this MD&A to EBITDA (earnings before interest, income taxes,
depreciation, amortization and other charges) (EBITDA) are to a non-GAAP
financial measure. We believe that the use of non-GAAP financial measures
enables us and investors to evaluate, and compare from period to period, the
results from ongoing operations in a more meaningful and consistent manner.
Reconciliations of GAAP to non-GAAP financial measures are included on page 20. 13




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The following table presents the results of operations (in thousands) for
the three months ended March 31, 2004 and 2003. Three Months Ended March 31,2004
    
    2003Operating Data:Revenues:Periodicals:Advertising
    
    $
    18,273
    
    
    $
    18,555Subscription
    
    
    6,254
    
    
    
    6,038Ancillary products and services
    
    
    10,557
    
    
    
    9,310Total revenues
    
    
    35,084
    
    
    
    33,903Operating expenses:Editorial
    
    
    5,145
    
    
    
    5,212Production and distribution
    
    
    5,787
    
    
    
    6,339Selling
    
    
    7,154
    
    
    
    6,817General and administrative
    
    
    9,957
    
    
    
    9,359Depreciation, amortization and
other charges
    
    
    2,920
    
    
    
    3,508Total operating expenses
    
    
    30,963
    
    
    
    31,235Operating income
    
    
    4,121
    
    
    
    2,668Interest expense
    
    
    (7,162
    )
    
    
    (7,036
    )Loss before income tax
    
    
    (3,041
    )
    
    
    (4,368
    )Provision (benefit) for income tax
    
    
    16
    
    
    
    (820
    )Net loss
    
    $
    (3,057
    )
    
    $
    (3,548
    )
 Results of Operations Three months ended March 31, 2004 compared to three months ended March 31, 2003 Overview. Revenues increased by $1.2 million, or 3.5%, from $33.9 million
for the three months ended March 31, 2003 to $35.1 million for the three months
ended March 31, 2004. Operating expenses decreased $0.2 million, or 0.9%, from
$31.2 million for the three months ended March 31, 2003 to $31.0 million for
the three months ended March 31, 2004. As a result, operating income increased
$1.4 million, from $2.7 million for the three months ended March 31, 2003 to
$4.1 million for the three months ended March 31, 2004. EBITDA increased $0.8
million, or 14.1%, from $6.2 million for the three months ended March 31, 2003
to $7.0 million for the three months ended March 31, 2004. Net loss totaled
$3.1 million for the three months ended March 31, 2004 as compared to a net
loss of $3.5 million for the three months ended March 31, 2003. Revenues. Revenues increased by $1.2 million, or 3.5%, from $33.9 million
for the three months ended March 31, 2003 to $35.1 million for the three months
ended March 31, 2004. Revenue growth for the three months ended March 31, 2004
compared to the three months ended March 31, 2003 reflects revenues recorded in
our MA3000 business of $0.6 million, as a result of our acquisition of MA3000
on December 31, 2003. In addition, royalty and licensing fees, revenues from
our tradeshows and seminars, online continuing legal education (CLE) fees and
subscription revenues in our print publications increased during the three
months ended March 31, 2004. These increases were partially offset by
decreases in advertising revenues, primarily in classified advertising
revenues, in our print publications. Also contributing to the decrease in
revenues was the elimination of editorial content fees as a result of our
acquisition of MA3000. Advertising revenues decreased $0.3 million, from $18.6 million for the
three months ended March 31, 2003 to $18.3 million for the three months ended
March 31, 2004. Lower revenues were recorded in classified, legal notice and
law firm advertising of $0.3 million, $0.1 million and $0.1 million,
respectively, for the three months ended March 31, 2004. These decreases were 14




