<PAGE>


                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q
               QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934


<TABLE>
<S>                                                                    <C>
For the quarterly period ended March 31, 2001                          Commission File No.

    WRC MEDIA INC.                                                      WEEKLY READER CORPORATION
    (Exact name of Registrant as specified in its charter)              (Exact name of Registrant as specified in its charter)

    DELAWARE                                                            DELAWARE
    (State or other jurisdiction of incorporation or organization)      (State or other jurisdiction of incorporation or
                                                                        organization)

    2731                                                                2721
    (Primary Standard Industrial Classification Number)                 (Primary Standard Industrial Classification Number)

    13-4066536                                                          13-3603780
    (I.R.S. Employer Identification Number)                             (I.R.S. Employer Identification Number)

    COMPASSLEARNING, INC.
    (Exact name of Registrant as specified in its charter)
    2731

    DELAWARE
    (State or other jurisdiction of incorporation or organization)
    7372

    (Primary Standard Industrial Classification Number)
    13-4066535
    (I.R.S. Employer Identification Number)

    WRC MEDIA INC.                                                      WEEKLY READER CORPORATION
    512 7th AVENUE, 23RD FLOOR                                          512 7th AVENUE, 23RD FLOOR
    NEW YORK, NY 10018                                                  NEW YORK, NY 10018
    (212) 768-1150                                                      (212) 768-1150

    COMPASSLEARNING, INC.
    512 7th AVENUE, 23RD FLOOR
    NEW YORK, NY 10018
    (212) 768-1150

</TABLE>


               (Address, including zip code, and telephone number,
                    including area code, of each Registrant's
                          principal executive offices)

          Securities Registered Pursuant to Section 12 (b) of the Act:
                    12 3/4% Senior Subordinated Notes due 2009

          Securities Registered Pursuant to Section 12 (g) of the Act:
                                      None

<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------
TITLE OF CLASS                                 NAME OF EACH EXCHANGE ON WHICH REGISTERED
------------------------------------------------------------------------------------------
<S>                                            <C>
12 3/4% Senior Subordinated Notes due 2009     OVER-THE-COUNTER MARKET
------------------------------------------------------------------------------------------
</TABLE>




<PAGE>



                         WRC MEDIA INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                             (dollars in thousands)


<TABLE>
<CAPTION>
                                                                             Unaudited
                                                               December 31,   March 31,
                                                                   2000         2001
                                                              -------------  ----------
<S>                                                             <C>          <C>
ASSETS
Current Assets:

Cash and cash equivalents                                       $  2,968     $  2,941
Accounts receivable, net                                          42,930       40,849
Inventories, net                                                  14,605       13,993
Prepaid expenses                                                   3,454        6,269
Other current assets                                              17,409       16,330
                                                                --------     --------
                             Total current assets                 81,366       80,382

Property and equipment, net                                        8,105        7,694
Purchased software, net                                            4,709        4,244
Goodwill, net                                                    229,498      227,142
Deferred financing costs, net                                      6,693        6,406
Identified intangible assets, net                                174,068      162,971
Other assets                                                          25          375
                                                                --------     --------
                                 Total Assets                   $504,464     $489,214
                                                                ========     ========

LIABILITIES AND STOCKHOLDERS EQUITY
Current liabilities:

Accounts payable                                                $ 19,767     $ 15,545
Accrued payroll, commissions and benefits                          8,495        8,585
Current portion of deferred revenue                               36,455       32,218
Other accrued liabilities                                         39,991       40,837
Current portion of long-term debt                                  4,488        4,875
                                                                --------     --------

                           Total current liabilities             109,196      102,060

Deferred revenue, net of current portion                           1,868        2,038
Due to related party                                               2,946        2,946
Long-term debt                                                   269,469      280,138
                                                                --------     --------

Total liabilities                                                383,479      387,182

15% Series B preferred stock subject to redemption,
Including accrued dividends and accretion of warrant value        77,796       81,344
                                                                --------     --------

Warrants on preferred stock                                       11,751       11,751
                                                                --------     --------

Common stock subject to redemption                                 1,190        1,190
                                                                --------     --------

Stockholders equity:
Common stock, ($.01 par value, 20,000,000 shares authorized;
6,851,821 shares outstanding)                                         69           69
Additional paid-in capital                                       126,063      126,063
Accumulated deficit                                              (95,893)    (118,394)
Accumulated comprehensive loss                                         9            9
                                                                --------     --------

Total stockholders equity                                         30,248        7,747
                                                                --------     --------

Total liabilities and stockholders equity                       $504,464     $489,214
                                                                ========     ========
</TABLE>

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

                                       2




<PAGE>

                         WRC MEDIA INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                       For the three months ended March 31
                                    Unaudited
                             (dollars in thousands)
<TABLE>
<CAPTION>

                                                                  2000        2001
                                                                --------    --------
<S>                                                              <C>         <C>
Sales, net                                                      $ 50,234    $ 49,491

Cost of goods sold                                                16,952      14,219
                                                                --------    --------
Gross profit                                                      33,282      35,272

Costs and expenses:
Sales and marketing                                               11,829      12,734
Research and development                                           2,044       1,290
Distribution, circulation and fulfillment                          3,172       3,359
Editorial                                                          2,487       2,892
General and administrative                                         7,292       7,232
Depreciation                                                         634         782
                                                                --------    --------

                                                                  27,458      28,289

Income before amortization of goodwill and intangible
assets, interest expense, income taxes and other, net              5,824       6,983

Amortization of goodwill and intangible assets                     8,655      16,853

Loss from operations                                              (2,831)     (9,870)

Interest expense, including amortization
of deferred financing costs                                       (8,399)     (8,645)
Other, net                                                            56        (204)
                                                                --------    --------

Loss before income tax provision                                 (11,174)    (18,719)

Income tax provision                                                 450         234
                                                                --------    --------

Net loss                                                        $(11,624)   $(18,953)
                                                                ========    ========
</TABLE>


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

                                       3




<PAGE>



                         WRC MEDIA INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                       For the three months ended March 31
                                    Unaudited
                             (dollars in thousands)

<TABLE>
<CAPTION>

                                                           2000        2001
                                                         --------    --------
<S>                                                      <C>         <C>
Cash flows from operating activities:

Net loss                                                 $(11,624)   $(18,953)
Adjustments to reconcile net loss to net cash
provided by operating activities-
Depreciation and amortization                               9,291      17,636
Interest Expense-Accretion of Discounts and Stock              72          81
Amortization of deferred financing fees                       173         287
Changes in assets and liabilities-
Decrease in accounts receivable                             5,258       2,081
Decrease in inventories                                     1,175         612
Increase in prepaid expenses and other current assets        (558)     (1,738)
Increase in goodwill and other intangibles                 (2,320)     (2,934)
Decrease in accounts payable                               (9,052)     (4,222)
Decrease in current and noncurrent deferred revenue        (5,141)     (4,067)
(Increase) decrease in noncurrent assets                       17        (350)
Increase in current and noncurrent accrued liabilities        812         935
                                                         --------    --------

