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                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   FORM 10-K

(MARK ONE)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
    OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997, OR

[ ] 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 0-22789
                            ------------------------

                                 CMP MEDIA INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S>                                            <C>
                   DELAWARE                                      11-2240940
       (STATE OR OTHER JURISDICTION OF                        (I.R.S. EMPLOYER
        INCORPORATION OR ORGANIZATION)                      IDENTIFICATION NO.)

      600 COMMUNITY DRIVE, MANHASSET, NY                           11030
   (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                      (ZIP CODE)
</TABLE>

                                 (516) 562-5000
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

     SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

<TABLE>
<CAPTION>
                                                           NAME OF EACH EXCHANGE
             TITLE OF EACH CLASS                            ON WHICH REGISTERED
             -------------------                           ---------------------
<S>                                            <C>
                     NONE                                           NONE
</TABLE>

     SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

                 CLASS A COMMON STOCK, PAR VALUE $.01 PER SHARE
                                (TITLE OF CLASS)

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

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

     Based on the closing sales price on March 16, 1998, the aggregate market
value of voting stock of the Registrant held by non-affiliates of the Registrant
was approximately $150,671,100 as of such date.

     As of March 16, 1998, the Registrant had outstanding 7,060,312 shares of
Class A Common Stock, and 16,050,074 shares of Class B Common Stock.
                            ------------------------

                      DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the definitive proxy statement to be filed with the Securities
and Exchange Commission relative to the Registrant's 1998 Annual Meeting of
Stockholders are incorporated into Part III of this Report on Form 10-K.

     Certain exhibits filed with the Registrant's Registration Statement on Form
S-1 (File No. 333-26741) are incorporated by reference as Exhibits to this
Report on Form 10-K in Part IV, Item 14.
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                                 CMP MEDIA INC.

                               TABLE OF CONTENTS

                                   FORM 10-K

<TABLE>
<CAPTION>
                                                                          PAGE
                                                                          ----
<S>         <C>                                                           <C>
                                    PART I
Item 1.     Business....................................................  1
Item 2.     Properties..................................................  9
Item 3.     Legal Proceedings...........................................  9
Item 4.     Submission of Matters to a Vote of Security Holders.........  9
                                   PART II
Item 5.     Market for Registrant's Common Equity and Related
            Stockholder Matters.........................................  10
Item 6.     Selected Financial Data.....................................  11
Item 7.     Management's Discussion and Analysis of Financial Condition
            and Results of Operations...................................  12
Item 7A.    Quantitative and Qualitative Disclosures about Market
            Risk........................................................  19
Item 8.     Financial Statements and Supplementary Data.................  19
Item 9.     Changes In and Disagreements with Accountants on Accounting
            and Financial Disclosure....................................  40
                                   PART III
Item 10.    Directors and Executive Officers of the Registrant..........  40
Item 11.    Executive Compensation......................................  40
Item 12.    Security Ownership of Certain Beneficial Owners and
            Management..................................................  40
Item 13.    Certain Relationships and Related Transactions..............  40
                                   PART IV
Item 14.    Exhibits, Financial Statement Schedules and Reports on Form
            8-K.........................................................  41
Signatures..............................................................  47
</TABLE>
<PAGE>   3

ITEM 1.  BUSINESS

CMP Media Inc. ("CMP" or the "Company") is a leading technology media company
that provides information products and services to the builders, sellers and
users of technology worldwide. The Company has published magazines and
newspapers about technology for more than 26 years. In terms of total print
advertising pages, it is now the largest technology publisher in the U.S., with
a 1997 U.S. market share of 24.6% according to Inquiry Management Systems
("IMS"), an independent ad-tracking firm. In recent years the Company has
expanded its publishing activities into foreign countries as well as onto the
World Wide Web.

Of the three largest U.S. technology publishers, CMP is the only one which
serves the broad spectrum of builders, sellers and users of technology. The
Company believes that publishing for audiences across the spectrum of builders,
sellers and users enables it to offer advertisers a one-stop purchasing
opportunity which capitalizes on their need to reach audiences in multiple
markets. The "builders" of technology include manufacturers, engineers,
designers and purchasers of electronic systems and components, including
computers, telecommunications equipment, semiconductors, software, peripherals
and related products. The "sellers" include distributors, value-added resellers
("VARs"), retailers, systems integrators, dealers, consultants, computer
superstores, mass merchandisers, warehouse clubs, consumer electronics retailers
and mail-order sellers. The "users" include the end-users of information
systems, computer systems, personal computers, software, the Internet and
related products and services, including information systems executives, network
communications and departmental applications managers, and Internet and intranet
managers.

The technology sector of the U.S. publishing industry has experienced
substantial growth as technology has become increasingly integrated into
business and consumer products and the demand for technology information and
analysis has increased. According to IMS, since 1993 the technology publishing
market has grown by more than 20,500 advertising pages, and CMP has accounted
for more than 51% of that growth. In 1997, according to IMS, CMP was the only
U.S. technology publisher to publish more than 40,000 advertising pages.

CMP's principal executive offices are located at 600 Community Drive, Manhasset,
New York, and its telephone number is 516/562-5000.

U.S. PUBLICATIONS

Each of CMP's print publications is designed for a distinct audience among the
builders, sellers and users of technology. The Company serves the builders of
technology through its original equipment manufacturer ("OEM") publications; it
serves the sellers of technology through its "channel" publications; and it
serves the users of technology through its "technology buyers" publications.
Most of CMP's magazines and newspapers are controlled-circulation,
business-to-business trade publications, although in recent years the Company
has expanded beyond its core controlled-circulation business by launching
paid-circulation magazines as well.

A controlled-circulation publication is one which is distributed without charge
to qualified subscribers and which generates revenues predominantly from the
sale of advertising space. Circulation is limited to a pre-determined number of
subscribers who have certified to the publisher in writing that their job
functions include purchasing authority in the particular market served by the
publication. The publisher selects subscribers based on defined qualifying
characteristics, thereby enabling advertisers to reach those individuals most
likely to be interested in purchasing the products advertised in the
publication. Once CMP accepts an applicant as a qualified subscriber for a
controlled-circulation magazine or newspaper, that person normally receives the
particular publication for one year. The subscriber must requalify each year
thereafter to continue receiving the publication. Because the Company is able to
offer its advertisers access to this highly targeted and valuable subscriber
base, it is able to sell advertising space in its controlled-circulation
publications at rates that are higher than the average rates charged by
publications aimed at more general audiences.

                                        1
<PAGE>   4

BUILDERS

CMP publishes two controlled-circulation newspapers that address distinct
audiences within the OEM sector of the technology industry.

     Electronic Buyers' News (launched May 1971) was CMP's first publication. It
is a weekly newspaper primarily serving purchasers of electronic systems and
components as well as corporate management at OEMs. It provides information
about pricing trends, new products, supplier reports and industry developments.
In terms of advertising pages, Electronic Buyers' News is the second largest
publication in the U.S. OEM publishing sector according to IMS.

     Electronic Engineering Times (launched September 1972) is a weekly
newspaper targeting electronic engineers and technical/corporate management at
OEMs in the computer and electronics industries. It provides business,
technology and product news, market information and industry trends reports for
this audience. In terms of advertising pages, Electronic Engineering Times is
the largest publication in the U.S. OEM publishing sector according to IMS.

SELLERS

CMP publishes three controlled-circulation publications that address distinct
audiences within the channel sector of the technology industry.

     Computer Reseller News (launched June 1982) is a weekly newspaper that
provides the value-added reseller channel (including VARs, systems integrators,
dealers, consultants and distributors) with news, analysis and research about
computer-related technology and product marketing trends. In terms of
advertising pages, Computer Reseller News is the largest trade publication in
the U.S. technology industry, according to IMS.

     VARBusiness (launched November 1987) is a bi-weekly magazine for the
value-added reseller channel, offering product coverage, analysis of technology
trends and practical insight on managing a reseller business. The magazine
provides overviews of the state of the computer market, with annual features
such as the VARBusiness 500, a ranking by revenues of the most successful VARs
and systems integrators in North America.

     Computer Retail Week (launched September 1992) is a bi-weekly newspaper
that delivers news and analysis concerning product technology and merchandising
trends to management and store-level sales personnel in the retail channel at
computer superstores, mass merchandisers, warehouse clubs and electronics
retailers selling directly to consumers.

USERS

CMP publishes three controlled-circulation publications and two paid-circulation
magazines that address distinct audiences in business and other enterprises.

     InternetWeek (launched 1984; re-launched 1997) is a weekly newspaper that
provides news, reviews, case studies and business analysis to information
technology buyers focused on the Internet, corporate networks, intranets and
extranets. The newspaper was originally published under the title
CommunicationsWeek and was re-launched as InternetWeek in 1997.

     InformationWeek (launched 1979; re-launched 1985) is a weekly magazine that
provides technology news and analysis from a business solutions perspective.
InformationWeek has the largest controlled-circulation base of U.S. information
systems managers and technology-related business managers among all enterprise
computing publications. It was originally published under the title Information
Systems News and was re-launched as InformationWeek in 1985. In 1997,
InformationWeek had the largest growth in advertising pages among all U.S.
information systems publications according to IMS.

     Network Computing (launched October 1990) is a bi-weekly magazine that
provides network managers with technical, lab-based news and information about
network technologies, from local area networks to large corporate intranet
networks.
                                        2
<PAGE>   5

     WINDOWS Magazine (launched February 1992) is a monthly paid-circulation
magazine for purchasers of Windows-related graphical computing products ranging
from hand-held units through desktop PCs and workstations to enterprise-wide
systems.

     HomePC (launched May 1994) is a monthly paid-circulation magazine that
focuses on entertainment, education and personal productivity products and
"how-to's" for home computing enthusiasts and offers a mix of product news,
reviews and commentary.

INTERNATIONAL

Over the past few years, CMP has expanded its business internationally. As a
print publisher, a licensor and an advertising sales representative, the Company
now offers advertisers access to a global network of technology publications
serving the builders, sellers and users of technology worldwide.

PUBLICATIONS

The Company publishes a number of technology magazines and newspapers in Europe.
The circulation of each of the publications is primarily controlled, although a
portion of the circulation is paid.

The Company publishes two channel publications in Europe.

     Computer Reseller News (Germany; launched March 1995) is a German-language
bi-weekly newspaper published in Munich by a joint venture between CMP and WEKA
Firmengruppe GmbH & Co. KG ("WEKA"). It provides news, analysis and product
information for resellers, VARs and OEMs in Germany, Austria and Switzerland.

     Computer Reseller News (France; launched October 1997) is a wholly-owned
French-language monthly magazine targeting channel resellers, integrators,
dealers, consultants and distributors in France, Belgium and Switzerland.

The Company publishes six technology-buyers publications in Europe.

     InformationWeek (Germany; launched June 1997) is a bi-weekly magazine
published in Munich by a joint venture between CMP and WEKA. It targets
information technology decision-makers, and its editorial content covers all
technology areas.

     Network Computing (Germany; launched February 1998) is a monthly newspaper
published in Munich by a joint venture between CMP and WEKA. A re-launch of a
magazine formerly known as PC-Netze, it provides news, trends and analysis to
information technology buyers in networked environments.

     Datacom (Germany; launched November 1984) is a monthly magazine published
in Munich by a joint venture between CMP and WEKA, which acquired the magazine
in 1997. It covers the spectrum of in-house data exchange, including WANs,
telecommunications and related services, for data communications and
telecommunications professionals.

     Informatiques Magazine (France; launched October 1994) is a wholly-owned,
French-language bi-weekly magazine published in Paris. It provides information
on product developments, strategies and trends for information system managers
and technology-related business managers at companies in France, Belgium and
Switzerland.

     InformationWeek (United Kingdom; launched March 1997) is a wholly-owned
bi-weekly magazine published in London. It targets information technology
decision-makers whose purchasing responsibilities extend across the enterprise.
Editorial content covers all technology areas, with in-depth product reviews.

     Network Week (United Kingdom; launched June 1995) is a wholly-owned weekly
newspaper which the Company acquired on December 31, 1997. It covers technology
and product issues for purchasers and managers of enterprise networks.

                                        3
<PAGE>   6

LICENSING

To achieve further international extension of its publication brands, the
Company licenses the editorial content, and in some cases the titles and
designs, of its U.S. publications to publishers outside the U.S. CMP material is
currently licensed to more than 25 non-U.S. publishers and is distributed in
more than 60 countries around the world.

ADVERTISING SALES REPRESENTATION

In addition to selling advertising space in its own publications to non-U.S.
advertisers, CMP acts as the exclusive advertising sales representative in the
U.S. and Canada for 80 non-CMP technology publications published outside the
U.S. This global network of technology publications enables the Company to offer
its advertisers a single source for the placement, billing and market-specific
translation and customization of advertisements around the world.

INTERNET SERVICES

CMP has expanded its business onto the Internet in recent years. With the launch
of TechWeb in 1994, the Company became the first major U.S. technology publisher
to establish a Web site specifically for technology audiences. CMPnet
(http://cmpnet.com) is the World Wide Web site which now serves as a single
point of access for all of the Company's Internet services. Since its launch in
July 1997, CMPnet's traffic growth has been more than three times that of its
closest competitor based on its monthly compounded growth rate as measured by
Media Matrix Inc. It provides access not only to the Web sites maintained by
each of CMP's U.S. print publications but also to a number of other Internet
services, including the following:

     TechWeb is one of the most comprehensive technology sources on the Web and
provides, in addition to CMP's publication archives, daily news updates, expert
analysis, hardware and software reports and other features for corporate
information-technology decision-makers.

     EDTN Network (the Electronics Design & Technology News Network) is an
interactive Internet service which provides electronics engineers with design
information and decision-support tools. Certain components of the EDTN service
are available by subscription only. EDTN is produced by a joint venture between
CMP and Aspect Development, Inc.

     ChannelWeb is an Internet service available by subscription only which
provides users with a customized news feed from CMP's channel publications and
provides areas for vendors and resellers to exchange information, receive
channel research and learn more about industry issues, products and
technologies.

Except for EDTN and ChannelWeb, which derive their revenues primarily from
subscriptions, CMP's Internet services derive their revenues primarily from the
sale of advertising space on their sites.

OTHER MARKETING SERVICES

CMP generates additional revenues through a variety of marketing services which
help advertisers reach their customers through avenues other than print
publications and Internet services.

     Events.  CMP hosts various industry forums and roundtables, including the
InformationWeek 500 Conference, where top technology executives explore
innovative uses of technology to tackle business challenges; the Xchange
Conference, which provides technology vendors with the opportunity to meet with
and demonstrate their new products to resellers and retailers; and the Networked
Economy Conference, which brings together prominent representatives from the
networking, finance and government sectors.

     Research.  CMP completes more than 500 research studies a year through its
own research organization and in cooperation with leading research firms. These
include quantitative and qualitative studies conducted at the publication level
as well as large syndicated market studies sponsored by advertisers. In 1997 the
Company established a research unit, Channel Information Services, specifically
to conduct research relevant to the channel market.