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partially offset by increases in display and directory advertising of $0.1
million despite the decision not to renew a contract to publish certain
directories, which totaled $0.4 million for the three months ended March 31,
2003. Classified advertising revenues declined $0.3 million, or 5.3%, from $5.0
million for the three months ended March 31, 2003 to $4.7 million for the three
months ended March 31, 2004. Our print publications declined $0.4 million,
which was offset by an increase in online classified advertising. Our print
market share continues to be strong, however, the total volume of advertising
is down, as law firms still have not yet begun to increase their volume of
recruitment advertising. Subscription revenues increased $0.3 million, or 3.6%, from $6.0 million
for the three months ended March 31, 2003 to $6.3 million for the three months
ended March 31, 2004. This increase is primarily due to direct marketing
efforts in our print publications. Revenues from ancillary products and services increased $1.3 million, or
13.4%, from $9.3 million for the three months ended March 31, 2003 to $10.6
million for the three months ended March 31, 2004. The increase in revenues
resulted primarily from higher seminar and tradeshow revenues from online CLE
registrations and our New York Legal Tech show, MA3000 court research fees,
higher royalty and licensing fees primarily from the inclusion of new products
in our royalty licensing contracts and higher newsletter sales. These increases
were partially offset by lower book sales from the above-mentioned decision not
to renew a contract to publish certain directories. Excluding this contract,
however, our book revenue increased year-over-year. In addition, as a result of
the acquisition of MA3000, we no longer derive revenue from the sale of our
editorial content fees but rather through court research fees as indicated
above. Operating expenses. Operating expenses decreased $0.2 million, or 0.9%,
from $31.2 million for the three months ended March 31, 2003 to $31.0 million
for the three months ended March 31, 2004. All expense categories decreased
with the exception of selling and general and administrative. Lower operating
expenses during the three months ended March 31, 2004 as compared to the three
months ended March 31, 2003 were primarily realized through lower production
and distribution expenses, primarily due to incremental cost savings due to
reduced book sales. Editorial and depreciation and amortization expenses also
decreased primarily from continued cost containment efforts and from certain
intangible assets and other capital assets becoming fully amortized or
depreciated in 2003, respectively. These savings were partially offset by an
increase in selling expenses, due to direct marketing efforts, and in general and
administrative expenses. Editorial expenses decreased $0.1 million, or 1.3%, from $5.2 million for
the three months ended March 31, 2003 to $5.1 million for the three months
ended March 31, 2004. The decrease in editorial expenses primarily resulted
from realized savings in salaries and related taxes and employee benefits, and
consulting and professional fees from our continued cost containment efforts.
These decreases were partially offset by an increase in contributing editor
fees and artwork and photography in our print publications. Production and distribution expenses decreased $0.5 million, or 8.7%, from
$6.3 million for the three months ended March 31, 2003 to $5.8 million for the
three months ended March 31, 2004. Production and distribution expenses
decreased primarily from lower paper, printing, fulfillment and other
production costs, a decrease in salaries and related taxes and employee
benefits, a decrease in book production costs and other realized savings from
our continued cost containment efforts. These decreases were partially offset
by an increase in production costs related to our seminar and tradeshow
revenues. 15




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Selling expenses increased $0.4 million, or 5.0%, from $6.8 million for
the three months ended March 31, 2003 to $7.2 million for the three months
ended March 31, 2004. The increase in expenses is primarily due to increases in
direct mail costs and other marketing efforts and in salaries and related taxes
and employee benefits. General and administrative expenses increased $0.6 million, or 6.4%, from
$9.4 million for the three months ended March 31, 2003 to $10.0 million for the
three months ended March 31, 2004. This increase resulted primarily from higher
management consulting and professional fees, salary and other compensation,
salary related taxes and employee benefits and an increase in other taxes.
These increases were partially offset by a net reduction in our provision for
uncollectible accounts due to an improvement in our accounts receivable aging
performance and lower legal fee expenses. Depreciation, amortization and other charges decreased $0.6 million, or
16.8%, from $3.5 million for the three months ended March 31, 2003 to $2.9
million for the three months ended March 31, 2004. This decrease resulted
primarily from lower amortization and depreciation expense recorded during the
three months ended March 31, 2004 as compared to the three months ended March
31, 2003 due to certain non-compete and other intangible assets and certain
capital assets being fully amortized or depreciated by the end of 2003. Operating income. As a result of the above factors, our operating income
increased $1.4 million, from $2.7 million for the three months ended March 31,
2003 to $4.1 million for the three months ended March 31, 2004. In addition,
EBITDA increased $0.8 million, or 14.1%, from $6.2 million for the three months
ended March 31, 2003 to $7.0 million for the three months ended March 31, 2004. Interest
expense. Total interest expense increased $0.2 million, from
$7.0 million for the three months ended March 31, 2003 to $7.2 million for the
three months ended March 31, 2004. This increase was due to additional interest
of $0.2 million recorded on our Senior Discount Notes partially offset by a
decrease in the average carrying balance on our revolving credit facility with
GECC coupled with a lower average interest rate. Income
taxes. We recorded a net income tax provision of $16,000 for the
three months ended March 31, 2004 as compared to a tax benefit of $0.8 million
for the three months ended March 31, 2003. The provision recorded for the three
months ended 2004 results from the tax effect of the pretax loss recognized for
this period offset by a valuation of approximately $1.0 million recorded
against our income tax benefit due to the uncertainty regarding the utilization
of these benefits. Net loss.As a result of the above factors, our net loss narrowed $0.4
million from a loss of $3.5 million for the three months ended March 31, 2003
to a loss of $3.1 million for the three months ended March 31, 2004. Operating segments.Operating segments represent components of our
business that are evaluated regularly by chief operating decision makers in
assessing performance and resource allocation. We have determined that our
reportable segments consist of our regional newspapers (the Regional
Newspapers), national businesses (the National Businesses) and our online
business, Law.com (Online). We have also reflected unallocated costs related
to our corporate and administrative functions as a separate unit (Corporate)
so as to not distort our other segments. 16