Net cash used in operating activities                     (11,897)    (10,631)
                                                         --------    --------

Cash flows from investing activities:

Capital expenditures                                         (424)       (371)
                                                         --------    --------

Net cash used in investing activities                        (424)       (371)
                                                         --------    --------

Cash flows from financing activities:

Net proceeds from revolving line of credit                  2,000      12,000
Retirement of senior bank debt                               (638)     (1,025)
                                                         --------    --------

Net cash provided by financing activities                   1,362      10,975
                                                         --------    --------

Decrease in cash and cash equivalents                     (10,959)        (27)

Cash and cash equivalents, beginning of period             15,520       2,968
                                                         --------    --------

Cash and cash equivalents, end of period                 $  4,561    $  2,941
                                                         ========    ========

Supplemental disclosure of cash flow information:
Cash paid during the period for interest                 $  2,719    $  3,937
                                                         ========    ========

Cash paid during the period for income taxes             $    450    $    234
                                                         ========    ========

</TABLE>


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

                                       4






<PAGE>


                        WRC MEDIA, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)
                (Dollars in thousands, except per share amounts)

1. ORGANIZATION AND DESCRIPTION OF BUSINESS ORGANIZATION

         The accompanying condensed consolidated financial statements include
the accounts of WRC Media, Inc. ("WRC") and its subsidiaries- Weekly Reader
Corporation, and CompassLearning, Inc. The term "Company" refers to WRC and its
subsidiaries.

         WRC was incorporated on May 14, 1999. On July 14, 1999, WRC acquired
CompassLearning in a business combination accounted for as a purchase.

         On November 17, 1999, WRC completed the recapitalization and purchase
of Weekly Reader and its subsidiaries. As a result of these transactions, WRC
owns 94.9% and PRIMEDIA INC. owns 5.1% of the common stock of the Weekly Reader
Corporation.

         The separate financial statements of the Subsidiary Guarantors have not
been included because (i) the Subsidiary Guarantors constitute all of WRC
Media's direct and indirect subsidiaries, (ii) the Subsidiary Guarantors have
fully and unconditionally guaranteed the Company's obligations on a joint and
several basis; (iii) WRC Media has no operations and its ability to service its
debt is dependent on the operations of its subsidiaries.

         All significant intercompany balances and transactions have been
eliminated in the accompanying condensed consolidated financial statements.

         The accompanying condensed consolidated financial statements have been
prepared without audit. In the opinion of management, all adjustments,
consisting of only normal recurring adjustments necessary to present fairly the
financial position, the results of operations and cash flows for the periods
presented, have been made.

         The accompanying condensed consolidated financial statements have been
prepared pursuant to the rules and regulations of the Securities and Exchange
Commission ("SEC"). Accordingly, certain information and note disclosures
normally included in financial statements prepared in conformity with generally
accepted accounting principles have been condensed or omitted.

         These condensed consolidated financial statements should be read in
conjunction with WRC Media, Inc. and Subsidiaries annual financial statements
and related notes for the year ended December 31, 2000. The operating results
for the three-month periods ended March 31, 2000 and 2001 are not necessarily
indicative of the results that may be expected for a full year.



                                       5





<PAGE>

                   WEEKLY READER CORPORATION AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                             (dollars in thousands)

<TABLE>
<CAPTION>

                                                                                                    Unaudited
                                                                      December 31,                  March 31,
                                                                          2000                         2001
                                                                  ---------------------        ---------------------

<S>                                                                            <C>                          <C>
ASSETS
Current Assets:

Cash                                                                     $       2,914                $       2,570
Accounts receivable, net                                                        26,758                       26,065
Inventories, net                                                                14,124                       13,259
Due from related party, net                                                      4,632                        8,616
Prepaid expenses                                                                 3,219                        5,635
Other current assets                                                            17,409                       16,330
                                                                         --------------               --------------

                             Total current assets                               69,056                       72,475

Property and equipment, net                                                      5,729                        5,534
Other intangible assets, net                                                    41,282                       42,179
Excess of purchase price over net assets acquired, net                         104,881                      104,156
Other non-current assets                                                            25                          375
                                                                         --------------               --------------

                                 Total Assets                            $     220,973                $     224,719
                                                                         ==============               ==============

LIABILITIES AND STOCKHOLDERS EQUITY
Current liabilities:

Accounts payable                                                         $      17,382                $      13,293
Deferred revenue                                                                20,119                       17,643
Accrued expenses and other                                                      29,592                       27,250
Current portion of long-term debt                                                4,488                        4,875
                                                                         --------------               --------------

                           Total current liabilities                            71,581                       63,061

Long-term debt                                                                 269,469                      280,138

Commitments and contingencies
Redeemable preferred stock, plus accrued dividends                              88,528                       91,848

Stockholders deficit:
Common stock, ($.01 par value, 20,000,000 shares authorized;
2,830,000 shares issued)                                                            28                           28
Class A non-voting common stock ($.01 par value,
1,000,000 shares authorized, no shares issued or outstanding)                        -                            -
Class B non-voting common stock ($.01 par value,
1,000,000 shares authorized, no shares issued or outstanding)                        -                            -
Additional paid-in capital                                                       9,133                        9,133
Due from parent                                                                (69,374)                     (64,362)
Accumulated deficit                                                           (148,392)                    (155,127)
                                                                         --------------               --------------

Total stockholders deficit                                                    (208,605)                    (210,328)
                                                                         --------------               --------------

Total liabilities and stockholders deficit                               $     220,973                $     224,719
                                                                         ==============               ==============

</TABLE>


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




                                       6




<PAGE>

                   WEEKLY READER CORPORATION AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                       For the three months ended March 31
                                    Unaudited
                             (dollars in thousands)

<TABLE>
<CAPTION>

                                                                    2000           2001
                                                                 ----------     ----------

<S>                                                               <C>            <C>
Sales, net                                                        $ 35,707       $ 35,582

Cost of goods sold                                                   9,705          9,058
                                                                 ----------     ----------

Gross profit                                                        26,002         26,524

Costs and expenses:
Marketing and selling                                                5,918          6,796
Distribution, circulation and fulfillment                            3,172          3,359
Editorial                                                            2,487          2,892
General and administrative                                           5,248          5,277
Depreciation                                                           474            491
                                                                 ----------     ----------

                                                                    17,299         18,815
Income before amortization of goodwill and intangible assets,
interest expense, income taxes and other, net                        8,703          7,709

Amortization of goodwill and intangible assets                       3,239          2,764

Income from operations                                               5,464          4,945

Other income (expense):
Interest expense                                                    (8,228)        (8,361)
Other, net                                                              45             34
                                                                 ----------     ----------