                                        4
<PAGE>   7

     Mailing List Rentals.  CMP uses information from its subscription lists and
other available databases to compile detailed mailing lists for rental by
advertisers. The Company has the ability to customize its mailing list databases
in order to screen for specific business or demographic criteria selected by a
list renter and to match advertiser customer files against CMP's subscriber
databases in order to compile additional data regarding such customers,
including job function, purchase involvement, company size and other useful
information. The Company believes that, because its mailing lists provide such
highly targeted data, they are particularly attractive to its mailing list
renters.

     Reprints.  CMP licenses to advertisers and marketing customers the right to
distribute reprints of articles that have appeared in CMP publications.

     Other.  CMP provides a number of other marketing services, such as daily
e-mail news services for subscribers and the Channel Advocate Program which is
designed to help vendors enhance their channel relationships and sales results.

EDITORIAL

CMP believes that its print and Internet content has established a reputation
among readers and within the technology industry for authoritative and reliable
journalism.

Each CMP publication has its own dedicated editorial staff, including editors,
researchers, designers and production personnel. To preserve the editorial
integrity of each publication's news reporting and analysis, the Company seeks
to maintain strict separation between the editorial and sales staffs of each
publication. The Company believes that its reputation for objective, fair and
credible editorial content contributes significantly to its success.

CMP's editorial staffs meet frequently with readers of their particular
publications to understand better the information needs and interests of those
readers and thereby serve them more effectively. The Company devotes
considerable resources to the study of trends in its readership communities and
strives to make its publications the best-read and most widely used among its
target audiences. The Company also uses high-quality design graphics,
illustrations, photography and other artistic elements to make its publications
visually attractive and accessible to readers. CMP's publications have won
numerous editorial and design awards from publishing and computer press
societies.

Many of the Company's editors, designers, programmers and contributors are
recognized as experts in their field and are regularly contacted by the press to
comment on developments and trends in technology areas.

ADVERTISING SALES

Each of the Company's publications has its own advertising sales team,
complemented by a Corporate Accounts sales team that provides large national
advertisers with a single point of contact for all CMP publications and
services. Each CMP publication uses a separate rate card to sell its advertising
space, although advertisers may qualify for discounts based on spending patterns
across multiple CMP publications. Because CMP is positioned as a single source
for advertisers to reach a broad spectrum of the technology market, CMP enables
advertisers to consolidate their advertising expenditures in a cost-effective
manner.

CMP markets advertising space in each of its controlled-circulation publications
by assuring advertisers that they will be able to reach a valuable, qualified
audience of technology professionals and managers who are likely to have an
interest in purchasing products or services in the sector of the technology
industry to which the particular publication relates. Because CMP offers its
advertisers access to a highly targeted and valuable subscriber base, it is able
to sell advertising space in its controlled-circulation publications at rates
that are higher than the average rates charged by publications aimed at more
general audiences.

The Company believes it has built one of the most knowledgeable sales teams in
the technology publishing sector.

                                        5
<PAGE>   8

CIRCULATION

CMP's subscriber information for each of its controlled-circulation publications
is audited each year by BPA International ("BPA"), a nationally recognized
auditor of periodical subscription lists specializing in controlled-circulation
publications. BPA's audits verify that CMP's subscription information accurately
identifies the number and job characteristics of qualified recipients and that
the qualified recipients are in fact eligible to subscribe to the relevant
publication under CMP's standards established for that publication.

The Audit Bureau of Circulation, another nationally recognized auditor of
periodical subscription lists, audits WINDOWS Magazine and HomePC, which are
paid-circulation magazines. Subscriptions for WINDOWS Magazine and HomePC are
generated through a mix of direct mail marketing, online promotion, insert cards
in the Company's magazines and advertising.

PRODUCTION AND DISTRIBUTION

CMP's publications and other printed materials are printed and bound by
independent printers. The Company believes that outside printing services are
readily available at competitive prices, and its publications are printed by
several different printers.

The principal raw material used in the Company's print publications is paper.
CMP is party to a number of long-term paper supply contracts under which it
purchases the bulk of the paper used by its printers to produce the Company's
publications. The Company believes that the existing arrangements providing for
the supply of paper are adequate and that, in any event, alternative sources are
available. Paper costs represent a significant expense for the Company. All of
the Company's paper supply contracts provide for price adjustments (upwards or
downwards) on a quarterly basis to reflect then-prevailing market prices. Paper
prices are affected by a variety of factors, including demand, capacity, pulp
supply and general economic conditions. Paper prices have been volatile over the
past several years. The Company's costs for paper, relative to revenues, can
vary from year-to-year due to increased paper demands associated with the launch
of new publications.

The Company uses third-party distributors to distribute the United States and
international editions of certain of its publications.

Many of the Company's publications are delivered to the United States Postal
Service directly by the printer. Postage costs also represent a significant
expense for the Company. In an attempt to contain postal costs, the Company
takes advantage of various postal discounts as well as alternative delivery
services.

PROMOTION AND MARKETING

The Company uses advertising, publicity, trade show presentations, promotions
and alliances to increase brand awareness for its publications and services and
to position its brands, as well as to generate subscriptions and increase online
traffic.

GROWTH STRATEGY

The Company continually monitors developments and trends in technology markets,
and it expects to continue extending the reach and scope of its existing
businesses by serving the changing needs of the builders, sellers and users of
technology worldwide. CMP's objective is to continue to grow in revenues,
profitability and market share. The Company believes that its ability to achieve
its objective will be enhanced by its strong relationships with advertisers, the
broad market coverage of its publications and services, its reputation for
high-quality editorial content and its experienced management team. To implement
this objective, CMP has adopted the following strategies, which it may pursue
through internal growth, selective acquisitions, joint ventures and licensing
arrangements.

BUILD UPON STRENGTH OF EXISTING PUBLICATIONS AND INTRODUCE NEW
PUBLICATIONS.  CMP will seek to increase its overall market share of advertising
pages by continuing to improve the editorial and circulation quality of its
print publications, thereby providing advertisers with increasingly effective
access to their target audiences. The Company will also continue monitoring new
developments and trends in technology markets to identify

                                        6
<PAGE>   9

emerging audiences for technology-related information and, when it perceives
appropriate opportunities, it intends to launch publications with innovative
positions attractive to both advertisers and readers.

EXPAND INTERNATIONALLY.  CMP believes that the strength of its existing
publications and its network of non-U.S. publications for which it provides
advertising sales representation enable it to take advantage of the growth of
technology markets internationally. The Company plans to expand its
international business primarily by launching local versions of its strongest
publications, either independently or in joint ventures with local publishers,
in those countries that have the largest or fastest-growing technology markets.
CMP also intends to expand its program of licensing its titles, designs and
editorial content to local publishers and to increase the number of non-U.S.
publications for which it acts as advertising sales representative.

EXPAND INTERNET SERVICES.  CMP intends to continue using the Internet to
complement and extend the reach of its existing print publications and to
develop new online audiences for its advertisers. It also intends to develop new
services for users of technology and to further develop its e-commerce
capabilities.

EXPAND INTO ADDITIONAL MEDIA.  CMP plans to expand its presence in media beyond
print and the Internet in order to capitalize on advertisers' increasing need to
reach their audiences through integrated marketing programs. The Company
currently sponsors several industry forums and expects to initiate additional
face-to-face events in the coming years.

COMPETITION

The Company faces significant competition with respect to its print publications
from a number of technology publishers, some of which have substantially greater
financial resources that may give them a competitive advantage. In addition, the
Company faces broad competition for audiences and advertising revenue from other
media companies that produce magazines, newspapers and online content. Overall
competitive factors include product positioning, editorial quality, circulation,
price and customer service. Competition for advertising dollars is primarily
based on advertising rates, the nature and scope of readership, reader response
to advertisers' products and services, and effectiveness of sales teams.

There are several other technology publishing companies which compete intensely
with the Company in certain sectors of the technology publishing market targeted
by the Company's publications. The Company estimates that there are more than
350 technology magazines in the United States, most of which are published by
smaller publishers. Although in terms of advertising pages the Company's
publications are market share leaders in the OEM and channel sectors of the
technology publishing market, other publishers are the market share leaders in
the technology buyers sector of the market. An increasing number of companies,
some with significantly greater resources than the Company, are developing
content and services for delivery on the World Wide Web, and competing for
audiences and the advertising dollars that are currently being devoted to the
Internet.

TRADEMARKS AND INTELLECTUAL PROPERTY RIGHTS

The Company regards its copyrights, trademarks, trade secrets and similar
intellectual property as critical to its success and relies upon copyright,
trademark and trade secrets laws, as well as confidentiality agreements with its
employees and others, to protect its rights. The Company pursues the
registration of its material trademarks in the United States and, depending upon
use, in certain other countries. Effective copyright, trademark and trade secret
protection may not be available in every country in which the Company's
publications and services are available.

From time to time, the Company may be subject to legal proceedings and claims in
the ordinary course of its business, including claims of alleged infringement by
the Company and its licensees of trademarks and other intellectual property
rights of third parties. The Company does not believe there are any legal
proceedings or claims that will have, individually or in the aggregate, a
material adverse effect on the Company's business, financial condition or
results of operations.

                                        7
<PAGE>   10

EMPLOYEES

As of December 31, 1997, the Company had a total of 1,720 employees. None of the
Company's employees is represented by a labor union.

EXECUTIVE OFFICERS OF THE REGISTRANT

     The executive officers of the Company are as follows:

<TABLE>
<CAPTION>
                   NAME                     AGE                         POSITION
                   ----                     ---                         --------
<S>                                         <C>   <C>
Michael S. Leeds..........................  45    President, Chief Executive Officer and a Director
Kenneth D. Cron...........................  41    Executive Vice President, President of Publishing
                                                  and a Director
Daniel H. Leeds...........................  42    Executive Vice President, President of International
                                                  and a Director
Joseph E. Sichler.........................  57    Vice President and Chief Financial Officer
Robert D. Marafioti.......................  50    Vice President, Secretary and General Counsel
Tina Sanacore.............................  37    Treasurer
Barbara Kerbel............................  51    Vice President of Corporate Communications
Mary Jones-Herbert........................  53    Vice President of Human Resources
Debra Robinson............................  45    Vice President/Chief Information Officer
E. Drake Lundell, Jr......................  56    Senior Vice President/Managing Director, U.K.
Jeffrey L. Strief.........................  41    Senior Vice President, Technology Buyers
Rebecca S. Barna..........................  48    Vice President, Internet Media
Girish Mhatre.............................  48    Vice President, OEM
John Russell..............................  38    Vice President, Channel
</TABLE>

     All executive officers of the Company are elected by the Board of Directors
annually.

     Michael S. Leeds has been the President and Chief Executive Officer of the
Company since 1988. He joined the Company in 1984 and was elected a director in
1987. Mr. Leeds is the brother of Daniel H. Leeds, the President of
International, and the son of Gerard and Lilo Leeds, founders of the Company and
Co-Chairpersons of the Board of Directors.

     Kenneth D. Cron is an Executive Vice President of the Company and has been
the President of Publishing of the Company since 1994. He joined the Company in
1978 and held various sales, publishing and group publishing positions prior to
assuming his present responsibilities. He was elected a director in 1997.

     Daniel H. Leeds is an Executive Vice President of the Company and has been
the President of International since 1992. He joined the Company in 1985 and was
elected a director in 1987. He is the brother of Michael S. Leeds, the President
and Chief Executive Officer of the Company, and the son of Gerard and Lilo
Leeds, founders of the Company and Co-Chairpersons of the Board of Directors.

     Joseph E. Sichler joined the Company as Chief Financial Officer in 1992. He
was elected a Vice President in 1996.

     Robert D. Marafioti joined the Company as General Counsel in 1988. He was
elected a Vice President in 1993 and Secretary of the Company in 1997.

     Tina Sanacore was named Treasurer of the Company in 1997. She joined the
Company in 1985 and held various financial and business management positions
prior to assuming her present responsibilities.

     Barbara Kerbel has been the Vice President of Corporate Communications of
the Company since 1995. She first joined the Company in 1981 and held various
editorial, marketing and communications positions prior to assuming her present
responsibilities.

                                        8
<PAGE>   11

     Mary Jones-Herbert joined the Company as Vice President of Human Resources
in October 1997. From 1995 to 1997 she served as Director of Human Resources,
Finance, of Allied Signal Inc., which she joined in 1993.

     Debra Robinson joined the Company as Vice President/Chief Information
Officer in October 1997. From 1995 to 1997, she served as Vice President,
Information Technologies, of Delaware North Companies and from 1992 to 1995 as
Director, Information Systems & Technology, of ARA Services, Business Services
Group.

     E. Drake Lundell, Jr. has been a Senior Vice President of the Company since
1996. He joined the Company in 1984 and held various publishing and group
publishing positions prior to assuming his present responsibilities as Managing
Director, U.K., in 1997.

     Jeffrey L. Strief has been a Senior Vice President of the Company since
1994. He joined the Company in 1985 and held various sales, publishing and group
publishing positions prior to assuming his present responsibilities as group
publisher of the Company's technology buyers publications in 1997.

     Rebecca S. Barna has been a Vice President of the Company and the group
publisher of its Internet media products since 1997. She joined the Company in
1989 and held various editorial and publishing positions prior to assuming her
present responsibilities.

     Girish Mhatre has been a Vice President of the Company and the group
publisher of the Company's OEM publications since 1995. He joined the Company in
1978 and held various editorial and publishing positions prior to assuming his
present responsibilities.

     John Russell has been a Vice President of the Company and the group
publisher of the Company's channel publications since 1994. He first joined the
Company in 1983 and held various editorial and publishing positions prior to
assuming his present responsibilities.

ITEM 2.  PROPERTIES

CMP's world headquarters are located in Manhasset, New York, and the Company has
editorial, production and sales offices in many other cities in the United
States and around the world, including: Atlanta; Chicago; Dallas; Irvine,
California; Jericho, New York; Los Angeles; New York City; San Francisco; San
Mateo, California; Waltham, Massachusetts; Washington, D.C.; Hong Kong; London;
Munich; Paris; Taipei; and Tokyo.

The Company owns no material real estate and leases all of its offices from
third parties. During 1997, Gerard Leeds, Lilo Leeds and their children, who
collectively own or control a majority of the outstanding voting securities of
the Company, collectively held a 15% minority interest in the entity from which
the Company leases its Manhasset, New York offices. The Company believes that
its properties, taken as a whole, are in good operating condition and are
suitable and adequate for the Company's current business operations, and that
suitable additional or alternative space, including space available under lease
options, will be available at commercially reasonable terms for future
expansion.

ITEM 3.  LEGAL PROCEEDINGS

There are no legal proceedings to which the Company is a party, other than
ordinary routine litigation incidental to the business of the Company which is
not otherwise material to the business or financial condition of the Company.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of the Company's security holders during the
fourth quarter of its fiscal year ended December 31, 1997.

                                        9
<PAGE>   12

                                    PART II

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

The Company has two classes of common stock, Class A Common Stock and Class B
Common Stock (the "Common Stock"). The Company's Class A Common Stock was listed
on the Nasdaq National Market ("Nasdaq") under the symbol "CMPX" on July 25,
1997. The following table sets forth by quarter the high and low bid prices of
the Company's Class A Common Stock as reported by Nasdaq.