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For the three months ended March 31, 2004 and 2003 presented herein, the
Regional Newspapers are comprised of the following: New York Law Journal; The
National Law Journal; and fifteen other daily and weekly newspapers. The
economic characteristics, products, services, production processes, customer
type and distribution methods are substantially similar. The National Businesses are comprised of the following: The American
Lawyerand eight other magazines; our newsletters; our hard and soft cover
books; our trade shows and seminars; our licensing and syndication business;
our litigation services division; our international operations; and our MA3000
business. These businesses share substantially the same customer type and
geographic regions. Online is administered by Law.com and consists primarily of web content,
seminars and practice and CLE areas. Corporate is comprised of: unallocated costs relating to our
administrative offices, which include executive management, legal, human
resources, accounting, information systems, business development, office
services, government affairs and public relations. In addition, Corporate
includes us, ALM and ALM Properties, Inc., one of our subsidiaries. Our operations on a segmented basis were as follows (in thousands): For the Three Months Ended March 31, 2004Regional Newspapers
    
    National Businesses
    
    OnlineREVENUES:Periodicals:Advertising
    
    $
    13,696
    
    
    $
    3,749
    
    
    $
    827Subscription
    
    
    5,225
    
    
    
    745
    
    
    
    285Ancillary products and services
    
    
    1,980
    
    
    
    8,021
    
    
    
    556Total revenues
    
    
    20,901
    
    
    
    12,515
    
    
    
    1,668OPERATING EXPENSES:Editorial
    
    
    2,967
    
    
    
    2,004
    
    
    
    175Production and distribution
    
    
    3,320
    
    
    
    2,175
    
    
    
    291Selling
    
    
    3,377
    
    
    
    3,225
    
    
    
    553General and administrative
    
    
    3,979
    
    
    
    3,096
    
    
    
    532Depreciation, amortization and
other charges
    
    
    168
    
    
    
    9
    
    
    
    68Total operating expenses
    
    
    13,811
    
    
    
    10,509
    
    
    
    1,619Segment operating income
    
    $
    7,090
    
    
    $
    2,006
    
    
    $
    49
 For the Three Months Ended March 31, 2003Regional Newspapers
    
    National Businesses
    
    OnlineREVENUES:Periodicals:Advertising
    
    $
    14,554
    
    
    $
    3,319
    
    
    $
    684Subscription
    
    
    5,072
    
    
    
    705
    
    
    
    261Ancillary products and services
    
    
    2,606
    
    
    
    6,430
    
    
    
    272Total revenues
    
    
    22,232
    
    
    
    10,454
    
    
    
    1,217OPERATING EXPENSES:Editorial
    
    
    3,183
    
    
    
    1,842
    
    
    