Loss before income tax provision                                    (2,719)        (3,382)

Income tax provision                                                   450             33
                                                                 ----------     ----------

Net loss                                                          $ (3,169)      $ (3,415)
                                                                 ==========     ==========

</TABLE>

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





                                       7





<PAGE>

                   WEEKLY READER CORPORATION AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                       For the three months ended March 31
                                    Unaudited
                             (dollars in thousands)

<TABLE>
<CAPTION>

                                                                  2000             2001
                                                                ---------        ---------

<S>                                                             <C>              <C>
Cash flows from operating activities:

Net loss                                                         $(3,169)         $(3,415)
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation and amortization                                      3,714            3,255
Interest Expense-Accretion of Discounts and Stock                     72               81
Changes in operating assets and liabilities:
(Increase) decrease in-
Accounts receivable                                                  638              693
Inventories                                                        1,167              865
Prepaid expenses and other assets                                 (2,520)          (4,621)
Increase (decrease) in-
Accounts payable                                                  (8,191)          (4,089)
Deferred revenue                                                  (1,345)          (2,476)
Accrued expenses and other liabilities                            (1,960)          (2,343)
                                                                ---------        ---------

Net cash used in operating activities                            (11,594)         (12,050)
                                                                ---------        ---------

Cash flows from investing activities:

Capital expenditures                                                (111)            (296)
                                                                ---------        ---------

Net cash used in investing activities                               (111)            (296)
                                                                ---------        ---------

Cash flows from financing activities:

Net proceeds from revolving line of credit                         2,000           12,000
Retirement of senior bank debt                                      (638)          (1,025)
(Increase) decrease in due from parent, net                        4,841            5,012
(Increase) decrease in due from related party                     (5,211)          (3,984)
                                                                ---------        ---------

Net cash provided by financing activities                            992           12,003
                                                                ---------        ---------

Decrease in cash and cash equivalents                            (10,713)            (343)

Cash, beginning of period                                         14,143            2,914
                                                                ---------        ---------

Cash, end of period                                              $ 3,430          $ 2,571
                                                                =========        =========

Supplemental disclosure of cash flow information:
Cash paid during the period for interest                         $ 2,719          $ 3,937
                                                                =========        =========

Cash paid during the period for income taxes                     $   450          $   234
                                                                =========        =========

</TABLE>


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



                                       8






<PAGE>



                    WEEKLY READER CORPORATION ND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)
                (Dollars in thousands, except per share amounts)

1. ORGANIZATION AND DESCRIPTION OF BUSINESS ORGANIZATION

         Weekly Reader Corporation ("WRC" or the "Company"), PRIMEDIA Reference,
Inc. ("PRI") and American Guidance Services, Inc. ("American Guidance") were
wholly-owned subsidiaries of PRIMEDIA Inc. ("PRIMEDIA"). On August 13, 1999,
PRIMEDIA entered into a Redemption, Stock Purchase and Recapitalization
Agreement (as amended as of October 6, 1999, the "Recapitalization Agreement")
with WRC Media Inc., formerly EAC II Inc. ("WRC Media"). The terms of the
Recapitalization Agreement required that all of the outstanding capital stock of
PRI and American Guidance be contributed to WRC prior to WRC Media's purchase of
majority interest in WRC for a purchase price of $395,000. The presentation of
these financial statements reflects the capital contribution made by PRIMEDIA to
WRC of all the PRI and American Guidance shares at their historical carrying
values. In addition, on October 5, 1999, the authorized capital of WRC was
amended to consist of 20,000,000 shares of common stock, par value $.01/share,
and WRC declared a 10,000-for-one stock split effective on October 5, 1999. On
November 17, 1999 WRC Media completed its recapitalization of WRC. The
consolidated financial statements include the accounts of WRC and its
subsidiary, Lifetime Learning System, Inc. ("Lifetime Learning"), PRI and its
subsidiaries, Funk & Wagnalls Yearbook Corporation and Gareth Stevens, Inc.
("Gareth Stevens"), and American Guidance and its subsidiary, AGS International
Sales, Inc. (collectively referred to as "Weekly Reader"). As a result of the
recapitalization, WRC owns 94.9% and PRIMEDIA 5.1% of the common stock of Weekly
Reader. On November 17, 1999 PRI legally changed its name to World Almanac
Education Group ("WAE").

         All significant intercompany balances and transactions have been
eliminated in the accompanying condensed consolidated financial statements.

         The accompanying condensed consolidated financial statements have been
prepared without audit. In the opinion of management, all adjustments,
consisting of only normal recurring adjustments necessary to present fairly the
financial position, the results of operations and cash flows for the periods
presented, have been made.

         The accompanying condensed consolidated financial statements have been
prepared pursuant to the rules and regulations of the Securities and Exchange
Commission ("SEC"). Accordingly, certain information and note disclosures
normally included in financial statements prepared in conformity with generally
accepted accounting principles have been condensed or omitted.

         These condensed consolidated financial statements should be read in
conjunction with Weekly Reader Corporation and Subsidiaries annual financial
statements and related notes for the year ended December 31, 2000. The operating
results for the three-month periods ended March 31, 2000 and 2001 are not
necessarily indicative of the results that may be expected for a full year.


                                       9




<PAGE>




                              COMPASSLEARNING, INC.
                            CONDENSED BALANCE SHEETS
                             (dollars in thousands)


<TABLE>
<CAPTION>
                                                                                   Unaudited
                                                          December 31,             March 31,
                                                             2000                    2001
                                                          ------------             ---------
<S>                                                    <C>                      <C>
ASSETS
Current Assets:

Cash                                                         $      54             $     371
Accounts receivable, net                                        15,410                14,022
Inventories, net                                                   481                   734
Prepaid expenses                                                   233                   634
                                                             ---------             ---------
                             Total current assets               16,178                15,761
Purchased software, net                                          4,709                 4,244
Other acquired intangible assets, net                           18,147                17,028
Excess of purchase price over net assets acquired, net          21,424                20,457
Fixed assets, net                                                2,376                 2,160
                                                             ---------             ---------
                                 Total Assets                $  62,834             $  59,650
                                                             =========             =========

LIABILITIES AND STOCKHOLDERS EQUITY
Current liabilities:

Accounts payable                                             $   2,385             $   2,252
Due to related party                                             4,630                 8,616
Accrued expenses                                                 6,942                 6,474
Current portion of deferred revenue                             16,336                14,575
Current portion of long-term debt                                4,488                 4,875
                                                             ---------             ---------

                           Total current liabilities            34,781                36,792

Deferred revenue, net of current portion                         1,868                 2,038
Long-term debt                                                 269,469               280,138
Due to related party                                             2,160                 2,160
                                                             ---------             ---------

Total liabilities                                              308,278               321,128