<TABLE>
<CAPTION>
                       1997                           HIGH      LOW
                       ----                           ----      ---
<S>                                                  <C>       <C>
Third Quarter (July 25, 1997 -- September 30,
  1997)............................................  $29.00    $23.50
Fourth Quarter.....................................   26.63     13.38
</TABLE>

As of March 16, 1998, there were approximately 2,200 holders of record of the
Company's Class A Common Stock and 13 holders of record of the Company's Class B
Common Stock.

Prior to the Company's initial public offering in July 1997 (the "Offering"),
the Company was an S corporation and made distributions to its stockholders
primarily to fund taxes owed by them on the Company's income attributable to
them as stockholders of an S corporation and to distribute earnings of the
Company on which such stockholders had previously paid income tax. In connection
with the termination of the Company's S corporation election upon consummation
of the Offering, the Company made to its then-stockholders a final distribution,
which was declared prior to the Offering but paid subsequently. Since the
Offering, the Company has not declared any dividends on its Common Stock. The
Company does not anticipate that any cash dividends will be declared in the
foreseeable future. The Company currently intends to retain all available funds
for use in the operation and expansion of its business.

In July 1997, the Company completed the Offering of its Class A Common Stock.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Initial Public Offering". The net proceeds of the Offering
received by the Company were approximately $84.7 million. The Company used a
portion of such proceeds to pay $26 million of the estimated $38 million final S
corporation distribution and approximately $21.8 million to repay indebtedness
outstanding under its revolving credit agreement.

                                       10
<PAGE>   13

ITEM 6.  SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
                                                        FOR THE YEAR ENDED DECEMBER 31,
                                              ----------------------------------------------------
                                                1993       1994       1995       1996       1997
                                              --------   --------   --------   --------   --------
                                                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                           <C>        <C>        <C>        <C>        <C>
STATEMENT OF INCOME DATA:
Revenues....................................  $258,919   $316,800   $382,360   $418,059   $473,851
Income from operations......................     9,572     16,182     19,615     28,805     34,887
Historical net income(1)....................     9,980     27,739     16,635     26,859     30,287
Pro forma net income(1)(2)..................     5,982     16,326      9,536     16,056     17,336
Pro forma net income per
  share-basic(1)(2).........................      0.27       0.73       0.43       0.72       0.77
Pro forma net income per
  share-diluted(1)(2).......................      0.27       0.73       0.43       0.72       0.75
</TABLE>

<TABLE>
<CAPTION>
                                                               AS OF DECEMBER 31,
                                              ----------------------------------------------------
                                                1993       1994       1995       1996       1997
                                              --------   --------   --------   --------   --------
                                                                 (IN THOUSANDS)
<S>                                           <C>        <C>        <C>        <C>        <C>
BALANCE SHEET DATA:
Working capital.............................  $ 12,415   $  2,416   $ 23,887   $ 11,865   $ 50,922
Total assets................................    65,845     93,668    113,326    123,935    197,709
Total long-term debt........................        --         --     12,000     25,000         --
Stockholders' equity........................    23,473     19,345     27,827     16,713     96,596
</TABLE>

---------------
(1) 1994 results include a gain from the sale of the Company's travel-related
    publications. This gain increased 1994 historical net income, pro forma net
    income and pro forma net income per share -basic and -diluted by $13,070,
    $7,693 and $0.34, respectively.

(2) During 1997, the Company completed the Offering and elected to change its
    tax status from an S corporation to a C corporation. Pro forma net income
    and pro forma net income per share data are presented as if the Company had
    changed its tax status to a C corporation prior to January 1, 1993. Please
    see Notes 2m., 8 and 10 of the consolidated financial statements presented
    elsewhere herein.

                                       11
<PAGE>   14

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

OVERVIEW

CMP publishes controlled-circulation, business-to-business trade publications
and paid-circulation magazines and also provides Internet services. A
substantial portion of the Company's revenues are derived from the sale of
advertising space in its publications. The Company also earns revenues from paid
subscriptions, newsstand sales, list rentals, reprints and licensing of the
editorial content, designs and titles of its publications.

The Company's revenues and profitability are influenced by a number of external
factors, the most significant of which include the pace at which new technology
products are introduced; the extent to which companies selling such products
elect to advertise using print or online media rather than other advertising
media; trends in paper prices and postal rates which, in certain years, have
increased at levels in excess of the rate increases which could reasonably be
passed along to customers; and the level of competition in various market
sectors among the major technology publishers.

INITIAL PUBLIC OFFERING

On July 30, 1997, the Company completed the Offering of 5,485,000 shares of
Class A Common Stock at an offering price of $22.00 per share, of which
4,235,000 shares were sold by the Company and 1,250,000 shares were sold by
selling stockholders. The Company did not receive any of the proceeds from the
shares sold by the selling stockholders. Net proceeds to the Company after
issuance costs of the Offering were approximately $84.7 million. See
"-- Liquidity and Capital Resources."

NEW PUBLICATIONS AND SERVICES

As part of its growth strategy, the Company invests in new publications and
services aimed at the builders, sellers and users of technology. New
publications generally incur significant operating losses and require several
years to achieve profitability. New Internet services have incurred significant
operating losses, and the amount of time required for these services to achieve
profitability remains uncertain as the Internet is still in the early stages of
development as a commercial medium. CMP has funded the launches of new
publications and services with cash flow from operations and, to a lesser
extent, with borrowings under its revolving credit agreement. The Company does
not capitalize development costs or start-up expenses for new publications and
services. Costs related to the development of new publications and services are
expensed as incurred. If the Company concludes that a new publication or service
will not achieve certain benchmarks with regard to revenues, profitability and
cash flow within a reasonable period of time, management will modify or
reposition the publication or service, incorporate it into another publication
or service, sell it or discontinue it.

                                       12
<PAGE>   15

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, items within the
Company's consolidated statements of income. This table and the subsequent
discussion should be read in conjunction with the consolidated financial
statements and the notes thereto contained elsewhere herein.

<TABLE>
<CAPTION>
                                                     FOR THE YEAR ENDED DECEMBER 31,
                                                     --------------------------------
                                                       1995        1996        1997
                                                     --------    --------    --------
                                                              (IN THOUSANDS)
<S>                                                  <C>         <C>         <C>
Revenues...........................................  $382,360    $418,059    $473,851
Operating costs and expenses:
  Cost of revenues.................................   166,092     172,475     188,965
  Selling and promotion............................   128,640     138,319     160,579
  General and administrative.......................    68,013      78,460      84,971
  Non-recurring compensation charge................        --          --       4,449
                                                     --------    --------    --------
Income from operations.............................    19,615      28,805      34,887
Gain (loss) on sales...............................      (282)      1,434       4,011
Other expense, net.................................    (2,103)     (2,476)     (8,161)
                                                     --------    --------    --------
Income before pro forma provision for income
  taxes............................................    17,230      27,763      30,737
Pro forma provision for income taxes(1)............     7,694      11,707      13,401
                                                     --------    --------    --------
Pro forma net income(1)............................  $  9,536    $ 16,056    $ 17,336
                                                     ========    ========    ========
</TABLE>

---------------
(1) Pro forma provision for income taxes is presented as if the Company had
    changed its tax status from an S corporation to a C corporation prior to
    January 1, 1995.

1997 COMPARED WITH 1996

REVENUES.  Revenues for 1997 increased $55.8 million, or 13.3%, to $473.9
million compared with $418.1 million for 1996. The improvement was primarily
attributable to increases in advertising yield (advertising revenue per page),
and in the number of advertising pages in the Company's print publications, as
well as increased revenues from the Company's Internet services and growth in
International operations. Total advertising pages for the Company's domestic
print publications increased 3.2% to 40,384 pages, primarily due to advertising
page increases for InformationWeek, Computer Reseller News and VARBusiness,
partially offset by advertising page decreases for InternetWeek
(CommunicationsWeek was re-launched as InternetWeek in September 1997) and
HomePC. In addition, the Company ceased publishing NetGuide Magazine in July
1997.

OPERATING COSTS AND EXPENSES.  Cost of revenues for 1997 increased $16.5
million, or 9.6%, to $189.0 million compared with $172.5 million for 1996,
primarily as a result of increased editorial, production, distribution and
fulfillment costs for the Company's print publications, and increased costs
attributable to the Company's Internet services, partially offset by decreased
paper costs for the Company's print publications. However, cost of revenues as a
percentage of revenues decreased to 39.9% in 1997 as compared to 41.2% in 1996,
primarily as a result of higher revenues resulting from increased advertising
yield and advertising pages without a corresponding increase in cost of revenues
for certain of the Company's print publications and the discontinuance of
NetGuide Magazine in July 1997, which had a higher expense ratio than the
Company's other print publications, partially offset by costs associated with
the Company's Internet services, which currently have higher expense ratios than
the Company's print publications.

Selling and promotion expenses for 1997 increased $22.3 million, or 16.1%, to
$160.6 million compared with $138.3 million for 1996. The increase was primarily
attributable to higher commission and sales force costs associated with
increased revenues in 1997 as compared to 1996, increased circulation and
promotion efforts in 1997 relating to the re-launch of CommunicationsWeek as
InternetWeek and the launch of Computer Reseller News in France, as well as
increased promotion efforts related to the Company's Internet services. Selling
and

                                       13
<PAGE>   16

promotion expenses also increased to support sales force expansion in several of
the Company's print publications to better meet the needs of customers. Selling
and promotion expenses as a percentage of revenues increased to 33.9% in 1997
from 33.1% in 1996. This was principally due to higher costs associated with the
Company's Internet services which currently have higher expense ratios than the
Company's print publications.

General and administrative expenses for 1997 increased $6.5 million, or 8.3%, to
$85.0 million compared with $78.5 million for 1996, primarily due to costs of
approximately $2.4 million related to a reduction in the Company's work force,
mainly at the corporate level but also in WINDOWS Magazine, HomePC, NetGuide
Magazine and NetGuide (the on-line service), as well as higher depreciation
expense in 1997 as compared to 1996. General and administrative expenses as a
percentage of revenues decreased to 17.9% in 1997 from 18.8% in 1996.

NON-RECURRING COMPENSATION CHARGE.  Upon the consummation of the Offering,
certain members of the founding family of the Company made a gift from their
personal holdings of 202,186 shares of Class A Common Stock to substantially all
of the employees of the Company. As required by generally accepted accounting
principles, the Company recorded, at the date of the gift, a one-time, non-cash
compensation charge of approximately $4.4 million which represented the fair
market value of the shares on such date.

GAIN (LOSS) ON SALES.  The gain on sales of $4.0 million in 1997 was primarily
attributable to a gain of approximately $3.0 million resulting from the sale of
the subscriber list of NetGuide Magazine in July 1997 and a gain of
approximately $0.8 million resulting from the sale of the Company's 50% interest
in one of its joint ventures engaged in Internet-related services in December
1997. The gain on sales of $1.4 million in 1996 was realized primarily from the
sale of the Company's CommunicationsWeek International publication in February
1996.

OTHER EXPENSE, NET.  Other expense, net for 1997 increased $5.7 million to $8.2
million as compared with $2.5 million for 1996, primarily as a result of
increased losses from the Company's equity investments of approximately $7.0
million, partially offset by lower interest expense and foreign exchange gains
in 1997 as compared to foreign exchange losses in 1996. Losses from the
Company's equity investments in 1997 included impairment charges of $3.2 million
to reduce the carrying value of certain investments in companies developing
Internet-related technologies.

PROVISION FOR INCOME TAXES.  Prior to the consummation of the Offering, the
Company and certain affiliates had elected to be treated as S corporations for
U.S. federal income tax purposes, which required that the income or loss for
federal and certain state and local jurisdictions be recognized by the
stockholders. In connection with the Offering (see "-- Liquidity and Capital
Resources"), the Company terminated its S corporation election and became a C
corporation. If the Company and certain affiliates had been C corporations for
the years ended December 31, 1997, 1996 and 1995, the effective income tax rate
would have been 43.6%, 42.2% and 44.7%, respectively.

1996 COMPARED WITH 1995

REVENUES.  Revenues for 1996 increased $35.7 million, or 9.3%, to $418.1 million
compared with $382.4 million for 1995. The improvement was primarily
attributable to increases in advertising yield and in the number of advertising
pages and the acquisition of M&T International in May 1996, partially offset by
the effect of the sale of CommunicationsWeek International in February 1996.
Total advertising pages increased 5.5% to 38,925 pages, primarily due to
advertising page increases for Computer Reseller News, Electronic Engineering
Times, Network Computing and InformationWeek, partially offset by advertising
page decreases for WINDOWS Magazine and Computer Retail Week. Excluding the
effects of the acquisition of M&T International and the sale of
CommunicationsWeek International, revenues for 1996 increased 11.4% as compared
to 1995.

OPERATING COSTS AND EXPENSES.  Cost of revenues for 1996 increased $6.4 million,
or 3.8%, to $172.5 million compared with $166.1 million for 1995, primarily as a
result of increased paper, editorial, fulfillment and distribution costs for the
Company's print publications, and increased costs attributable to the Company's

                                       14
<PAGE>   17

Internet services, NetGuide and TechWeb, launched in August 1996 and November
1994, respectively, partially offset by decreased production costs for the
Company's print publications and the effect of the sale of CommunicationsWeek
International. However, cost of revenues as a percentage of revenues decreased
to 41.2% in 1996 as compared to 43.4% in 1995, primarily as a result of higher
revenues resulting from increased advertising yield and advertising pages
without a corresponding increase in cost of revenues, partially offset by costs
attributable to NetGuide and TechWeb, which at that time had significant costs
but did not generate substantial revenues.

Selling and promotion expenses for 1996 increased $9.7 million, or 7.5%, to
$138.3 million compared with $128.6 million for 1995. The increase was primarily
attributable to higher commission and sales force costs associated with
increased revenues in 1996 as compared to 1995, increased circulation efforts in
1996 by NetGuide Magazine and WINDOWS Magazine, expenses associated with the
Company's launch of NetGuide in August 1996 and the effect of the acquisition of
M&T International. Selling and promotion expenses as a percentage of revenues
decreased to 33.1% in 1996 from 33.6% in 1995. This was principally due to the
expense reduction associated with outsourcing the Company's list rental
business, increased revenues for Informatiques Magazine and NetGuide Magazine
without corresponding increases in selling and promotion expenses, partially
offset by higher costs associated with the Company's Internet services and the
inclusion of M&T International, which have higher expense ratios than the
Company's print publications.

General and administrative expenses for 1996 increased $10.5 million, or 15.4%,
to $78.5 million compared with $68.0 million for 1995. General and
administrative expenses as a percentage of revenues increased to 18.8% in 1996
from 17.8% in 1995. These increases were principally due to cost increases of
approximately $7.8 million associated with higher staffing levels in 1996 to
support the continuing development of the World Wide Web sites for each of the
Company's publications as well as costs incurred to launch the on-line service,
NetGuide.