    190Production and distribution
    
    
    4,174
    
    
    
    1,854
    
    
    
    191Selling
    
    
    3,838
    
    
    
    2,216
    
    
    
    791General and administrative
    
    
    4,080
    
    
    
    2,452
    
    
    
    553Depreciation, amortization and
other charges
    
    
    166
    
    
    
    2
    
    
    
    350Total operating expenses
    
    
    15,441
    
    
    
    8,366
    
    
    
    2,075Segment operating income (loss)
    
    $
    6,791
    
    
    $
    2,088
    
    
    $
    (858
    )
 17




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Regional Newspapers Revenues. Revenues for our Regional Newspapers decreased $1.3 million,
from $22.2 million for the three months ended March 31, 2003 to $20.9 million
for the three months ended March 31, 2004. The overall decline in revenue was
due to a decrease in book sales of $0.9 million as a result of the decision not
to renew a contract to publish certain directories. Adding to the overall
decline was a decrease in advertising revenue of $0.9 million, from $14.6
million for the three months ended March 31, 2003 to $13.7 million for the
three months ended March 31, 2004. The decrease was due largely to lower
classified advertising revenues of $0.4 million, primarily in attorney related
help wanted advertising as our publications continue to experience the effects
of a weak economy and also to the above-mentioned decision not to renew a
contract to publish certain directories. In addition, display advertising, law
firm advertising, legal notice advertising and directory revenue also declined.
These decreases were partially offset by an increase in subscription revenue
and from higher royalty and licensing fees. Operating expenses.Total operating expenses declined $1.6 million, or
10.6%, from $15.4 million for the three months ended March 31, 2003 to $13.8
million for the three months ended March 31, 2004. Production and editorial
expenses decreased primarily due to lower paper, printing, fulfillment and
other production costs, salary and related taxes and employee benefits, book
royalty expense and other realized savings from our continued cost containment
efforts. Selling costs decreased due to lower salary and related taxes and
employee benefits, a decrease in direct mail efforts and lower allocated
expenses due to a reduction of allocated sales staff resources from the
National segment. General and administrative expenses decreased primarily due
to lower allocated corporate overhead expenses as our overall corporate
expenses declined. In addition, we realized a net reduction in our provision
for uncollectible accounts due to an improvement in our accounts receivable
aging performance, as well as lower rent and utilities expense. Operating income. Our operating income increased $0.3 million, from $6.8
million for the three months ended March 31, 2003 to $7.1 million for the three
months ended March 31, 2004. EBITDA increased $0.3 million, or 4.4%, from $7.0
million for the three months ended March 31, 2003 to $7.3 million for the three
months ended March 31, 2004. National Businesses Revenues. Revenues for our National Businesses increased $2.0 million, or
19.7%, from $10.5 million for the three months ended March 31, 2003 to $12.5
million for the three months ended March 31, 2004. Advertising revenues for our
National Businesses increased $0.4 million, from $3.3 million for the three
months ended March 31, 2003 to $3.7 million for the three months ended March
31, 2004. This increase was primarily due to increases in display advertising,
law firm advertising and directory advertising revenues. In addition, ancillary
revenues increased $1.6 million due primarily to higher book sales, seminar and
tradeshow revenue, court research fees, royalty and licensing fees and
newsletter sales. These increases were partially offset by the elimination of
editorial content fees as a result of our acquisition of MA3000, as we no
longer derive revenue from the sale of this content but rather through court
research fees as indicated above. Operating expenses.Operating expenses for our National Businesses
increased $2.1 million, or 25.6%, from $8.4 million for the three months ended
March 31, 2003 to $10.5 million for the three months ended March 31, 2004.
Production and editorial expenses increased primarily due 18