Stockholders deficit:
Preferred stock, ($.01 par value, 10,000,000
shares authorized, no shares issued
and outstanding)                                                     -                     -
Class A common stock, ($.01 par value,
20,000 shares authorized,
10,000 shares issued and outstanding)                                -                     -
Additional paid-in capital                                      31,316                31,316
Accumulated deficit                                            (59,240)              (70,918)
Due from parent                                               (217,520)             (221,876)
                                                             ---------             ---------

Total stockholders deficit                                    (245,444)             (261,478)
                                                             ---------             ---------

Total liabilities and stockholders deficit                   $  62,834             $  59,650
                                                             =========             =========
</TABLE>



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


                                       10




<PAGE>



                              COMPASSLEARNING, INC.
                       CONDENSED STATEMENTS OF OPERATIONS
                       For the three months ended March 31
                                    Unaudited
                             (dollars in thousands)


<TABLE>
<CAPTION>
                                                                        2000            2001
                                                                      --------        --------
<S>                                                                 <C>            <C>
Sales, net                                                            $ 14,527        $ 13,909

Cost of goods sold                                                       7,247           5,161
                                                                      --------        --------

Gross profit                                                             7,280           8,748

Costs and expenses:
Sales and marketing                                                      5,911           5,938
Research and development                                                 2,044           1,290
General and administrative                                               2,044           1,955
Depreciation                                                               160             291
                                                                      --------        --------

                                                                        10,159           9,474
Loss before amortization of goodwill and intangible assets,
interest expense, income taxes and other, net                           (2,879)           (726)

Amortization of goodwill and intangible assets                           2,603           2,550

Loss from operations                                                    (5,482)         (3,276)

Other income (expense):
Interest expense                                                        (8,226)         (8,358)
Other, net                                                                  11               -
                                                                      --------        --------

Loss before income tax provision                                       (13,697)        (11,634)

Income tax provision                                                         -              44
                                                                      --------        --------

Net Loss                                                              $(13,697)       $(11,678)
                                                                      ========        ========
</TABLE>


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

                                       11



<PAGE>



                              COMPASSLEARNING, INC.
                       CONDENSED STATEMENTS OF CASH FLOWS
                       For the three months ended March 31
                                    Unaudited
                             (dollars in thousands)




<TABLE>
<CAPTION>
                                                                      2000           2001
                                                                    --------       --------
<S>                                                              <C>            <C>
Cash flows from operating activities:

Net loss                                                            $(13,697)      $(11,678)
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation and amortization                                          2,764          2,842
Interest Expense-Accretion of Discounts and Stock                         72             81
Changes in assets and liabilities:
Decrease in accounts receivable                                        4,620          1,388
(Increase) decrease in inventories                                         8           (253)
(Increase) decrease in prepaid expenses                                   59           (401)
Decrease in accounts payable                                            (855)          (133)
Decrease in deferred revenue                                          (3,797)        (1,591)
Decrease in accrued expenses and other long-term liabilities          (2,075)          (468)
                                                                    --------       --------

Net cash used in operating activities                                (12,901)       (10,213)
                                                                    --------       --------

Cash flows from investing activities:

Capital expenditures                                                    (313)           (75)
                                                                    --------       --------

Net cash used in investing activities                                   (313)           (75)
                                                                    --------       --------

Cash flows from financing activities:

Borrowings under revolving line of credit, net                         2,000         12,000
Retirement of senior bank debt                                          (638)        (1,025)
Increase in due to related party                                       5,489          3,986
(Increase) decrease in due from parent, net                            7,392         (4,356)
                                                                    --------       --------

Net cash provided by financing activities                             14,243         10,605
                                                                    --------       --------

Change in Cash                                                         1,029            317

Cash, beginning of period                                                102             54
                                                                    --------       --------

Cash, end of period                                                 $  1,131       $    371
                                                                    ========       ========

Supplemental disclosure of cash flow information:
Cash paid during the period for interest                            $      -       $      -
                                                                    ========       ========

Cash paid during the period for income taxes                        $      -       $     44
                                                                    ========       ========
</TABLE>




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


                                       12




<PAGE>


                              COMPASSLEARNING, INC.
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (Unaudited)
                (Dollars in thousands, except per share amounts)

1. ORGANIZATION AND DESCRIPTION OF BUSINESS ORGANIZATION

         CompassLearning, Inc. (formerly, JLC Learning Corporation and formerly
EAC I Inc.) (the "Company") is a leading provider of technology-based
educational programs to schools and school districts for kindergarten through
twelfth grade. Prior to July 14, 1999, the Company's predecessor (the
"Predecessor") was a wholly-owned subsidiary of Software Systems Corporation
("SSC"), a wholly-owned subsidiary of JLC Learning Holdings, Inc. ("Holdings").

         The Predecessor was acquired by WRC Media, Inc. (the "Parent") on July
14, 1999 (the "Purchase Date"). The Securities and Exchange Commission ("SEC")
deems an acquired business to be a predecessor when the acquirer is in
substantially the same business of the entity acquired and the acquirer's own
operations prior to the acquisition appear insignificant relative to the
business acquired. The purchase method of accounting was used to record the
assets acquired and liabilities assumed by the Company. Such accounting
generally results in the acquirer recording the assets purchased and liabilities
assumed at fair value, which results in increased amortization and depreciation
reported in future periods.

         The accompanying condensed consolidated financial statements have been
prepared without audit. In the opinion of management, all adjustments,
consisting of only normal recurring adjustments necessary to present fairly the
financial position, the results of operations and cash flows for the periods
presented, have been made.

         The accompanying condensed consolidated financial statements have been
prepared pursuant to the rules and regulations of the SEC. Accordingly, certain
information and note disclosures normally included in financial statements
prepared in conformity with generally accepted accounting principles have been
condensed or omitted.

         These condensed consolidated financial statements should be read in
conjunction with CompassLearning, Inc.'s financial statements and related notes
for the period ended December 31, 2000. The operating results for the
three-month periods ended March 31, 2000 and 2001 are not necessarily indicative
of the results that may be expected for a full year.


                                       13




<PAGE>



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

The following discussion is intended to assist in understanding the financial
condition as of March 31, 2001 of WRC Media Inc. ("WRC Media") and its
subsidiaries and their results of operations for the three-month periods ended
March 31, 2000 and 2001. You should read the following discussion in conjunction
with the financial statements of WRC Media, Weekly Reader Corporation ("Weekly
Reader") and CompassLearning, Inc. ("CompassLearning,") attached to this
discussion and analysis. Unless the context otherwise requires, references to
"Weekly Reader" herein are to Weekly Reader and its subsidiaries, including
American Guidance Service, Inc. ("American Guidance") and World Almanac
Education Group, Inc. ("World Almanac"). Unless the context otherwise requires,
the terms "we," "our," and "us" refer to WRC Media and its subsidiaries after
giving effect to the transactions related to the acquisition of CompassLearning
and recapitalization of Weekly Reader effectuated on July 14, 1999 and November
17, 1999, respectively (the "Acquisition and Recapitalization"). This discussion
and analysis contains forward-looking statements. Although we believe that our
plans, intentions and expectations reflected in or suggested by these
forward-looking statements are reasonable, we cannot assure you that these
plans, intentions or expectations will be achieved. These forward-looking
statements are subject to risks, uncertainties and assumptions about us.