GAIN (LOSS) ON SALES.  The gain on sales of $1.4 million in 1996 was realized
primarily from the sale of the Company's CommunicationsWeek International
publication in February 1996. The loss on sales of $0.3 million in 1995
consisted primarily of the loss on sale of the Company's conference business in
Japan in September 1995.

OTHER EXPENSE, NET.  Other expense, net for 1996 increased $0.4 million to $2.5
million compared with $2.1 million for 1995, primarily as a result of increased
losses from the Company's equity investments, partially offset by reduced
interest expense due to lower interest rates on the Company's borrowings and
lower foreign exchange losses.

LIQUIDITY AND CAPITAL RESOURCES

Working capital was $50.9 million, $11.9 million and $23.9 million at December
31, 1997, 1996 and 1995, respectively. The increase in working capital at
December 31, 1997 as compared to December 31, 1996 was primarily attributable to
the net proceeds of the Offering and earnings for 1997, partially offset by net
repayments of borrowings, distributions to S corporation stockholders for taxes
and other, purchase of long-term investments and capital expenditures. The
decrease in working capital at December 31, 1996 as compared to December 31,
1995 was primarily attributable to distributions to S corporation stockholders
for taxes and other, repayment of borrowings and capital expenditures, partially
offset by borrowings under the Company's revolving credit agreement and earnings
for 1996. Accounts receivable, net were $76.7 million, $65.1 million and $64.2
million at December 31, 1997, 1996 and 1995, respectively. Days sales
outstanding ("DSO") was 56.7, 54.0 and 49.1 at December 31, 1997, 1996 and 1995,
respectively. DSO has increased primarily due to the growth in International
operations which currently have higher DSO than the Company's other businesses.
Paper inventories were $7.6 million, $6.1 million and $12.2 million at December
31, 1997, 1996 and 1995, respectively.

Cash provided by operating activities was $34.2 million, $48.4 million and $7.2
million for the years ended December 31, 1997, 1996 and 1995, respectively. The
decrease from 1996 to 1997 was primarily due to changes in working capital
items, the most significant of which were accounts receivable and inventories,
partially offset by increased operating income. The significant increase from
1995 to 1996 was primarily due to
                                       15
<PAGE>   18

increased operating income and to changes in working capital items, principally
paper inventories and accounts receivable.

Investing activities used $39.2 million in 1997, which consisted primarily of
$19.3 million for the purchase of short-term and long-term investments, $12.6
million in capital expenditures and $5.6 million in investments in and advances
to entities in which the Company has equity investments. Investing activities
used $22.4 million in 1996, which consisted primarily of $12.7 million in
capital expenditures, $10.0 million in investments in and advances to entities
in which the Company has equity investments and $2.0 million for the purchase of
M&T International, partially offset by proceeds of $2.2 million from the sale of
CommunicationsWeek International. Investing activities for 1995 used $1.5
million, consisting primarily of $8.2 million in capital expenditures and $0.3
million in advances to companies in which the Company has equity investments,
partially offset by proceeds of $7.1 million from the sale of short-term
investments. The Company expects capital expenditures in 1998 to continue at
least at the pace of 1997 and to be primarily for computer equipment for
business unit and corporate use.

Financing activities provided $29.7 million in 1997, consisting primarily of
$84.7 million in net proceeds from the Offering, $29.5 million of borrowings
under the Company's revolving credit agreement, partially offset by $54.5
million for repayment of borrowings and $29.7 million for cash distributions to
the Company's stockholders of record prior to the Offering, a significant
portion of which will be used to pay taxes such stockholders will owe on the
Company's income attributable to them as stockholders of an S corporation.
Financing activities used $25.3 million in 1996, consisting primarily of $38.3
million for distributions to stockholders and $30.1 million for repayment of
borrowings, partially offset by $43.1 million of borrowings under the Company's
revolving credit agreement. Financing activities used $6.8 million in 1995,
consisting primarily of $73.6 million for repayment of borrowings and $7.8
million for distributions to stockholders, partially offset by $74.6 million of
borrowings under the Company's revolving credit agreement.

The Company's revolving credit agreement, as amended, with two financial
institutions provides for borrowings of up to $75.0 million, all of which was
available at December 31, 1997. Borrowings are unsecured and bear interest at
either (i) LIBOR plus .35% to .825% depending on outstanding loan balances and
the Company's earnings levels, or (ii) the prime rate, at the Company's option.
The weighted average interest rate for borrowings during 1997 was 6.07%. The
agreement, as amended, contains certain negative covenants regarding, among
other items, minimum levels of net worth, fixed coverage and limitations on
indebtedness. The agreement expires November 14, 2001.

In April 1997, the Company guaranteed loans totaling $4.7 million to two of its
senior executives to pay taxes in connection with their purchase of Class A
Common Stock from principal stockholders of the Company. The loans are from one
of the financial institutions with which the Company has its revolving credit
agreement. These loans will be payable in November 2001 and are guaranteed
through such date. The Company is obligated to extend the guarantees for $3.0
million and $1.7 million through December 31, 2005 and December 31, 2007,
respectively, at the request of the senior executives.

In connection with the Offering, the Company terminated its S corporation
election and declared a final S corporation distribution to its stockholders of
record prior to the Offering, estimated to be approximately $38.0 million, a
significant portion of which will be used by such stockholders to pay taxes they
will owe on the Company's income attributable to them as stockholders of an S
corporation. The Company has used a portion of the net proceeds of the Offering
to pay $26.0 million of the estimated $38.0 million final S corporation
distribution and a portion to repay approximately $21.8 million outstanding
under its revolving credit agreement at the time of the Offering. The remaining
net proceeds are currently held in short-term and long-term investments. The
Company plans to pay the remaining amount of the final S corporation
distribution within the first four months of 1998.

The Company's working capital requirements and costs associated with new product
development have been met by cash flow from operations and short-term borrowings
under its existing revolving credit facility. Management believes sufficient
cash resources will be available to support its long-term growth strategies
through internally generated funds, the proceeds of the Offering and existing
credit arrangements.

                                       16
<PAGE>   19

SEASONALITY

The Company has typically incurred operating losses in the first quarter of each
year, but generally has earned profits in each of the remaining quarters.
First-quarter losses have been primarily due to lower than average advertising
sales during the quarter and relatively even distribution of certain costs
throughout the year. First-quarter losses have varied from year to year due to a
variety of factors, including the timing of new product launches and price
increases from suppliers.

Fourth-quarter revenues and income from operations of the Company have
traditionally been more favorable than those of the preceding quarters as a
result of a tendency of technology advertisers to place more advertising in the
latter part of the year and the scheduling of major technology industry trade
shows in the fourth quarter. While operating results for any quarter are not
necessarily indicative of results for any future period, the Company expects
that these quarterly trends will continue for the foreseeable future.

INFLATION AND VOLATILITY OF PAPER PRICES

The Company continually reviews the impact of inflation and the volatility of
paper prices. In early 1995, a postal rate increase went into effect, which was
the first such increase since 1991. Paper prices rose significantly in 1995,
dropped in 1996 and have increased moderately in 1997. The Company will continue
to monitor the impact of inflation and paper prices and will consider these
matters in setting its pricing policies. There can be no assurance that the
Company can recoup paper price increases by passing them through to its
advertisers and readers. In addition, the Company continually reviews its
purchasing and manufacturing processes for opportunities to reduce costs and
mitigate the impact of paper and postage increases (such as purchasing
lighter-grade paper stock or, when paper prices are at cyclical lows, increasing
paper inventory or entering into longer term contracts with suppliers). However,
the Company has not entered, and does not currently plan to enter, into forward
contracts. The Company also takes advantage of various postal discounts.

YEAR 2000

The Company has initiated an enterprise-wide project to assess the potential
issues associated with computer programming codes in its existing computer
systems with respect to a two-digit value for the year 2000. This project
consists of an evaluation of the technology and data used in the Company's
internal operations and the creation and delivery of its products and services
in order to identify potential year 2000 issues. The project also includes
assessing any year 2000 issues that may be caused by the Company's customers and
vendors, but there can be no assurance that such third parties will successfully
remediate their own year 2000 issues over which the Company has no control. The
Company believes that it will complete its assessment as well as implement any
necessary programming modifications prior to the commencement of the year 2000
and, assuming that the Company's customers and vendors successfully remediate
their own year 2000 issues, the Company believes it will have no material
business risk from such year 2000 issues. Management believes that any cost
associated with the assessment of year 2000 issues as well as necessary
modifications to its systems will not have a material adverse impact on the
Company's financial position, results of operations or cash flows.

FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements regarding matters that are
subject to risks and uncertainties. For such statements, the Company claims the
protection of the safe harbor for forward-looking statements contained in
Section 21E of the Securities Exchange Act of 1934, as amended. The Company's
results could differ materially from those discussed in each forward-looking
statement due to various factors which are outside the Company's control,
including a reduction in demand for advertising by technology advertisers,
competition from other media companies for audience and advertising revenue,
market acceptance and penetration of new products and services, and material
adverse changes in general economic conditions.

                                       17
<PAGE>   20

NEW ACCOUNTING PRONOUNCEMENTS

In 1996, the Company adopted Statement of Financial Accounting Standards No.
123, "Accounting for Stock-Based Compensation" ("SFAS No. 123"), which was
effective for fiscal years beginning after December 15, 1995. SFAS No. 123
provides companies with the choice of following the provisions of SFAS No. 123
in the determination of stock-based compensation or to continue to follow the
provisions of Accounting Principles Bulletin No. 25, "Accounting for Stock
Issued to Employees" ("APB No. 25"). The Company elected to continue to follow
APB No. 25 and has provided the pro forma disclosures required by SFAS No. 123
in the notes to the consolidated financial statements.

On January 1, 1996, the Company adopted the provisions of Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets and For Long-Lived Assets to be Disposed Of" ("SFAS No. 121"), which was
effective for fiscal years beginning after December 15, 1995. Adoption of SFAS
No. 121 had no impact on the Company's financial position, results of operations
or cash flows.

In 1997, the Company adopted Statement of Financial Accounting Standards No.
128, "Earnings per Share" ("SFAS No. 128"), which simplifies existing
computational guidelines, revises disclosure requirements and increases the
comparability of earnings-per-share data on an international basis. SFAS No. 128
is effective for financial statements for periods ending after December 15, 1997
and requires restatement of all prior-period earnings-per-share data presented.

In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income" ("SFAS
No. 130"), which establishes standards for reporting and display of
comprehensive income and its components in the financial statements. SFAS No.
130 is effective for fiscal years beginning after December 15, 1997.
Reclassification of financial statements for earlier periods provided for
comparative purposes is required. SFAS No. 130 offers alternatives for
presentation of disclosures required by the standard; the Company is in the
process of determining its preferred format. As SFAS No. 130 establishes
standards for reporting and display, the adoption of this standard will have no
impact on a company's consolidated results of operations, financial position or
cash flows.

                                       18
<PAGE>   21

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not Required.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                PAGE
                                                              ---------
<S>                                                           <C>
Report of Independent Accountants...........................     20
Consolidated Statements of Income for the years ended
  December 31, 1995, 1996
  and 1997..................................................     21
Consolidated Balance Sheets as of December 31, 1996 and
  1997......................................................     22
Consolidated Statements of Stockholders' Equity for the
  years ended December 31, 1995, 1996 and 1997..............     23
Consolidated Statements of Cash Flows for the years ended
  December 31, 1995, 1996 and 1997..........................     24
Notes to Consolidated Financial Statements..................     25
</TABLE>

                                       19
<PAGE>   22

                       REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of CMP Media Inc.:

     We have audited the accompanying consolidated balance sheets of CMP Media
Inc. and subsidiaries as of December 31, 1996 and 1997 and the related
consolidated statements of income, stockholders' equity, and cash flows for each
of the three years in the period ended December 31, 1997. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

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

     In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of CMP Media
Inc. and subsidiaries as of December 31, 1996 and 1997, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1997, in conformity with generally accepted accounting principles.

                                          COOPERS & LYBRAND L.L.P.

New York, New York
February 9, 1998.

                                       20
<PAGE>   23

                        CMP MEDIA INC. AND SUBSIDIARIES

                       CONSOLIDATED STATEMENTS OF INCOME
              FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                               1995        1996        1997
                                                             --------    --------    --------
<S>                                                          <C>         <C>         <C>
Revenues...................................................  $382,360    $418,059    $473,851
Operating costs and expenses:
  Cost of revenues.........................................   166,092     172,475     188,965
  Selling and promotion....................................   128,640     138,319     160,579
  General and administrative...............................    68,013      78,460      84,971
  Non-recurring compensation charge........................        --          --       4,449
                                                             --------    --------    --------
Income from operations.....................................    19,615      28,805      34,887
                                                             --------    --------    --------
Gain (loss) on sales.......................................      (282)      1,434       4,011
Other expense, net.........................................    (2,103)     (2,476)     (8,161)
                                                             --------    --------    --------
Income before provision for income taxes...................    17,230      27,763      30,737
Provision for income taxes.................................       595         904         450
                                                             --------    --------    --------
Net income.................................................  $ 16,635    $ 26,859    $ 30,287
                                                             ========    ========    ========

Pro Forma Data (unaudited):
  Historical income before provision for income taxes......  $ 17,230    $ 27,763    $ 30,737
  Pro forma provision for income taxes.....................     7,694      11,707      13,401
                                                             --------    --------    --------
  Pro forma net income.....................................  $  9,536    $ 16,056    $ 17,336
                                                             ========    ========    ========
  Pro forma net income per share -- basic..................  $   0.43    $   0.72    $   0.77
                                                             ========    ========    ========
  Pro forma net income per share -- diluted................  $   0.43    $   0.72    $   0.75
                                                             ========    ========    ========
</TABLE>

   The accompanying notes are an integral part of the consolidated financial
                                  statements.
                                       21
<PAGE>   24