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to higher printing and production, contributing editor, and artwork and
photo costs resulting from the addition of three new national magazines; and
higher costs associated with the seminar and tradeshow division. Selling
expenses increased due to increased marketing efforts, higher salary and
related taxes and employee benefits and lower allocated expenses due to a
reduction of allocated sales staff resources to the Newspaper segment. In
addition, selling expenses increased as less National sales force costs were
shifted in the selling of online products for Law.com. General and
administrative expenses increased due to higher salary and related taxes and
employee benefits, increased consulting and professional fees, and an increase
in other taxes. Operating profit. Our operating profit decreased $0.1 million, or 3.9%,
from $2.1 million for the three months ended March 31, 2003 to $2.0 million for
the three months ended March 31, 2004. EBITDA decreased $0.1 million, or 3.6%,
from $2.1 million for the three months ended March 31, 2003 to $2.0 million for
the three months ended March 31, 2004. Online Revenues.Revenues for our online business increased $0.5 million, or
37.1%, from $1.2 million for the three months ended March 31, 2003 to $1.7
million for the three months ended March 31, 2004. Seminar and trade show
revenue increased by $0.3 million, from $0.3 million for the three months ended March
31, 2003 to $0.6 million for the three months ended March 31, 2004 due to higher sales
of online CLE training. In addition, advertising revenue increased by $0.2
million. Operating expenses.Operating expenses for our online business decreased
$0.5 million, or 22.1%, from $2.1 million for the three months ended March 31,
2003 to $1.6 million for the three months ended March 31, 2004. Selling
expenses declined by $0.2 million as less cost was shifted to Law.com from the National
sales force for online sales efforts. Depreciation and amortization decreased
by $0.3 million due to the write-off of leasehold improvements and furniture in
2003. Operating profit.Our operating profit increased $0.9 million, from a loss
of $0.9 million for the three months ended March 31, 2003 to break even for the
three months ended March 31, 2004. EBITDA increased $0.6 million, from an
EBITDA loss of $0.5 million for the three months ended March 31, 2003 to a gain
of $0.1 million for the three months ended March 31, 2004. Liquidity and Capital Resources Net cash provided by operating activities. Net cash provided by operating
activities totaled $7.1 million for the three months ended March 31, 2004,
which resulted primarily from an increase in accrued interest payable of $4.3
million, depreciation, amortization and other charges of $2.9 million,
accretion of interest on Discount Notes of $2.2 million, an increase in
deferred income of $1.0 million, an increase in accounts payable and accrued
expenses of $0.6 million and the amortization of non-cash interest of $0.3
million. This was partially offset by a net loss of $3.1 million, a decrease in
other non-current liabilities of $0.4 million, an increase in accounts
receivable of $0.3 million and increase in other current assets of $0.2
million. Net cash used in investing activities. Net cash used in investing
activities was $0.5 million for the three months ended March 31, 2004,
resulting entirely from capital expenditures. Capital expenditures. Capital expenditures totaled $0.5 million for the
three months ended March 31, 2004, essentially flat when compared to capital
expenditures for the three months ended March 31, 2003. Capital expenditures
for both the three months ended March 31, 2004 and 19




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2003 were primarily for continuing system upgrades as well for facilities
and equipment modernization. Net cash used in financing activities.Net cash used in financing
activities totaled $6.4 million for the three months ended March 31, 2004,
which reflects the net paydown on our GECC Facility. Liquidity.Our principal sources of funds are cash flows from operating
activities, which may be supplemented by borrowings under our GECC Facility.
The GECC Facility had $24.0 million outstanding as of March 31, 2004 and
accrues interest as described in Note 3 to the Consolidated Financial
Statements. For details relating to the terms of our GECC Facility entered into
on May 1, 2002, see Note 3 to the Consolidated Financial Statements. We believe
that these funds will be sufficient to meet our current financial obligations,
which include the payment of interest on the $175,000,000 of the Notes
due 2007, interest under our GECC Facility, working capital, capital
expenditures and other obligations for the next 12 months. No assurance can be
given, however, that this will be the case. Our future operating performance
and ability to service or refinance our debt, meet future debt covenants, and
to repay, extend or refinance any credit agreements to which we are a party
will be subject to future economic conditions and to financial, business and
other factors, many of which are beyond our control. Reconciliations of GAAP to Non-GAAP Financial Measures Reconciliations
of GAAP to non-GAAP financial measures, such as EBITDA (earnings
before interest, income taxes, depreciation, amortization and other
charges),
are provided below (in thousands). We believe that the use of non-GAAP
financial measures enables us and investors to evaluate, and compare from
period to period our results from ongoing operations in a more meaningful and
consistent manner. Three Months EndedMarch 31,2004
    