Results of Operations for the three months ended March 31, 2001-- WRC Media Inc.
and Subsidiaries

The results of operations of WRC Media and its subsidiaries encompass the
operations of CompassLearning and Weekly Reader and its subsidiaries, including
American Guidance and World Almanac. The results of operations of WRC Media and
its subsidiaries should be read together with the separate discussions of the
results of operations of Weekly Reader and CompassLearning.

In analyzing WRC Media's results for the three months ended March 31, 2000 and
2001, respectively, the seasonal nature of WRC Media's business should be
considered. As a result of seasonality, approximately 23% of WRC Media's
publication and related service revenues usually result in its first quarter,
23% in its second quarter, and 54% in the third and fourth quarters combined.
However, unlike this revenue stream, many of WRC Media's expenses are incurred
evenly throughout the year.

WRC Media analyzes its revenues, expenses and operating results on a percentage
of sales basis. The following table sets forth, for the periods indicated,
combined statements of operations data for WRC Media and its subsidiaries,
expressed in millions of dollars and as a percentage of net sales.


                                       14




<PAGE>


<TABLE>
<CAPTION>
                                                                                            Three Months Ended March 31,
                                                                           2000                        2001
                                                                      --------------------------------------------------------------
                                                                          Amount     % of Net Sales      Amount       % of Net Sales
                                                                      ------------  ----------------  ------------   ---------------
                                                                                          (Dollars in millions)
<S>                                                                      <C>             <C>             <C>               <C>
Sales, net (a)                                                             $ 50.2            100.0%        $ 49.5            100.0%
Cost of goods sold (a)                                                       16.9             33.7%          14.2             28.7%
                                                                           ------            -----         ------            -----
Gross profit                                                               $ 33.3             66.3%        $ 35.3             71.3%
Costs and expenses:
       Sales and marketing                                                   11.8             23.5%          12.7             25.7%
       Research and development                                               2.0              4.0%           1.3              2.6%
       Distribution, circulation and fulfillment                              3.2              6.4%           3.4              6.9%
       Editorial                                                              2.5              5.0%           2.9              5.9%
       General and administrative                                             7.3             14.5%           7.2             14.5%
       Depreciation                                                           0.6              1.2%           0.8              1.6%
                                                                           ------            -----         ------            -----
                                                                             27.4             54.6%          28.3             57.2%
Income before amortization of goodwill and intangible assets,
interest expense, income taxes and other, net                                 5.9             11.7%           7.0             14.1%
Amortization of goodwill and intangible assets                                8.7             17.2%          16.9             34.1%
                                                                           ------            -----         ------            -----
Loss from operations                                                         (2.8)            (5.5%)         (9.9)           (20.0%)
Interest expense, including amortization
of deferred financing costs                                                  (8.4)           (16.7%)         (8.6)           (17.4%)
Other, net                                                                    0.1              0.2%          (0.2)            (0.4%)
                                                                           ------            -----         ------            -----
Loss before income tax expense                                              (11.1)           (22.0%)        (18.7)           (37.8%)
Income tax expense                                                            0.5              1.0%           0.2              0.4%
                                                                           ------            -----         ------            -----
Net loss                                                                   $(11.6)           (23.0%)       $(18.9)           (38.2%)
                                                                           ======            =====         ======            =====

       EBITDA (b)                                                          $  6.5             12.9%        $  7.6             15.3%
                                                                           ======            =====         ======            =====
</TABLE>


(a)  Certain amounts have been reclassified in accordance with EITF 99-19,
     "Reporting Revenue as Principal versus Net as an Agent".
(b)  EBITDA is defined as income (loss) before interest expense, income taxes,
     depreciation and amortization. EBITDA data is included because we
     understand that this information may be considered by investors as an
     additional basis on which to evaluate WRC Media's ability to pay interest,
     repay debt and make capital expenditures. Because all companies do not
     calculate EBITDA identically, the presentation of EBITDA in this report is
     not necessarily comparable to similarly titled measures of other companies.
     EBITDA does not represent and should not be considered more meaningful
     than, or an alternative to, measures of operating performance determined in
     accordance with generally accepted accounting principles.


Three Months Ended March 31, 2001 Compared to Three Months Ended March 31, 2000

Sales, net. For the three months ended March 31, 2001, net sales decreased $0.7
million, or 1.0%, to $49.5 million from $50.2 million for the same period in
2000. This decrease was primarily due to a decrease in sales at CompassLearning
of $0.6 million, or 4.1%, to $13.9 million for the three months ended March 31,
2001 from $14.5 million for the same period in 2000 combined with a decrease in
sales at Weekly Reader of $0.1 million, or 0.3%, to $35.6 million for the three
months ended March 31, 2001 from $35.7 million for the same period in 2000. The
decrease in sales at Weekly Reader was the result of (1) an increase in sales at
American Guidance Service of $0.2 million, or 1.5%, to $12.1 million for the
three months ended March 31, 2001 from $11.9 million for the same period in 2000
as a result of increases in sales of our curriculum products, primarily
textbooks; (2) a decrease in sales at World Almanac of $0.3 million, or 2.0%, to
$13.0 million from $13.3 million for the same period in 2000, as a result of
anticipated lower sales of Funk & Wagnalls Yearbook business. World Almanac's
net revenue for the first quarter of 2001 excluding the de-emphasized non-core
Yearbook sales increased $0.1 million, or 0.4%, to $11.5 million from $11.4
million for the same period in 2000. World Almanac is no longer soliciting new
subscribers for its Yearbooks since the print edition of the Funk & Wagnall's
Encyclopedia was discontinued. Accordingly, Funk & Wagnalls sales of Yearbooks
are naturally declining year-over-year, as it is entirely dependent


                                       15




<PAGE>



upon sales orders from existing customers via renewals; and (3) Weekly Reader's
sales, not including World Almanac and American Guidance, of $10.4 million were
essentially flat for the three months ended March 31, 2001 compared to the same
period in 2000.