                        CMP MEDIA INC. AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS
                        AS OF DECEMBER 31, 1996 AND 1997
               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                1996        1997
                                                              --------    --------
<S>                                                           <C>         <C>
                                      ASSETS
Current assets:
  Cash and cash equivalents.................................  $  6,721    $ 31,495
  Accounts receivable, less allowance for doubtful accounts
     of $3,189 and $3,631 as of December 31, 1996 and 1997,
     respectively...........................................    65,145      76,667
  Short-term investments....................................        --       6,610
  Inventories...............................................     6,091       7,587
  Deferred income taxes.....................................       385       5,695
  Prepaid expenses and other current assets.................     6,046      10,073
                                                              --------    --------
          Total current assets..............................    84,388     138,127
                                                              --------    --------
Property and equipment, net.................................    26,461      27,831
Long-term investments.......................................        18      12,862
Investments in and advances to unconsolidated affiliates....     8,197       4,687
Intangible assets...........................................     3,382       6,460
Deferred income taxes.......................................        --       5,312
Other assets................................................     1,489       2,430
                                                              --------    --------
                                                              $123,935    $197,709
                                                              ========    ========
                       LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable..........................................  $ 27,146    $ 26,389
  Accrued expenses and other current liabilities............    33,995      38,150
  S corporation distribution payable........................        --      12,000
  Deferred revenue..........................................    11,382      10,666
                                                              --------    --------
          Total current liabilities.........................    72,523      87,205
                                                              --------    --------
Long-term debt..............................................    25,000          --
Deferred compensation.......................................     6,730       8,506
Other liabilities...........................................     2,969       5,402
                                                              --------    --------
     Total liabilities......................................   107,222     101,113
                                                              --------    --------
Commitments and contingencies (Note 13)
Stockholders' equity:
  Class A Common Stock, par value $.01 per share, 50,000,000
     shares authorized, 1,321,320 shares and 7,060,312
     shares issued and outstanding at December 31, 1996 and
     1997, respectively.....................................        13          71
  Class B Common Stock, par value $.01 per share, 20,000,000
     shares authorized, 17,553,250 shares and 16,050,074
     shares issued and outstanding at December 31, 1996 and
     1997, respectively.....................................       176         160
  Additional paid-in capital................................    17,843      86,305
  Retained earnings.........................................    14,323      23,582
  Unamortized restricted stock compensation.................   (15,174)    (13,270)
  Other.....................................................      (468)       (252)
                                                              --------    --------
     Total stockholders' equity.............................    16,713      96,596
                                                              --------    --------
                                                              $123,935    $197,709
                                                              ========    ========
</TABLE>

   The accompanying notes are an integral part of the consolidated financial
                                  statements.
                                       22
<PAGE>   25

                        CMP MEDIA INC. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
              FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
                      (IN THOUSANDS, EXCEPT SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                           COMMON STOCK
                                 ---------------------------------                           UNAMORTIZED
                                          SHARES                     ADDITIONAL               RESTRICTED
                                 ------------------------             PAID-IN     RETAINED      STOCK               STOCKHOLDERS'
                                   CLASS A      CLASS B     AMOUNT    CAPITAL     EARNINGS   COMPENSATION   OTHER      EQUITY
                                 -----------   ----------   ------   ----------   --------   ------------   -----   -------------
<S>                              <C>           <C>          <C>      <C>          <C>        <C>            <C>     <C>
Balance as of January 1,
  1995.........................   18,874,570           --    $189     $ 2,296     $16,913      $       --   $ (53)    $ 19,345
  Net income...................                                                    16,635                               16,635
  Distributions to S
    corporation stockholders
    for taxes and other........                                                    (7,825)                              (7,825)
  Contributed capital..........                                            70                                               70
  Minimum pension liability
    adjustment.................                                                                              (451)        (451)
  Adjustment to unrealized loss
    on securities
    available-for-sale.........                                                                                53           53
                                 -----------   ----------    ----     -------     --------     ----------   -----     --------
Balance as of December 31,
  1995.........................   18,874,570           --     189       2,366      25,723              --    (451)      27,827
                                 ===========   ==========    ====     =======     ========     ==========   =====     ========
  Net income...................                                                    26,859                               26,859
  Conversion of Class A Common
    Stock to Class B Common
    Stock......................  (18,874,570)  18,874,570
  Conversion of Class B Common
    Stock to Class A Common
    Stock......................    1,321,320   (1,321,320)
  Sale of restricted stock.....                                        15,414                     (15,414)                  --
  Distributions to S
    corporation stockholders
    for taxes and other........                                                   (38,259)                             (38,259)
  Amortization of restricted
    stock compensation.........                                                                       240                  240
  Contributed capital..........                                            63                                               63
  Minimum pension liability
    adjustment.................                                                                               (17)         (17)
                                 -----------   ----------    ----     -------     --------     ----------   -----     --------
Balance as of December 31,
  1996.........................    1,321,320   17,553,250     189      17,843      14,323         (15,174)   (468)      16,713
                                 ===========   ==========    ====     =======     ========     ==========   =====     ========
  Net income...................                                                    30,287                               30,287
  Conversion of Class B Common
    Stock to Class A Common
    Stock......................    1,300,990   (1,300,990)
  Proceeds from issuance of
    Class A Common Stock in
    initial public offering at
    $22 per share, net of
    issuance costs of $1,937...    4,235,000                   42      84,669                                           84,711
  Gift of Class A Common Stock
    to employees...............      202,186     (202,186)              4,449                                            4,449
  Issuance of Class A Common
    Stock......................          816                               20                         (20)                  --
  Distributions to S
    corporation stockholders
    for taxes and other........                                       (20,693)    (21,028)                             (41,721)
  Amortization of restricted
    stock compensation.........                                                                     1,924                1,924
  Unrealized gain on securities
    available-for-sale.........                                                                               109          109
  Contributed capital..........                                            17                                               17
  Minimum pension liability
    adjustment.................                                                                               107          107
                                 -----------   ----------    ----     -------     --------     ----------   -----     --------
Balance as of December 31,
  1997.........................    7,060,312   16,050,074    $231     $86,305     $23,582      $  (13,270)  $(252)    $ 96,596
                                 ===========   ==========    ====     =======     ========     ==========   =====     ========
</TABLE>

   The accompanying notes are an integral part of the consolidated financial
                                  statements.
                                       23
<PAGE>   26

                        CMP MEDIA INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                1995        1996        1997
                                                              --------    --------    --------
<S>                                                           <C>         <C>         <C>
Cash flows from operating activities:
  Net income................................................  $ 16,635    $ 26,859    $ 30,287
  Reconciliation of net income to net cash provided by
    operating activities:
    Depreciation and amortization of property and
      equipment.............................................     6,068       6,952       8,356
    Amortization of intangible assets.......................       283         369         415
    Write-off of property and equipment.....................     1,622         872       2,993
    Write-off of intangible assets..........................        --          --         390
    Provision for doubtful accounts.........................     2,150       2,216       3,100
    Compensation expense under incentive plans..............     1,595       2,192       4,410
    Loss (gain) on sales....................................       282      (1,434)     (4,011)
    Non-recurring compensation charge.......................        --          --       4,449
    Losses from unconsolidated affiliates...................       743       1,330       8,374
    Deferred income taxes...................................      (134)        207     (10,622)
    Changes in operating assets and liabilities, net of the
      effects of businesses acquired and sold:
      Increase in accounts receivable.......................   (22,105)     (2,807)    (13,939)
      (Increase) decrease in inventories....................    (8,088)      6,153      (1,496)
      Decrease (increase) in prepaid expenses and other
         assets.............................................     1,005         551      (2,676)
      Increase in accounts payable, accrued expenses and
         other current liabilities..........................     5,250       5,398         927
      Increase (decrease) in deferred revenue and other
         liabilities........................................     1,942        (501)      3,260
                                                              --------    --------    --------
         Net cash provided by operating activities..........     7,248      48,357      34,217
                                                              --------    --------    --------
Cash flows from investing activities:
  Purchase of property and equipment........................    (8,224)    (12,728)    (12,587)
  Purchase of intangible assets.............................      (102)       (219)         --
  Investments in and advances to unconsolidated
    affiliates..............................................      (339)     (9,950)     (5,559)
  Purchase of businesses, net of cash acquired..............        --      (2,000)     (3,698)
  Purchase of short-term and long-term investments..........        --          --     (19,346)
  Proceeds from sale of short-term investments..............     7,080          --          --
  Proceeds from sales of assets.............................       126       2,489       2,001
                                                              --------    --------    --------
         Net cash used in investing activities..............    (1,459)    (22,408)    (39,189)
                                                              --------    --------    --------
Cash flows from financing activities:
  Proceeds from issuance of Class A Common Stock, net of
    issuance costs..........................................        --          --      84,711
  Borrowings under revolving credit agreement...............    74,550      43,050      29,475
  Repayment of borrowings...................................   (73,550)    (30,050)    (54,475)
  Distributions to S corporation stockholders for taxes and
    other...................................................    (7,825)    (38,259)    (29,721)
  Other financing activities................................        70         (60)       (244)
                                                              --------    --------    --------
         Net cash (used in) provided by financing
           activities.......................................    (6,755)    (25,319)     29,746
                                                              --------    --------    --------
Net change in cash and cash equivalents.....................      (966)        630      24,774
Cash and cash equivalents at beginning of year..............     7,057       6,091       6,721
                                                              --------    --------    --------
Cash and cash equivalents at end of year....................  $  6,091    $  6,721    $ 31,495
                                                              ========    ========    ========
Supplemental disclosure of cash flow information:
  Interest paid.............................................  $    840    $    724    $  1,076
                                                              ========    ========    ========
  Income taxes paid.........................................  $    734    $    781    $  6,102
                                                              ========    ========    ========
Supplemental disclosure of businesses acquired:
  Fair value of assets acquired.............................              $  2,275    $  4,232
  Liabilities assumed.......................................                  (275)       (534)
                                                                          --------    --------
  Cash paid, net of cash acquired...........................              $  2,000    $  3,698
                                                                          ========    ========
</TABLE>

   The accompanying notes are an integral part of the consolidated financial
                                  statements.
                                       24
<PAGE>   27

                        CMP MEDIA INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

1.  NATURE OF BUSINESS:

     CMP Media Inc. and subsidiaries (the "Company") operate in one business
segment by publishing magazines and newspapers and providing Internet services
for the manufacturers, engineers, designers and purchasers of electronic systems
and components, including computers, telecommunications equipment and related
products, distributors, resellers and retailers of those products and the
end-users, in business and at home, of information systems, computer systems,
personal computers, software, the Internet and related products and services. In
addition, the Company licenses the titles, editorial content and designs of many
of its publications to publishers outside the United States and represents
foreign technology publishers in their sale of advertising space to U.S.
technology advertisers.

     As more fully discussed in Note 8, on July 30, 1997, the Company completed
an initial public offering (the "Offering") of 5,485,000 shares of Class A
Common Stock at an offering price of $22.00 per share, of which 4,235,000 shares
were sold by the Company and 1,250,000 shares were sold by selling stockholders.

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

a.  Basis of Presentation and Principles of Consolidation

     The accompanying financial statements include the accounts of CMP Media
Inc. ("Media"), CMP International Corporation ("International"), CMP
Communications Corporation ("Communications"), CMP Media Partnership (the
"Partnership"), CMP France S.N.C. ("S.N.C."), and CMP Japan K.K. ("K.K."), which
are all related through common ownership. Through a series of transactions which
occurred from October 21, 1996 through February 3, 1997, Media became the parent
company of International and S.N.C., K.K. was liquidated, Media and
Communications merged, the outstanding shares in Communications were
subsequently canceled and the Partnership (which owned S.N.C.) ceased to exist.
As all of the entities were under common control, the most meaningful
presentation of the financial statements is the retroactive consolidation of
Media and its subsidiaries for all periods presented. All significant
intercompany accounts and transactions between Media and its subsidiaries have
been eliminated in consolidation.

     As discussed in Note 8, prior to the consummation of the Offering the
Company declared a 35.75-for-one stock split, in the form of a stock dividend,
of all classes of its common stock and changed the par value of all classes of
its common stock from $0.10 per share to $0.01 per share. These transactions
have been given retroactive treatment in the consolidated financial statements
for all periods presented.

b.  Use of Estimates in the Preparation of Financial Statements

     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. The
Company's most significant estimates are related to provisions for estimated
returns, rebates, discounts and adjustments and allowances for doubtful
accounts.

c.  Investments in Unconsolidated Affiliates

     Investments in companies in which ownership interests range from 20 to 50
percent and the Company has the ability to exercise significant influence over
the operating and financial policies of such companies are accounted for under
the equity method. Other investments are accounted for under the cost method.

                                       25
<PAGE>   28
                        CMP MEDIA INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: -- CONTINUED
d.  Revenue Recognition

     Advertising revenues from the Company's controlled-circulation trade
newspapers and magazines are recognized based on the publications' cover dates
net of provisions for estimated rebates, adjustments and discounts. Advertising
revenues from the Company's paid-subscription and newsstand-circulation consumer
magazines are recognized at the on-sale date, net of provisions for estimated
rebates, adjustments and discounts. Revenues from newsstand sales are recognized
at the on-sale date for all publications, net of provisions for estimated
returns. Revenues from subscription sales are recognized over the terms of the
subscription on a straight-line basis. Licensing revenues are recognized on a
straight-line basis over the term of the license agreement.

e.  Operating Costs and Expenses

     Cost of revenues includes editorial, production, paper, distribution and
fulfillment costs. Selling and promotion costs include subscription acquisition
costs. Such costs are expensed as incurred.

f.  Marketable Securities

     The Company's investments in marketable securities are categorized as
available-for-sale, as defined by Statement of Financial Accounting Standards
No. 115, "Accounting for Certain Investments in Debt and Equity Securities".
Securities are carried at fair value, with net unrealized holding gains and
losses reflected as a component of stockholders' equity until realized. For the
purpose of computing realized gains and losses, cost is calculated on a specific
identification basis.

     As of December 31, 1997, the Company's investments consisted of securities
issued by various municipalities. The majority of the investments have
contractual maturities of two years or less. Gross unrealized gains and losses
for the year ended December 31, 1997 were not material.

g.  Cash and Cash Equivalents

     The Company considers all highly liquid investments purchased with original
maturities of three months or less to be cash equivalents.

h.  Concentration of Credit Risk

     The Company places its investments with high credit quality financial
institutions and municipalities. At times, such investments may be in excess of
federally insured limits. The Company has not experienced losses in such
accounts.

     The Company provides publishing, marketing and information services to its
customers who represent a variety of technology companies in the United States
and other countries. The Company extends credit to its customers and
historically has not experienced significant losses relating to receivables from
individual customers or groups of customers.

i.  Inventories

     Inventories, which consist primarily of paper used in the production of the
Company's publications, are stated at the lower of cost or market. Cost is
determined on a first-in, first-out basis.

                                       26
<PAGE>   29
                        CMP MEDIA INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: -- CONTINUED
j.  Property and Equipment

     Property and equipment is recorded at cost. Depreciation is computed
principally using the straight-line method over estimated useful lives which
range from three to seven years. Maintenance and repairs are charged to expense
as incurred; renewals and improvements which extend the life of the asset are
capitalized. Gains or losses on the disposition of property and equipment are
reflected in results of operations. Leasehold improvements are amortized over
the shorter of the lease term or the remaining useful life of the related
assets.

k.  Intangible Assets

     Intangible assets consist of goodwill, trademarks, subscriber lists and
covenants not to compete. Intangible assets are amortized on a straight-line
basis over periods ranging from three to fifteen years.

l.  Long-Lived Assets

     In accordance with Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to be
Disposed Of" ("SFAS No. 121"), the Company periodically evaluates the carrying
value of long-lived assets to be held and used, including goodwill and other
intangible assets, to assess whether there has been an impairment in the value
of such assets. If the carrying value of the assets exceeds the estimated
undiscounted future cash flows from operating activities of the related
businesses, an impairment is deemed to have occurred. In this event, the assets
are written down to fair value. Adoption of SFAS No. 121 on January 1, 1996 had
no impact on the Company's financial position, results of operations or cash
flows.

m.  Income Taxes

     Prior to the Offering, the Company and certain affiliates elected to be
treated as S corporations for U.S. federal income tax purposes, which requires
that the income or loss for federal and certain state and local tax
jurisdictions be recognized by the stockholders. The other affiliates were
partnerships where income or loss was included in a partner's tax return based
upon its respective ownership percentage.