    2003GAAP net loss
    
    $
    (3,057
    )
    
    $
    (3,548
    )Adjustments to arrive at operating income:Provision (benefit) for income tax
    
    
    16
    
    
    
    (820
    )Interest expense
    
    
    7,162
    
    
    
    7,036Operating income
    
    
    4,121
    
    
    
    2,668Adjustments to arrive at EBITDA:Depreciation, amortization
and other charges
    
    
    2,920
    
    
    
    3,508EBITDA
    
    $
    7,041
    
    
    $
    6,176
 20




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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The GECC Facility is subject to interest rate volatility. A 10% increase
in the average interest rate of borrowing under the GECC Facility during the
year ended December 31, 2003 would have increased our net loss to approximately
$3.1 million. 
 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 such term is defined in Rules 13a-15(e) and 15d-15(e) under
the Securities Exchange Act of 1934, as amended (the Exchange Act)) as of the
end of the period covered by this report. Based on such evaluation, the
Companys Chief Executive Officer and Chief Financial Officer have concluded
that, as of the end of such period, the Companys disclosure controls and
procedures are effective in timely alerting them to material information
required to be included in our filings under the Exchange Act. (b) Internal Controls Over Financial Reporting. There have not been any
changes in the Companys internal controls over financial reporting (as such
term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during
the fiscal quarter to which this report relates that have materially affected,
or are reasonably likely to materially affect, the Companys internal control
over financial reporting. 21




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##### Table of Contents



PART II 
  
 ITEM 1. LEGAL PROCEEDINGS We are a party to various litigation matters incidental to the conduct of
our business. We do not believe that the outcome of any of the matters in which
we are currently involved will have a material adverse effect on our financial
condition or on the results of our operations. 
 ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS None. 
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. 
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. 
 ITEM 5. OTHER INFORMATION None. 
 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 3.1
    *
    
    
    Certificate of Incorporation of American Lawyer Media Holdings,
Inc.3.2
    *
    
    
    Certificate of Amendment of the Certificate of Incorporation of
American Lawyer Media Holdings, Inc.3.16
    *
    
    
    Bylaws of American Lawyer Media Holdings, Inc.31.1
    
    
    
    Certification by the Chief Executive Officer pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    
    
    Certification by the Chief Financial Officer pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    
    
    Certification of the Chief Executive Officer and
Chief Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
    *
    
    Exhibits are incorporated by reference from American Lawyer Media
Holdings, Inc.s previous filings with the Securities and Exchange
Commission. 22




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##### Table of Contents



ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (continued) (b) Reports on Form 8-K 1.
    
    
    We filed a report on Form 8-K, dated and filed January
23, 2004, announcing a consent solicitation for our Discount Notes
and ALMs Notes.2.
    
    
    We filed a report on Form 8-K, dated and filed January
30, 2004, announcing an extension of the expiration date for the
consent solicitation for our Discount Notes and ALMs Notes.3.
    
    
    We filed a report on Form 8-K, dated and filed February
2, 2004, announcing an extension of the expiration date for the
consent solicitation for our Discount Notes and ALMs Notes.4.
    
    
    We filed a report on Form 8-K, dated and filed February
3, 2004, announcing an extension of the expiration date for the
consent solicitation for our Discount Notes and ALMs Notes.5.
    
    
    We filed a report on Form 8-K, dated and filed February
6, 2004, announcing an extension of the expiration date for the
consent solicitation for our Discount Notes and ALMs Notes.6.
    
    
    We filed a report on Form 8-K, dated and filed February
10, 2004, announcing amendments to the Discount Notes indenture
and extension of the expiration date for the consent solicitation
for our Discount Notes as well as the expiration of the consent
solicitation for ALMs Notes.
 23




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##### Table of Contents



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 LAWYER MEDIA HOLDINGS, INC.May 12, 2004
    
    /s/ WILLIAM L. POLLAKWilliam L. PollakPresident and Chief Executive OfficerMay 12, 2004
    
    /s/ ERIC F. LUNDBERGEric F. LundbergVice President and Chief Financial Officer