The decrease in sales at CompassLearning was due to (1) a planned decrease in
hardware revenue of $1.9 million, or 70.4%, to $0.8 million for the three months
ended March 31, 2001 from $2.7 million for the same period in 2000, (2) a
decrease in service revenue from technical support (of older software) of $0.6
million, or 14.3%, to $3.6 million for the three months ended March 31, 2001
from $4.2 million for the same period in 2000 primarily as a result of lower
service contract renewal sales, and (3) a decrease in service revenue from
professional development services of $0.2 million or 7.4% to $2.5 million for
the three months ended March 31, 2001 from $2.7 million for the same period in
2000 offset by an increase in software revenue of $2.1 million, or 42.9%, to
$7.0 million for the three months ended March 31, 2001 from $4.9 million for the
same period in 2000 primarily as a result of higher market coverage with a more
seasoned sales force compared to one year ago, customers accelerating buying
decisions in order to be ready for summer sessions, and reduced market confusion
as a result of many smaller startup companies exiting the marketplace due to
poor sales performance and loss of additional financing. CompassLearning's net
revenue for the first quarter of 2001 excluding the de-emphasized non-core
hardware sales increased $1.3 million, or 11.0%, to $13.1 million from $11.8
million for the same period in 2000.

Net revenue for the first quarter of 2001 - excluding de-emphasized non-core
business lines of hardware and Yearbooks increased $1.4 million, or 3.1%, to
$47.1 million from $45.7 million for the same period in 2000, shown in the
following table:


<TABLE>
<CAPTION>
                                                                                   Variance to
                                                                                     Q1 2000
                                                 Q1              Q1          ----------------------
       Net Revenue (thousands)                  2000            2001           $               %
------------------------------------           -------         ------        ------          ------
<S>                                         <C>            <C>              <C>           <C>
Weekly Reader                                   10,459         10,421           (38)          (0.4%)
AGS                                             11,940         12,119           179            1.5%
World Almanac                                   13,308         13,042          (266)          (2.0%)
Compass                                         14,527         13,909          (618)          (4.3%)
                                               -------         ------        ------          ------
WRC Media - Consolidated                        50,234         49,491          (743)          (1.5%)
                                               -------         ------        ------          ------
Non-core revenues:
    Compass Hardware business                    2,690            848        (1,842)         (68.5%)
    World Almanac's Funk & Wagnall's
    yearbook business
                                                 1,846          1,536          (310)         (16.8%)
                                               -------         ------        ------          ------
WRC Media - Core Business                       45,698         47,107         1,409            3.1%
                                               =======         ======        ======          ======
</TABLE>


                                       16




<PAGE>


Gross profit. For the three months ended March 31, 2001, gross profit increased
by $2.0 million, or 6.0%, to $35.3 million from $33.3 million for the same
period in 2000. This increase was due to an increase in gross profit at
CompassLearning of $1.4 million, or 18.5%, to $8.7 million for the three months
ended March 31, 2001 from $7.3 million for the same period in 2000 combined with
an increase in gross profit at Weekly Reader of $0.6 million, or 2.3%, to $26.6
million for the three months ended March 31, 2001 from $26.0 million for the
same period in 2000. The increase in gross profit at Weekly Reader was a result
of (1) an increase in gross profit at American Guidance of $0.4 million, or
4.7%, to $8.9 million for the three months ended March 31, 2001 from $8.5
million for the same period in 2000 primarily due to the increased sales
described above; (2) an increase in gross profit at Weekly Reader, not including
World Almanac and American Guidance, of $0.1 million, or 1.2%, to $8.7 million
for the three months ended March 31, 2001 from $8.6 million for the same period
in 2000 due to a favorable cost of goods sold rate variance; (3)an increase in
gross profit at World Almanac of $0.1 million, or 0.6 % to $8.9 million for the
three months ended March 31, 2001 from $8.8 million for the same period in 2000
due to a favorable cost of goods sold rate variance. The increase in gross
profit at CompassLearning of $1.4 million, or 18.5%, to $8.7 million from $7.3
million in 2000 was primarily due to higher software revenue. CompassLearning's
gross profit as a percent of revenue significantly increased to 62.6% from 50.3%
for the same period in 2000 as a result of the change in sales mix. For the
three months ended March 31, 2001 CompassLearning's higher margin software
business represented 50.4% as a percentage of total revenues compared to 33.8%
as a percentage of total revenues for the same period in 2000. At
CompassLearning, it is our strategy to grow our core business; which is the high
margin electronic courseware business and the related professional development
services that emanate from that business, and continue to de-emphasize the
significantly lower margin hardware revenues, as well as the technical support
service revenue streams which have a declining service life cycle.

WRC Media's gross profit as a percentage of sales increased to 71.3% for the
three months ended March 31, 2001 from 66.3% for the same period in 2000,
primarily due to change in sales mix previously noted.

Costs and expenses. For the three months ended March 31, 2001, costs and
expenses increased by $.9 million, or 3.3%, to $28.3 million from $27.4 million
for the same period in 2000. This was primarily attributable to increased sales
and marketing expenses, which increased $0.9 million for the three months ended
March 31, 2001, or 7.6%, to $12.7 million from $11.8 million for the same period
in 2000.


                                       17




<PAGE>



Income before amortization of goodwill and intangible assets, interest expense,
income taxes and other, net. For the three months ended March 31, 2001, income
before amortization of goodwill and intangible assets, interest expense, income
taxes and other, net increased by $1.1 million, or 18.6%, to $7.0 million from a
loss of $5.9 million for the same period in 2000, and as a percentage of sales
increased to 14.1% from 11.7% for the same period in 2000. These decreases were
primarily due to the increase in gross profit described above, partially offset
by the increase in sales and marketing expense, also described above.

Amortization of goodwill and intangible assets. For the three months ended March
31, 2001, amortization of goodwill and intangible assets increased by $8.2
million, or 95.3%, to $16.9 million from $8.7 million for the same period in
2000. This increase was primarily due to an increased appraisal valuation of
some WRC Media intangible assets, which allow WRC Media to increase the rate of
amortization of some intangible assets.

Loss from operations. For the three months ended March 31, 2001, loss from
operations increased $7.1 million, or 259.3%, to $9.9 million from $2.8 million
for the same period in 2000. This increase was primarily due to the increase in
amortization of goodwill and intangible assets of $8.2 million described above.

Interest expense, including amortization of deferred financing costs. For the
three months ended March 31, 2001, interest expense increased by $0.2 million,
or 2.4%, to $8.6 million from $8.4 million for the same period in 2000 and
interest expense as a percentage of sales increased to 17.4% from 16.7% for the
same period in 2000. Interest expense for the three months ended March 31, 2001
and 2000 relates to debt and amortization of deferred financing costs associated
with the Acquisition and Recapitalization.

Other, net. For the three months ended March 31, 2001, other , net decreased
$0.2 million, or 300.0%, to an expense of $0.2 million from income of $0.1
million for the same period in 2000. This decrease was primarily due to a
management fee incurred from a shareholder, which was not charged in 2000.

Income tax provision (benefit). For the three months ended March 31, 2001,
provision for income taxes decreased by $0.3 million or 60.0% due to an income
tax provision of $0.2 million down from a provision for income taxes of $0.5
million for the same period in 2000.