     In connection with the Offering, the Company terminated its S corporation
election. As a result of converting to a C corporation, the Company is subject
to U.S. federal and all applicable state and local taxes. The unaudited pro
forma provision for income taxes, unaudited pro forma net income and unaudited
pro forma net income per share data are presented as if the Company had
terminated its S corporation election prior to January 1, 1995.

     Deferred income taxes are recognized for the tax consequences in future
years of differences between the tax bases of assets and liabilities and their
financial reporting amounts at each year-end on the basis of enacted laws and
statutory tax rates applicable to the period in which the differences are
expected to affect taxable income. Valuation allowances are established when
necessary to reduce deferred tax assets to the amounts expected to be realized.

n.  Pro Forma Net Income Per Share and Weighted Average Common Shares
Outstanding (Unaudited)

     In 1997, the Company adopted Statement of Financial Accounting Standards
No. 128, "Earnings per Share" ("SFAS No. 128"), which simplifies existing
computational guidelines, revises disclosure requirements and increases the
comparability of earnings-per-share-data on an international basis. SFAS No.
128,

                                       27
<PAGE>   30
                        CMP MEDIA INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: -- CONTINUED
issued by the Financial Accounting Standards Board in February 1997, is
effective for financial statements for periods ending after December 15, 1997.

     Pro forma net income per share-basic is calculated using weighted average
common shares outstanding and pro forma net income per share-diluted is
calculated using weighted average common shares outstanding including the effect
of dilutive securities calculated using the Treasury Stock Method. Prior to the
Offering, pro forma net income per share-basic and pro forma net income per
share-diluted were calculated using weighted average common shares outstanding
including the effect of dilutive securities calculated using the Treasury Stock
Method. In addition, the calculations prior to the Offering include shares of
common stock representing the number of shares, based upon the Offering price of
$22.00 per share, the proceeds from which would be necessary to pay the final S
corporation distribution (see Note 8) and S corporation distributions of
approximately $10,300 made in the twelve months preceding May 31, 1997 which
were in excess of net income for such twelve-month period.

     For the year ended December 31, 1997, for the purpose of calculating pro
forma net income per share-basic, the weighted average number of common shares
outstanding was 22,565,848 and for the purpose of calculating pro forma net
income per share-diluted, the weighted average number of common shares
outstanding and dilutive securities was 23,206,073 which includes 640,225 shares
representing the impact of common stock options calculated using the Treasury
Stock Method.

o.  Fair Value of Financial Instruments

     Cash and cash equivalents, marketable securities, short-term receivables
and trade payables and accrued expenses are carried at amounts approximating
fair value. Based on the interest rates currently available to the Company for
similar borrowings, long-term debt is also carried at an amount approximating
fair value.

p.  New Accounting Pronouncements

     In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income" ("SFAS
No. 130"), which establishes standards for reporting and display of
comprehensive income and its components in the financial statements. SFAS No.
130 is effective for fiscal years beginning after December 15, 1997.
Reclassification of financial statements for earlier periods provided for
comparative purposes is required. SFAS No. 130 offers alternatives for
presentation of disclosures required by the standard; the Company is in the
process of determining its preferred format. As SFAS No. 130 establishes
standards for reporting and display, the adoption of this standard will have no
impact on a company's consolidated results of operations, financial position or
cash flows.

q.  Reclassifications

     Certain prior year amounts have been reclassified to conform with the 1997
presentation.

3.  ACQUISITIONS, INVESTMENTS AND DISPOSITIONS:

a.  Acquisitions

     In May 1996, the Company acquired M&T International (now called CMP
Worldwide Media Networks), a business which represents non-U.S. technology
publishers in the sale of advertising space to U.S. technology advertisers, for
$2,275 in cash and assumed liabilities. In December 1997, the Company acquired
two technology publications in the U.K., as well as the 50% interest of the
Company's partner in the

                                       28
<PAGE>   31
                        CMP MEDIA INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

3.  ACQUISITIONS, INVESTMENTS AND DISPOSITIONS: -- CONTINUED
joint venture which published InformationWeek in the U.K. for $4,232 in cash and
assumed liabilities (net of cash acquired). These acquisitions have been
accounted for by the purchase method of accounting. The results of operations of
the businesses acquired have been included in the Company's Consolidated
Statements of Income from the dates of acquisition. In connection with these
acquisitions, the Company recorded intangible assets of $2,175 and $3,843 in
1996 and 1997, respectively, which are being amortized over periods of up to
fifteen years. Pro forma data have been omitted as the impact is not material to
the Company's results of operations for 1995, 1996 and 1997.

b.  Investments

     In 1996, the Company made equity investments totaling $5,748 in three
companies, and an investment accounted for under the cost method of $3,000 in
another company. These companies are engaged in the Internet services and
technology industries. In 1997, the Company made equity investments totaling
$3,391 in international publishing joint ventures and an Internet services joint
venture, as well as an investment accounted for under the cost method of $275 in
a company engaged in Internet-related services. In addition, during 1996 and
1997, the Company made advances of $1,177 and $1,893 to its publishing joint
ventures.

     Losses from unconsolidated affiliates were $743, $1,330 and $8,374 for
1995, 1996 and 1997, respectively, and have been included in other expense, net,
in the Company's Consolidated Statements of Income. Losses for the year ended
December 31, 1997 include $3,200 for other than temporary impairments in
carrying value.

     The excess of the Company's investments over equity in net assets acquired
amounted to $2,534 and $2,203 at December 31, 1996 and 1997, respectively, net
of accumulated amortization. Amortization is calculated on a straight-line basis
over periods ranging from three to fifteen years.

c.  Dispositions

     In February 1996, the Company sold its publication CommunicationsWeek
International for $2,198. The sale resulted in a gain of $1,216. The Company's
results of operations for 1995 and 1996 included revenues and income (loss)
before provision for income taxes of approximately $11,042 and $1,370 and $175
and $(107), respectively, from this publication. In August 1997, the Company
sold the subscriber list of NetGuide Magazine for approximately $3,042 in cash
and assumed liabilities. The sale resulted in a gain of $3,042. In December
1997, the Company sold its 50% interest in one of its joint ventures engaged in
Internet-related services for $2,000. The sale resulted in a gain of $836.

4.  PROPERTY AND EQUIPMENT:

     Property and equipment at December 31, 1996 and 1997 consisted of the
following:

<TABLE>
<CAPTION>
                                                               1996       1997
                                                              -------    -------
<S>                                                           <C>        <C>
Office equipment............................................  $20,077    $26,381
Leasehold improvements......................................   10,485     11,938
Production, editorial and circulation equipment.............    9,739      8,379
Furniture and fixtures......................................    2,054      2,724
                                                              -------    -------
                                                               42,355     49,422
Less: accumulated depreciation and amortization.............   15,894     21,591
                                                              -------    -------
  Property and equipment, net...............................  $26,461    $27,831
                                                              =======    =======
</TABLE>

                                       29
<PAGE>   32
                        CMP MEDIA INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

5.  INTANGIBLE ASSETS:

     Intangible assets at December 31, 1996 and 1997 consisted of the following:

<TABLE>
<CAPTION>
                                                               1996      1997
                                                              ------    ------
<S>                                                           <C>       <C>
Goodwill....................................................  $2,673    $6,516
Trademark...................................................     817       390
Subscriber lists............................................     220       150
Covenants not to compete....................................     150       150
                                                              ------    ------
                                                               3,860     7,206
Less: accumulated amortization..............................     478       746
                                                              ------    ------
  Intangible assets, net....................................  $3,382    $6,460
                                                              ======    ======
</TABLE>

6.  ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES:

     Accrued expenses and other current liabilities at December 31, 1996 and
1997 consisted of the following:

<TABLE>
<CAPTION>
                                                               1996       1997
                                                              -------    -------
<S>                                                           <C>        <C>
Salaries, commissions, vacation and employee benefits.......  $16,480    $12,844
Profit sharing and 401(k) matching contributions............    4,991      6,070
Volume discounts............................................    3,025      4,758
Income taxes payable........................................      347      3,206
Other.......................................................    9,152     11,272
                                                              -------    -------
                                                              $33,995    $38,150
                                                              =======    =======
</TABLE>

7.  REVOLVING CREDIT AGREEMENT:

     On November 14, 1996, the Company modified an existing revolving credit
agreement with two financial institutions to provide for borrowings of up to
$75,000. Borrowings bear interest at either LIBOR plus .35% to .825%, depending
on outstanding loan balances and the Company's earnings levels, or the prime
rate, at the Company's option. The agreement contains certain negative covenants
regarding, among other items, minimum levels of net worth, fixed coverage and
limitations on indebtedness. Borrowings under the agreement were $25,000 and $0
as of December 31, 1996 and 1997, respectively. The agreement expires November
14, 2001. The weighted average interest rates for borrowings under the agreement
were 7.26%, 6.11% and 6.07% for the years ended December 31, 1995, 1996 and
1997, respectively. Interest expense was approximately $852, $667 and $1,009 for
the years ended December 31, 1995, 1996 and 1997, respectively and is included
in other expense, net, in the Company's Consolidated Statements of Income.

8.  STOCKHOLDERS' EQUITY:

     The Company has the authority to issue 70 million shares of common stock,
par value $.01 per share, of which 50 million shares are designated Class A
Common Stock and 20 million shares are designated Class B Common Stock.

     Holders of Class A Common Stock and Class B Common Stock vote together as a
single class as follows: holders of Class A Common Stock are entitled to one
vote for each share of such stock held and holders of Class B Common Stock are
entitled to ten votes for each share of such stock held. Dividends may be paid
out of legally available funds if declared by the Board of Directors and are
payable equally to each class of

                                       30
<PAGE>   33
                        CMP MEDIA INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

8.  STOCKHOLDERS' EQUITY: -- CONTINUED
common stock. Each share of Class B Common Stock is convertible, at the option
of the holder, into Class A Common Stock, on a share-for-share basis.

     In May 1996, the 18,874,570 outstanding shares of Class A Common Stock were
converted by the Company into an equal number of shares of Class B Common Stock.
In November 1996, 1,321,320 outstanding shares of Class B Common Stock were
converted into an equal number of shares of Class A Common Stock.

     Prior to the consummation of the Offering, the Company declared a
35.75-for-one stock split, in the form of a stock dividend, of all classes of
its common stock and restated its certificate of incorporation to, among other
things, change the par value of all classes of its common stock from $0.10 per
share to $0.01 per share. The stock dividend and the change in par value have
been given retroactive treatment in the consolidated financial statements for
all periods presented.

     On July 30, 1997, the Company completed the Offering of 5,485,000 shares of
Class A Common Stock at an offering price of $22.00 per share, of which
4,235,000 shares were sold by the Company and 1,250,000 shares were sold by
selling stockholders. Net proceeds to the Company, after issuance costs of
$1,937, were $84,711. The Company has used a portion of the net proceeds of the
Offering to repay outstanding debt of $21,750 under its revolving credit
agreement and a portion to pay $26,000 of a final S corporation distribution.

     Upon the consummation of the Offering, certain members of the founding
family of the Company made a gift from their personal holdings of 202,186 shares
of Class A Common Stock to substantially all of the employees of the Company. As
required by generally accepted accounting principles, the Company recorded, at
the date of the gift, a one-time, non-cash compensation charge of $4,449. In
addition, in connection with the Company's change in tax status from an S
corporation to a C corporation, the Company declared a final S corporation
distribution to its S corporation stockholders of approximately $38,000.

9.  INCENTIVE PLANS:

a.  Stock Options

     Executive Stock Option Agreements

     On November 27, 1996, the Company granted three senior executives stock
options to purchase 2,642,640 shares of Class A Common Stock pursuant to certain
stock option agreements between these executives and the Company. The option
price per share of Class A Common Stock of $12.72 was equal to the market value
per share on the date of grant. Subject to acceleration based on certain
performance criteria, options with respect to 755,040 shares and 1,887,600
shares of Class A Common Stock vest on December 31, 2003 and 2005, respectively.
Options expire five years after the date they vest but in no event later than
December 31, 2010.

     Employee Stock Option Plan

     In December 1996, the Company adopted the CMP Media Inc. Stock Incentive
Plan (the "Stock Incentive Plan"). The Stock Incentive Plan provides for the
issuance of non-qualified and incentive stock options to key employees of the
Company for the purchase of up to 1,132,560 shares of the Company's Class A
Common Stock. The Stock Incentive Plan also permits the award of stock
appreciation rights, stock bonuses, restricted stock awards, performance units
and phantom stock. The expiration date for options granted under the Stock
Incentive Plan is the tenth anniversary of the date of grant. The exercise price
of options granted during 1997 was equal to the market value per share on the
dates of grant. Of the total options

                                       31
<PAGE>   34
                        CMP MEDIA INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

9.  INCENTIVE PLANS: -- CONTINUED
granted during 1997, 419,705 options generally vest over six years and the
remaining 394,950 options vest over four years.

     Information regarding the Executive Stock Option Agreements and the Stock
Incentive Plan is summarized below:

<TABLE>
<CAPTION>
                                                                           WEIGHTED
                                                                           AVERAGE
                                                              NUMBER OF    EXERCISE
                                                               SHARES       PRICE
                                                              ---------    --------
<S>                                                           <C>          <C>
Outstanding at January 1, 1996..............................         --         --
  Granted...................................................  2,642,640     $12.72
                                                              ---------     ------
Outstanding at December 31, 1996............................  2,642,640     $12.72
  Granted...................................................    814,655      17.25
  Terminated and cancelled..................................     (5,750)     22.00
                                                              ---------     ------
Outstanding at December 31, 1997............................  3,451,545     $13.77
                                                              =========     ======
</TABLE>

     The range of exercise prices for options outstanding at December 31, 1997
was: 3,062,345 options at $12.72 per share and 389,200 options at prices ranging
from $18.88 to $26.25 per share. The number of options which were exercisable as
of December 31, 1996 and 1997 were 0 and 58,730, respectively.

     In addition to options granted to key employees, under the CMP Media Inc.
Directors' Stock Compensation Plan (the "Directors' Plan") the Company may grant
stock options to members of the Company's Board of Directors as part of the
Directors' annual compensation. The Company has reserved 35,000 shares of Class
A Common Stock for issuance under the Directors' Plan. During 1997,
approximately 2,900 options were granted to Directors. These options were
granted at exercise prices equal to the market value per share on the date of
grant. The options vest over three years and expire on the tenth anniversary of
the date of the grant.