Net loss. For the three months ended March 31, 2001, net loss increased by $7.3
million, or 63.6%, to $18.9 million from $11.6 million for the same period in
2000 primarily as a result of the $8.2 million increase in amortization expenses
for intangible assets resulting from the Acquisition and Recapitalization
described above. Net loss as a percentage of net sales increased to negative
38.2% for the three months ended March 31, 2001 from negative 23.0% for the same
period in 2000.


                                       18




<PAGE>



EBITDA. For the three months ended March 31, 2001, EBITDA increased $1.1
million, or 16.3%, to $7.6 million from $6.5 million for the same period in
2000. This increase is primarily attributable to $2.0 million of greater gross
profit for the first quarter of this year compared to the same period in 2000,
offset by $0.9 million of higher sales and marketing expenses. As discussed
above, CompassLearning contributed $1.4 million of the $2.0 million higher gross
profit in the quarter resulting from higher software sales.


                                       19





<PAGE>



Results of Operations for the three months ended March 31, 2001 -- Weekly Reader
Corporation and Subsidiaries

The following table sets forth, for the periods indicated, combined statements
of operations data for Weekly Reader and its subsidiaries expressed in millions
of dollars and as a percentage of net sales.

<TABLE>
<CAPTION>

                                                                              Three Months Ended March 31,
                                                                          2000                            2001
                                                              ------------------------------  ------------------------------
                                                                Amount      % of Net Sales      Amount      % of Net Sales
                                                              ------------  ----------------  ------------  ----------------
                                                                                  (Dollars in millions)

<S>                                                                <C>               <C>           <C>               <C>
Sales, net                                                         $ 35.7            100.0%        $ 35.6            100.0%
Cost of goods sold                                                    9.7             27.2%           9.0             25.3%
                                                              ------------  ----------------  ------------  ----------------
Gross profit                                                       $ 26.0             72.8%        $ 26.6             74.7%
Costs and expenses:
       Sales and marketing                                            5.9             16.5%           6.8             19.1%
       Distribution, circulation and fulfillment                      3.2              9.0%           3.4              9.6%
       Editorial                                                      2.5              7.0%           2.9              8.1%
       General and administrative                                     5.2             14.6%           5.3             14.9%
       Depreciation                                                   0.5              1.4%           0.5              1.4%
                                                              ------------  ----------------  ------------  ----------------
                                                                     17.3             48.5%          18.9             53.1%
Income before amortization of goodwill and intangible assets,
interest expense, income taxes and other, net                         8.7             24.3%           7.7             21.6%
Amortization of goodwill and intangible assets                        3.2              9.0%           2.8              7.9%
Income from operations                                                5.5             15.3%           4.9             13.7%
Interest Expense                                                     (8.2)           (22.9%)         (8.3)           (23.3%)
Other, net                                                              -                 -             -                 -
                                                              ------------  ----------------  ------------  ----------------
Loss before income tax expense                                       (2.7)            (7.6%)         (3.4)            (9.6%)
Income tax expense                                                    0.5              1.4%             -                 -
                                                              ------------  ----------------  ------------  ----------------
Net loss                                                           $ (3.2)            (9.0%)       $ (3.4)            (9.6%)
                                                              ============  ================  ============  ================

       EBITDA (a)                                                  $  9.2             25.8%        $  8.2             23.0%
                                                              ============  ================  ============  ================

</TABLE>


(a)  EBITDA is defined as income (loss) before interest expense, income
     taxes, depreciation and amortization. EBITDA data is included because we
     understand that this information may be considered by investors as an
     additional basis on which to evaluate Weekly Reader Corporation's ability
     to pay interest, repay debt and make capital expenditures. Because all
     companies do not calculate EBITDA identically, the presentation of EBITDA
     in this report is not necessarily comparable to similarly titled measures
     of other companies. EBITDA does not represent and should not be considered
     more meaningful than, or an alternative to, measures of operating
     performance determined in accordance with generally accepted accounting
     principles.


Three Months Ended March 31, 2001 Compared to Three Months Ended March 31, 2000

Sales, net. For the three months ended March 31, 2001, net sales decreased $0.1
million, or 0.3%, to $35.6 million from $35.7 million for the same period in
2000. This decrease in sales was the result of (1) an increase in sales at
American Guidance Service of $0.2 million, or 1.5%, to $12.1 million for the
three months ended March 31, 2001 from $11.9 million for the same period in 2000
as a result of increases in sales of our curriculum products, primarily
textbooks; (2) a decrease in sales at World Almanac of $0.3 million, or 2.0%, to
$13.0 million from $13.3 million for the same period in 2000, as a result of
anticipated lower sales of Funk & Wagnalls Yearbook business. World Almanac's
net revenue for the first quarter of 2001 excluding the de-emphasized non-core
Yearbook sales increased $0.1 million, or 0.4%, to $11.5






                                       20




<PAGE>


million from $11.4 million for the same period in 2000. World Almanac is no
longer soliciting new subscribers for its Yearbooks since the print edition of
the Funk & Wagnall's Encyclopedia was discontinued. Accordingly, Funk & Wagnalls
sales of Yearbooks are naturally declining year-over-year, as it is entirely
dependent upon sales orders from existing customers via renewals; and (3) Weekly
Reader's sales, not including World Almanac and American Guidance, of $10.4
million were essentially flat for the three months ended March 31, 2001 compared
to the same period in 2000.

Gross profit. For the three months ended March 31, 2001, gross profit increased
by $0.6 million, or 2.3%, to $26.6 million from $26.0 million for the same
period in 2000. The increase in gross profit at Weekly Reader was a result of
(1) an increase in gross profit at American Guidance of $0.4 million, or 4.7%,
to $8.9 million for the three months ended March 31, 2001 from $8.5 million for
the same period in 2000 primarily due to the increased sales described above;
(2) an increase in gross profit at Weekly Reader, not including World Almanac
and American Guidance, of $0.1 million, or 1.2%, to $8.7 million for the three
months ended March 31, 2001 from $8.6 million for the same period in 2000 due to
a favorable cost of goods sold rate variance; 3) an increase in gross profit at
World Almanac of $0.1 million, or 0.6%, to $8.9 million for the three months
ended March 31, 2001 from $8.8 million for the same period in 2000 due to a
favorable cost of goods sold rate variance. Gross profit as a percentage of
sales increased to 74.7% for the three months ended March 31, 2000 from 72.8%
for the same period in 2000.

Costs and expenses. For the three months ended March 31, 2001, costs and
expenses increased by $1.6 million, or 9.2%, to $18.9 million for the three
months ended March 31, 2001 from $17.3 million for the same period in 2000
primarily due to an increase in sales and marketing expenses of $0.9 million and
an increase in editorial expenses of $0.4 million. In 2001 at Weekly Reader
(excluding American Guidance and World Almanac), we increased the sales and
marketing budget related to direct mail by 14%; and implemented a research based
circulation recapture plan with a goal of increasing our market share. Costs and
expenses as a percentage of sales increased to 53.1% for the three months ended
March 31, 2001 from 48.5% for the same period in 2000.