     The Company applies Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees", and related interpretations in accounting for
its incentive plans. Accordingly, since all options granted to date have been
granted at exercise prices equal to market value on date of grant, no
compensation expense has been recognized by the Company in connection with stock
options for the years ended December 31, 1996 and 1997. The weighted-average
grant-date fair value of the options granted during 1997 was estimated as
approximately $3,723 using the Black-Scholes option-pricing model. In
calculating fair value, the following assumptions were used for options granted
prior to the Offering: dividend yield of 5%, volatility of 0%, risk-free
interest rate of 6.5% and an expected life of six years. For options granted at
the date of the Offering and subsequent to the Offering, the following
assumptions were used in calculating fair value: dividend yield of 0%,
volatility of 40%, risk-free interest rate of 6% and an expected life of four
years. Had compensation cost for the Company's stock option awards been
determined based upon the fair value at the grant date consistent with the
methodology prescribed under Statement of Financial Accounting Standards No.
123, "Accounting for Stock-Based Compensation," the Company's unaudited pro
forma net income, unaudited pro forma net income per share-basic and unaudited
pro forma net income per share-diluted for the years ended December 31, 1996 and
1997 would have been $16,036, $0.72 and $0.72 and $16,931, $0.75 and $0.73,
respectively.

                                       32
<PAGE>   35
                        CMP MEDIA INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

9.  INCENTIVE PLANS: -- CONTINUED
b.  Executive Stock Purchase Agreements

     On November 27, 1996, three senior executives acquired 1,321,320 shares of
the Company's outstanding Class A Common Stock from principal stockholders of
the Company for $1,386 in cash. At the date of purchase, the aggregate market
value of the shares was $16,800. The Company will recognize $15,414 in non-cash
compensation expense pro rata over the vesting periods ranging from seven to
nine years. Compensation expense for 1996 and 1997 was $240 and $1,924,
respectively.

c.  Equity Appreciation Plan

     In 1988, the Company established an equity appreciation plan (the "Equity
Appreciation Plan") for certain key employees and directors which provides for
incentive deferred compensation in the form of Share Appreciation Rights
("SARs") pursuant to formulas contained in the Equity Appreciation Plan. All
SARs are granted at the discretion of the Company's Board of Directors. The SARs
normally are subject to a nine-year redemption schedule beginning, at the
election of the participant, as early as June 30, 1993, and ending on June 30,
2002, unless the Board of Directors provides an extension. Under the redemption
schedule, a participant must have redeemed at least 20% of his or her SARs as of
June 30, 1998, 40% as of June 30, 1999, 60% as of June 30, 2000, 80% as of June
30, 2001 and 100% as of June 30, 2002; provided, however, that no more than 20%
of a participant's SARs may be redeemed in any one year. The Board of Directors
has the discretion to accelerate the payment of any or all redemptions and
payments. Pursuant to the Equity Appreciation Plan, approximately $1,595, $1,952
and $2,486 were charged to operations in 1995, 1996 and 1997, respectively. As
of December 31, 1996 and 1997, $8,414 and $10,632 respectively, has been accrued
for payment under the Equity Appreciation Plan.

d.  Employee Stock Purchase Plan

     During 1997, the Company adopted the CMP Media Inc. Employee Stock Purchase
Plan (the "Purchase Plan") which grants options to eligible employees to
purchase shares of the Company's Class A Common Stock. Under the Purchase Plan,
substantially all employees may purchase shares of Class A Common Stock, subject
to certain limitations. The purchase price will be the lower of 85% of the fair
market value of the Class A Common Stock on the grant date or 85% of the fair
market value of the Class A Common Stock on the exercise date. Options granted
under the Purchase Plan will be exercised six months after the grant date.
Purchases are limited to 10% of an employee's eligible compensation, subject to
the maximum amount permitted by the Purchase Plan. An aggregate of 1,500,000
shares of Class A Common Stock of the Company has been reserved for issuance
under the Purchase Plan.

10.  INCOME TAXES:

     Income before provision for income taxes for the years ended December 31,
1995, 1996 and 1997 is as follows:

<TABLE>
<CAPTION>
                                                         1995       1996       1997
                                                        -------    -------    -------
  <S>                                                   <C>        <C>        <C>
  Domestic..........................................    $25,374    $32,388    $35,217
  Foreign...........................................     (8,144)    (4,625)    (4,480)
                                                        -------    -------    -------
                                                        $17,230    $27,763    $30,737
                                                        =======    =======    =======
</TABLE>

                                       33
<PAGE>   36
                        CMP MEDIA INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

10.  INCOME TAXES: -- CONTINUED
     The provision (benefit) for historical income taxes for the years ended
December 31, 1995, 1996 and 1997 is as follows:

<TABLE>
<CAPTION>
                                                            1995     1996     1997
                                                            -----    ----    -------
<S>                                                         <C>      <C>     <C>
U.S. Federal income taxes:
  Current.................................................  $  --    $ --    $ 8,274
  Deferred................................................     --      --     (8,803)
State and local income taxes:
  Current.................................................    482     446      2,345
  Deferred................................................   (134)    207     (1,819)
Foreign income taxes, net.................................    247     251        453
                                                            -----    ----    -------
                                                            $ 595    $904    $   450
                                                            =====    ====    =======
</TABLE>

     In connection with the Offering (see Note 2m), the Company converted from
an S corporation to a C corporation and recorded a cumulative deferred tax
benefit of approximately $7,600. A reconciliation of the U.S. federal statutory
rate to the historical effective income tax rates of the Company for the years
ended December 31, 1995, 1996 and 1997 is as follows:

<TABLE>
<CAPTION>
                                                              1995     1996     1997
                                                              -----    -----    -----
<S>                                                           <C>      <C>      <C>
U.S. federal statutory rate.................................   35.0%    35.0%    35.0%
Benefit of S corporation status.............................  (35.0)   (35.0)   (16.0)
State and local income taxes................................    2.0      2.4      4.8
Foreign income taxes........................................    1.5      0.9      1.5
Operating expenses disallowed for tax purposes..............     --       --      0.9
Tax exempt interest.........................................     --       --     (0.3)
One-time cumulative deferred tax benefit....................     --       --    (24.4)
                                                              -----    -----    -----
                                                                3.5%     3.3%     1.5%
                                                              =====    =====    =====
</TABLE>

     The components of the net deferred income tax asset as of December 31, 1996
and 1997 are as follows:

<TABLE>
<CAPTION>
                                                              1996     1997
                                                              ----    -------
<S>                                                           <C>     <C>
Accounts receivable.........................................  $102    $ 1,150
Accruals for operating expenses.............................   344      4,546
Property, equipment and leasehold improvements..............   (62)       535
Deferred compensation.......................................    34      2,505
Investments in unconsolidated affiliates....................    --      2,713
Valuation allowance.........................................   (33)      (442)
                                                              ----    -------
                                                              $385    $11,007
                                                              ====    =======
</TABLE>

                                       34
<PAGE>   37
                        CMP MEDIA INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

10.  INCOME TAXES: -- CONTINUED
     The pro forma provision for income taxes (unaudited) for the years ended
December 31, 1995, 1996 and 1997 as if the Company had terminated its S
corporation election prior to January 1, 1995 is as follows:

<TABLE>
<CAPTION>
                                                         1995       1996       1997
                                                        -------    -------    -------
<S>                                                     <C>        <C>        <C>
U.S. federal income taxes:
  Current.............................................  $ 7,401    $ 6,853    $15,719
  Deferred............................................   (1,504)     2,223     (4,318)
State and local income taxes:
  Current.............................................    1,933      1,796      3,594
  Deferred............................................     (383)       584     (1,066)
Foreign income taxes, net.............................      247        251       (528)
                                                        -------    -------    -------
                                                        $ 7,694    $11,707    $13,401
                                                        =======    =======    =======
</TABLE>

     A reconciliation of the U.S. federal statutory rate to the pro forma
effective income tax rates (unaudited) of the Company for the years ended
December 31, 1995, 1996 and 1997 is as follows:

<TABLE>
<CAPTION>
                                                              1995    1996    1997
                                                              ----    ----    ----
<S>                                                           <C>     <C>     <C>
U.S. federal statutory rate.................................  35.0%   35.0%   35.0%
State and local income taxes................................   5.8     5.4     5.4
Foreign income taxes........................................   1.5     0.9     1.5
Operating expenses disallowed for tax purposes..............   1.8     1.2     2.0
Operating losses (income) with no income tax benefit
  (expense).................................................   1.3    (1.9)     --
Other.......................................................  (0.7)   (0.1)   (0.3)
Valuation allowance.........................................    --     1.7      --
                                                              ----    ----    ----
                                                              44.7%   42.2%   43.6%
                                                              ====    ====    ====
</TABLE>

     The components of the pro forma net deferred income tax asset (unaudited)
as of December 31, 1996 and 1997 are as follows:

<TABLE>
<CAPTION>
                                                               1996      1997
                                                              ------    -------
<S>                                                           <C>       <C>
Accounts receivable.........................................  $1,362    $ 1,150
Accruals for operating expenses.............................   4,156      4,546
Property, equipment and leasehold improvements..............    (830)       535
Deferred compensation.......................................     445      2,505
Investments in unconsolidated affiliates....................     440      2,713
Valuation allowance.........................................    (440)      (442)
                                                              ------    -------
                                                              $5,133    $11,007
                                                              ======    =======
</TABLE>

11.  EMPLOYEE BENEFIT PLANS:

a.  Defined Benefit Pension Plan

     As of December 31, 1992, substantially all employees of the Company were
covered under a noncontributory defined benefit pension plan (the "Pension
Plan"). The Company reports pension expense in accordance with Statement of
Financial Accounting Standards No. 87, "Employers' Accounting for Pensions"
("SFAS No. 87"), and Statement of Financial Accounting Standards No. 88,
"Employers' Accounting for Settlements and Curtailments of Defined Benefit
Pension Plans and for Termination Benefits". The Company has funded

                                       35
<PAGE>   38
                        CMP MEDIA INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

11.  EMPLOYEE BENEFIT PLANS: -- CONTINUED
the Pension Plan in accordance with the Employee Retirement Income Security Act
of 1974. The Pension Plan's assets consist of U.S. Treasury Bills.

     As of January 1, 1993, the Pension Plan was amended and frozen so that
employees have earned no further benefits for subsequent services. Subsequent
services have continued to be the basis for vesting of benefits not yet vested
at December 31, 1992 and the Pension Plan will continue to hold assets and pay
benefits. This amendment was treated as a curtailment for the year ended
December 31, 1992.

     The following table sets forth the Pension Plan's funded status and amounts
recognized at December 31, 1996 and 1997:

<TABLE>
<CAPTION>
                                                               1996      1997
                                                              ------    ------
<S>                                                           <C>       <C>
Actuarial present value of benefit obligation:
Accumulated benefit obligation, including vested benefits of
  $2,087 in 1996 and $1,768 in 1997.........................  $2,117    $1,915
                                                              ======    ======
Projected benefit obligation for service rendered to date...  $2,117    $1,915
Pension plan assets at fair value...........................   1,786     1,613
                                                              ------    ------
Fund status.................................................    (331)     (302)
Unrecognized transition amount being recognized over 15
  years.....................................................    (563)     (418)
Unrecognized net loss.......................................   1,031       779
Adjustment to recognize minimum liability...................    (468)     (361)
                                                              ------    ------
Accrued pension cost........................................  $ (331)   $ (302)
                                                              ======    ======
</TABLE>

     As required by SFAS No. 87, pension cost was computed using the projected
unit credit actuarial cost method (previously the entry age normal actuarial
cost method had been used). Net periodic pension cost includes the following
components for the years ended December 31, 1995, 1996 and 1997:

<TABLE>
<CAPTION>
                                                              1995    1996    1997
                                                              ----    ----    ----
<S>                                                           <C>     <C>     <C>
Interest cost...............................................  $141    $143    $148
Return on assets............................................   (90)   (109)    (94)
Net amortization and deferral...............................   (51)     (5)     25
                                                              ----    ----    ----
  Net periodic pension expense..............................  $ --    $ 29    $ 79
                                                              ====    ====    ====
</TABLE>

     For the years ended December 31, 1995, 1996 and 1997, the actuarial present
value of the projected benefit obligation was computed using an average discount
rate of 7%. The rate of increase in future compensation levels no longer applies
since the Pension Plan was frozen as of January 1, 1993. The expected long-term
rate of return on plan assets was 5% in 1995, 1996 and 1997.

     In accordance with the provisions of SFAS No. 87, the Company recorded a
minimum pension liability representing the excess of the accumulated benefit
obligation over the fair value of plan assets and accrued pension liabilities.
Because the liability recognized exceeds the amount of unrecognized prior
service cost, the liability as of December 31, 1996 and 1997 is reported as a
reduction of stockholders' equity.

b.  Profit Sharing Plan

     Substantially all employees of the Company are covered by a
defined-contribution plan (the "Profit Sharing Plan"). The Profit Sharing Plan
provides that employees may make annual pre-tax contributions of up to 15% of
their eligible compensation pursuant to Section 401(k) of the Internal Revenue
Code. Through

                                       36
<PAGE>   39
                        CMP MEDIA INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

11.  EMPLOYEE BENEFIT PLANS: -- CONTINUED
December 31, 1996, the Company contributed an amount equal to 25% of each
employee's contribution up to 1.5% of the employee's eligible compensation. As
of January 1, 1997, the Company contributes an amount equal to 50% of each
employee's contribution up to 3% of the employee's eligible compensation. In
addition, under the profit sharing component of the Profit Sharing Plan, the
Company contributes a minimum annual amount per eligible participant and at its
discretion, the Company has also made additional annual contributions as defined
in the Profit Sharing Plan. The provision for both the matching and
discretionary contributions amounted to $3,748, $5,165 and $6,150 in 1995, 1996
and 1997, respectively.

12.  RELATED PARTY TRANSACTIONS:

     During 1997, certain stockholders of the Company held a 15% ownership
interest in the facility which the Company leases as its principal offices. This
ownership interest was sold effective January 1, 1998. The existing lease
expires in November 2014. Total rental expense with respect to this lease was
approximately $4,500 for each of the years ended December 31, 1995 and 1996 and
$4,600 for the year ended December 31, 1997 (see Note 13). The Company has a
note receivable from one of its executive officers, the unpaid principal amount
of which was $770 and $760 as of December 31, 1996 and 1997, respectively. This
note, which bears interest at a rate which approximates LIBOR, provides for
quarterly interest payments and annual principal payments of $10 per year
through 2003, $20 per year through 2013 and $50 per year through 2023. In
addition, in April 1997, the Company guaranteed loans to two of its senior
executives totaling $4,700. The loans are from one of the financial institutions
with which the Company has its revolving credit agreement. These loans will be
payable in November 2001 and are guaranteed through such date. The Company is
obligated to extend the guarantees for $3,000 and $1,700 through December 31,
2005 and December 31, 2007, respectively, at the request of the senior
executives. The Company incurred expenses of approximately $489, $544 and $623
for the years ended December 31, 1995, 1996 and 1997, respectively, on behalf of
a not-for-profit organization managed by the Co-Chairpersons of the Company.

13.  COMMITMENTS AND CONTINGENCIES:

     The Company leases its office facilities and certain office equipment under
non-cancelable operating leases expiring in various years through 2014. Future
minimum lease payments as of December 31, 1997 are as follows:

<TABLE>
<CAPTION>
             YEAR ENDING DECEMBER 31,
             ------------------------
<S>                                                 <C>
     1998.........................................  $ 12,220
     1999.........................................    13,076
     2000.........................................    12,581
     2001.........................................    12,548
     2002.........................................    11,767
     Thereafter...................................    90,131
                                                    --------
                                                    $152,323
                                                    ========
</TABLE>

     Certain of the above leases are subject to escalation clauses for taxes and
other expenses. Rent expense amounted to $9,098, $9,851 and $10,739 in 1995,
1996 and 1997, respectively.

     The Company has employment agreements with three senior executives. The
agreements provide minimum terms for base compensation and fringe benefits. The
agreements also contain confidentiality and non-competition clauses ranging from
three to five years as well as termination provisions. The Company is

                                       37
<PAGE>   40
                        CMP MEDIA INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

13.  COMMITMENTS AND CONTINGENCIES: -- CONTINUED
accruing the probable amount of expected termination costs over the expected
service period. The maximum contingent liability under such agreements at
December 31, 1997 was approximately $17,000.

     In the normal course of business, the Company is sometimes named as a
defendant in litigation. In the opinion of management, based upon the advice of
counsel, any uninsured liability which may result from the resolution of any
present litigation or asserted claim will not have a material effect on the
Company's financial position, results of operations or cash flows.

14.  QUARTERLY FINANCIAL DATA (UNAUDITED):

<TABLE>
<CAPTION>
                1996                  MARCH 31,     JUNE 30,    SEPTEMBER 30,   DECEMBER 31,     TOTAL
                ----                  ----------   ----------   -------------   ------------   ----------
<S>                                   <C>          <C>          <C>             <C>            <C>
Revenues............................  $   84,910   $  107,674    $  110,578      $  114,897    $  418,059
Operating costs and expenses........      87,304       98,450       101,498         102,002       389,254
                                      ----------   ----------    ----------      ----------    ----------
Income (loss) from operations.......      (2,394)       9,224         9,080          12,895        28,805
Gain on sales(1)....................       1,216           72           146              --         1,434
Other income (expense), net.........         376          (95)         (655)         (2,102)       (2,476)
                                      ----------   ----------    ----------      ----------    ----------
Income (loss) before provision
  (benefit) for income taxes........        (802)       9,201         8,571          10,793        27,763
Provision (benefit) for income
  taxes.............................         (26)         300           279             351           904
                                      ----------   ----------    ----------      ----------    ----------
Net income (loss)...................  $     (776)  $    8,901    $    8,292      $   10,442    $   26,859
                                      ==========   ==========    ==========      ==========    ==========
Historical income (loss) before
  provision (benefit) for income
  taxes.............................  $     (802)  $    9,201    $    8,571      $   10,793    $   27,763
Pro forma provision (benefit) for
  income taxes(2)...................        (338)       3,880         3,614           4,551        11,707
                                      ----------   ----------    ----------      ----------    ----------
Pro forma net income (loss).........  $     (464)  $    5,321    $    4,957      $    6,242    $   16,056
                                      ==========   ==========    ==========      ==========    ==========
Pro forma net income (loss) per
  share -- basic(3).................  $    (0.02)  $     0.24    $     0.22      $     0.28    $     0.72
                                      ==========   ==========    ==========      ==========    ==========
Pro forma weighted average shares
  outstanding -- basic(3)...........  22,361,777   22,361,777    22,361,777      22,361,777    22,361,777
                                      ==========   ==========    ==========      ==========    ==========
Pro forma net income (loss) per
  share -- diluted(3)...............  $    (0.02)  $     0.24    $     0.22      $     0.28    $     0.72
                                      ==========   ==========    ==========      ==========    ==========
Pro forma weighted average shares
  outstanding -- diluted(3).........  22,361,777   22,361,777    22,361,777      22,361,777    22,361,777
                                      ==========   ==========    ==========      ==========    ==========
</TABLE>

                                       38
<PAGE>   41
                        CMP MEDIA INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

14.  QUARTERLY FINANCIAL DATA (UNAUDITED): -- CONTINUED

<TABLE>
<CAPTION>
                1997                  MARCH 31,     JUNE 30,    SEPTEMBER 30,   DECEMBER 31,     TOTAL
                ----                  ----------   ----------   -------------   ------------   ----------
<S>                                   <C>          <C>          <C>             <C>            <C>
Revenues............................  $  101,914   $  125,004    $  114,179      $  132,754    $  473,851
Operating costs and expenses........     102,858      111,421       107,374         117,312       438,964
                                      ----------   ----------    ----------      ----------    ----------
Income (loss) from operations.......        (944)      13,583         6,805          15,442        34,887
Gain on sales(1)....................          --           --         3,042             969         4,011
Other income (expense), net.........      (3,047)      (2,076)       (3,171)            133        (8,161)
                                      ----------   ----------    ----------      ----------    ----------
Income (loss) before provision
  (benefit) for income taxes........      (3,991)      11,507         6,676          16,544        30,737
Provision (benefit) for income
  taxes.............................        (133)         383        (2,939)          3,139           450
                                      ----------   ----------    ----------      ----------    ----------
Net income (loss)...................  $   (3,858)  $   11,124    $    9,615      $   13,405    $   30,287
                                      ==========   ==========    ==========      ==========    ==========
Historical income (loss) before
  provision (benefit) for income
  taxes.............................  $   (3,991)  $   11,507    $    6,676      $   16,544    $   30,737
Pro forma provision (benefit) for
  income taxes(2)...................      (1,740)       5,017         2,911           7,213        13,401
                                      ----------   ----------    ----------      ----------    ----------
Pro forma net income (loss).........  $   (2,251)  $    6,490    $    3,765      $    9,331    $   17,336
                                      ==========   ==========    ==========      ==========    ==========
Pro forma net income (loss) per
  share -- basic(3).................  $    (0.10)  $     0.29    $     0.17      $     0.40    $     0.77
                                      ==========   ==========    ==========      ==========    ==========
Pro forma weighted average shares
  outstanding -- basic(3)...........  22,361,777   22,361,777    22,429,722      23,110,114    22,565,848
                                      ----------   ----------    ----------      ----------    ----------
Pro forma net income (loss) per
  share -- diluted(3)...............  $    (0.10)  $     0.29    $     0.16      $     0.39    $     0.75
                                      ==========   ==========    ==========      ==========    ==========
Pro forma weighted average shares
  outstanding -- diluted(3).........  22,361,777   22,361,777    24,072,904      24,033,162    23,206,073
                                      ==========   ==========    ==========      ==========    ==========
</TABLE>

---------------
(1) See Note 3c -- Acquisitions, Investments and Dispositions

(2) See Note 10 -- Income Taxes

(3) See Note 2n -- Pro Forma Net Income Per Share and Weighted Average Common
    Shares Outstanding (Unaudited)

                                       39
<PAGE>   42

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

None.

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information with respect to Directors of the Company is incorporated herein by
reference to the Proxy Statement for the 1998 Annual Meeting of Stockholders
(the "1998 Proxy Statement"), and information with respect to Executive Officers
of the Company is set forth in Part I, Item 1 of this Report under the heading
"Executive Officers of the Registrant".

ITEM 11.  EXECUTIVE COMPENSATION

Information with respect to executive compensation is incorporated herein by
reference to the 1998 Proxy Statement.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Information with respect to security ownership of certain beneficial owners and
management is incorporated herein by reference to the 1998 Proxy Statement.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information with respect to certain relationships and related transactions is
incorporated herein by reference to the 1998 Proxy Statement.

                                       40
<PAGE>   43

                                    PART IV

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

(a) 1. Consolidated Financial Statements of CMP Media Inc. and Subsidiaries
       included in Item 8 herein.

     2. Financial Statement Schedule of CMP Media Inc. and Subsidiaries for
        three years ended December 31, 1997:

        Valuation and Qualifying Accounts and Reserves

     3. The following are included as part of this Report:

<TABLE>
<S>     <C>
*3.3    Restated Certificate of Incorporation of CMP Media Inc.
*3.4    Amended and Restated Bylaws of CMP Media Inc.
*4.1    Reference is made to Exhibits 3.3 and 3.4
*4.2    Specimen Class A Common Stock Certificate
*4.3    1997 Stockholders' Agreement
*10.1   Employment Agreement with Michael S. Leeds
*10.2   Share Purchase Agreement, dated November 27, 1996, among
        Gerard G. Leeds, Lilo J. Leeds, CMP Media Inc. and Michael
        S. Leeds
*10.3   Stockholders' Agreement, dated November 27, 1996, among CMP
        Media Inc., Gerard G. Leeds, Lilo J. Leeds and Michael S.
        Leeds
*10.4   Option Agreement, dated November 27, 1996, between CMP Media
        Inc. and Michael S. Leeds
*10.5   Employment Agreement with Daniel H. Leeds
*10.6   Share Purchase Agreement, dated November 27, 1996, among
        Gerard G. Leeds, Lilo J. Leeds, CMP Media Inc. and Daniel H.
        Leeds
*10.7   Stockholders' Agreement, dated November 27, 1996, among CMP
        Media Inc., Gerard G. Leeds, Lilo J. Leeds and Daniel H.
        Leeds
*10.8   Option Agreement, dated November 27, 1996, between CMP Media
        Inc. and Daniel H. Leeds
*10.9   Employment Agreement with Kenneth D. Cron
*10.10  Share Purchase Agreement, dated November 27, 1996, among
        Gerard G. Leeds, Lilo J. Leeds, CMP Media Inc. and Kenneth
        D. Cron
*10.11  Stockholders' Agreement, dated November 27, 1996, among CMP
        Media Inc., Gerard G. Leeds, Lilo J. Leeds and Kenneth D.
        Cron
*10.12  Option Agreement, dated November 27, 1996, between CMP Media
        Inc. and Kenneth D. Cron
*10.13  CMP Media Inc. 1996 Stock Option Plan
*10.14  CMP Media Inc. Pension Plan
*10.15  CMP Publications, Inc. Profit Sharing and Retirement Savings
        Plan and Trust
*10.16  CMP Publications, Inc. 1988 Equity Appreciation Plan
*10.17  CMP Media Inc. Employee Stock Purchase Plan
*10.18  Credit Agreement by and among CMP Publications, Inc.,
        Shawmut Bank Connecticut and The Chase Manhattan Bank,,
        dated July 15, 1993
*10.19  Fifth Amendment to the Credit Agreement by and among CMP
        Media Inc., Fleet National Bank and The Chase Manhattan
        Bank, dated November 14, 1996
*10.20  Sixth Amendment to the Credit Agreement by and among CMP
        Media Inc., Fleet National Bank and The Chase Manhattan
        Bank, dated April 15, 1997
*10.21  CMP Media Inc. Directors' Stock Compensation Plan
*10.22  CMP Media Inc. Stock Incentive Plan
</TABLE>

                                       41
<PAGE>   44

<TABLE>
<S>        <C>
*10.23     Seventh Amendment to the Credit Agreement by and among CMP Media Inc., Fleet National
           Bank and The Chase Manhattan Bank
*16        Letter from Miller, Ellin & Company
 21        Subsidiaries of CMP Media Inc.
 23.1      Consent of Coopers & Lybrand L.L.P.
 27.1      Financial Data Schedule for the year ended December 31, 1997
 27.2      Financial Data Schedule for the nine months ended September 30, 1997
 27.3      Financial Data Schedule for the six months ended June 30, 1997
</TABLE>

---------------
     * Incorporated by reference to the corresponding exhibit of the
       Registrant's Registration Statement on Form S-1 (File No. 333-26741).

(b) The following reports on Form 8-K were filed during the Registrant's quarter
    ended December 31, 1997:

        An Item 5 report on Form 8-K, dated December 9, 1997, was filed
        reporting Registrant's financial results for the nine months and fiscal
        quarter ended September 30, 1997.

                                       42
<PAGE>   45

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of
  CMP Media Inc.:

     Our report on the consolidated financial statements of CMP Media Inc. and
subsidiaries is included on page 20 of this Form 10-K. In connection with our
audits of such financial statements, we have also audited the related financial
statement schedule listed in the index on page 41 of this Form 10-K.

     In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information required to be
included therein.

                                          COOPERS & LYBRAND L.L.P.

New York, New York
February 9, 1998.

                                       43
<PAGE>   46

                        CMP MEDIA INC. AND SUBSIDIARIES

                 VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
                     AS OF DECEMBER 31, 1995, 1996 AND 1997
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                       ADDITIONS
                                                         BALANCE AT     CHARGED               BALANCE AT
                                                         BEGINNING    TO COSTS AND   WRITE-     END OF
                      DESCRIPTION                        OF PERIOD      EXPENSES      OFFS      PERIOD
                      -----------                        ----------   ------------   ------   ----------
<S>                                                      <C>          <C>            <C>      <C>
Allowance for Doubtful Accounts at December 31, 1995...    $2,706        2,150       (1,911)    $2,945
                                                           ======        =====       ======     ======
Allowance for Doubtful Accounts at December 31, 1996...    $2,945        2,216       (1,972)    $3,189
                                                           ======        =====       ======     ======
Allowance for Doubtful Accounts at December 31, 1997...    $3,189        3,100       (2,658)    $3,631
                                                           ======        =====       ======     ======
</TABLE>

                                       44
<PAGE>   47

                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, hereunto duly authorized.

                                          CMP MEDIA INC.
                                          (Registrant)

                                          By: /s/ MICHAEL S. LEEDS
                                            ------------------------------------
                                            Michael S. Leeds
                                            President and Chief Executive
                                              Officer

Date: March 30, 1998

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Company and in
the capacities and on the dates indicated.

<TABLE>
<CAPTION>
                     SIGNATURE                                    TITLE                      DATE
                     ---------                                    -----                      ----
<S>                                                  <C>                                <C>
/s/ MICHAEL S. LEEDS                                 President, Chief Executive         March 30, 1998
---------------------------------------------------  Officer and a Director
Michael S. Leeds                                     (Principal Executive Officer)

/s/ KENNETH D. CRON                                  Executive Vice President,          March 30, 1998
---------------------------------------------------  President of Publishing and a
Kenneth D. Cron                                      Director

                                                     Executive Vice President,
---------------------------------------------------  President of International and
Daniel H. Leeds                                      a Director

/s/ JOSEPH E. SICHLER                                Vice President and Chief           March 30, 1998
---------------------------------------------------  Financial Officer (Principal
Joseph E. Sichler                                    Financial Officer and Principal
                                                     Accounting Officer)

/s/ GERARD G. LEEDS                                  Director, Co-Chairperson of        March 30, 1998
---------------------------------------------------  Board of Directors
Gerard G. Leeds

/s/ LILO J. LEEDS                                    Director, Co-Chairperson of        March 30, 1998
---------------------------------------------------  Board of Directors
Lilo J. Leeds

                                                     Director
---------------------------------------------------
Richard W. Anderson

/s/ RICHARD A. LEEDS                                 Director                           March 30, 1998
---------------------------------------------------
Richard A. Leeds

/s/ SHARON LEE PATRICK                               Director                           March 30, 1998
---------------------------------------------------
Sharon Lee Patrick
</TABLE>

                                       47