Income before amortization of goodwill and intangible assets, interest expense,
income taxes and other, net. For the three months ended March 31, 2001, income
before amortization of goodwill and intangible assets, interest expense, income
taxes and other, net decreased by $1.0 million, or 11.5%, to $7.7 million from
$8.7 million for the same period in 2000 and, as a percentage of sales,
decreased to 21.6% from 24.3% for the same period in 2000. These decreases were
primarily due to the factors described above.

Amortization of goodwill and intangible assets. For the three months ended March
31, 2001, amortization of goodwill and intangible assets decreased by $0.4
million, or 12.5%, to $2.8 million from $3.2 million for the same period in
2000. This decrease was primarily due to intangible assets with lower
amortization schedules in the later part of their lives, and intangible assets
that have been fully amortized.



                                       21






<PAGE>

Income from operations. For the three months ended March 31, 2001, income from
operations decreased by $0.6 million, or 10.9%, to $4.9 million from $5.5
million for the same period in 2000 and, income from operations as a percentage
of sales decreased to 13.7% from 15.3% for the same period in 2000. These
decreases were primarily due to the factors described above.

Interest expense. For the three months ended March 31, 2001, interest expense
increased by $0.1 million, or 1.2%, to $8.3 million from $8.2 million for the
same period in 2000 and interest expense as a percentage of sales increased to
23.3% from 22.9% for the same period in 2000. The interest expense for the three
months ended March 31, 2001 and 2000 relates to debt associated with the
Acquisition and Recapitalization. Since Weekly Reader is jointly and severally
liable for that debt, the interest expense related to that debt is reflected in
the financial statements of Weekly Reader.

Income tax provision (benefit). For the three months ended March 31, 2001,
provision for income taxes decreased by $0.5 million or 100.0% to $0.0 from a
provision for income taxes of $0.5 million for the same period in 2000.

Net loss. For the three months ended March 31, 2001, net loss increased by $0.2
million, or 6.3%, to $3.4 million from $3.2 million for the same period in 2000.
Net loss as a percentage of net sales increased to 9.6% for the three months
ended March 31, 2001 from 9.0% for the same period in 2000. These increases were
primarily due to the factors described above.

EBITDA. For the three months ended March 31, 2001, EBITDA decreased $1.0
million, or 10.9%, to $8.2 million from $9.2 million for the same period in
2000. This decrease is primarily attributable to $1.6 million of increased
expenses, primarily selling expenses, partially offset by $0.6 million greater
gross profit for the first quarter of 2001 compared to the same period in 2000.



                                       22







<PAGE>


Results of Operations for the three months ended March 31, 2001 --
CompassLearning, Inc.

The following table sets forth, for the periods indicated, statement of
operations data for CompassLearning, expressed in millions of dollars and as a
percentage of net revenue.

<TABLE>
<CAPTION>

                                                                                  Three Months Ended March 31,
                                                                            2000                                2001
                                                              ---------------------------------   --------------------------------
                                                                Amount        % of Net Sales        Amount       % of Net Sales
                                                              ------------   ------------------   -----------   ------------------
                                                                                     (Dollars in millions)

<S>                                                                <C>                  <C>           <C>                  <C>
Revenue, net (a)                                                   $ 14.5               100.0%        $ 13.9               100.0%
Cost of goods sold (a)                                                7.2                49.7%           5.2                37.4%
                                                              ------------   ------------------   -----------   ------------------
Gross profit                                                       $  7.3                50.3%        $  8.7                62.6%
Costs and expenses:
       Sales and marketing                                            5.9                40.7%           5.9                42.4%
       Research and development                                       2.0                13.8%           1.3                 9.4%
       General and administrative                                     2.1                14.5%           2.0                14.4%
       Depreciation                                                   0.2                 1.4%           0.3                 2.2%
                                                              ------------   ------------------   -----------   ------------------
                                                                     10.2                70.4%           9.5                68.4%
Loss before amortization of goodwill and intangible assets,
interest expense, income taxes and other, net                        (2.9)              (20.1%)         (0.8)               (5.8%)
Amortization of goodwill and intangible assets                        2.6                17.9%           2.5                18.0%
Loss from operations                                                 (5.5)              (38.0%)         (3.3)              (23.8%)
Interest expense                                                     (8.2)              (56.6%)         (8.4)              (60.4%)
Other, net                                                              -                    -             -                    -
                                                              ------------   ------------------   -----------   ------------------
Loss before income tax expense                                      (13.7)              (94.6%)        (11.7)              (84.2%)
Income tax expense                                                      -                    -             -                    -
                                                              ------------   ------------------   -----------   ------------------
Net loss                                                            (13.7)              (94.6%)        (11.7)              (84.2%)
                                                              ============   ==================   ===========   ==================

                                                              ------------   ------------------   -----------   ------------------
       EBITDA (b)                                                  $ (2.7)              (18.6%)       $ (0.4)               (2.9%)
                                                              ============   ==================   ===========   ==================

</TABLE>



(a)  Certain amounts have been reclassified in accordance with EITF
     99-19, "Reporting Revenue as Principal versus Net as an Agent.
(b)  EBITDA is defined as income (loss) before interest expense, income
     taxes, depreciation and amortization. EBITDA data is included because we
     understand that this information may be considered by investors as an
     additional basis on which to evaluate CompassLearning's ability to pay
     interest, repay debt and make capital expenditures. Because all companies
     do not calculate EBITDA identically, the presentation of EBITDA in this
     report is not necessarily comparable to similarly titled measures of other
     companies. EBITDA does not represent and should not be considered more
     meaningful than, or an alternative to, measures of operating performance
     determined in accordance with generally accepted accounting principles.


Three Months Ended March 31, 2001 Compared to Three Months Ended March 31, 2000

Revenue, net. For the three months ended March 31, 2001, net revenue decreased
$0.6 million, or 4.1%, to $13.9 million from $14.5 million for the same period
in 2000. This decrease was due to (1) a planned decrease in hardware revenue of
$1.9 million, or 70.4%, to $0.8 million for the period ended March 31, 2001 from
$2.7 million in 2000, (2) a decrease in service revenue from technical support
(of older software) of $0.6 million, or 14.3%, to $3.6 million for the period
ended March 31, 2001 from $4.2 million in 2000 primarily as a result of lower
service contract renewal sales, and (3) a decrease in service revenue from
professional development services of $0.2 million or 7.4% to $2.5 million for
the period ended March 31, 2001 from $2.7 million in 2000 offset by an increase
in software revenue of $2.1 million, or 42.9%, to $7.0 million for the period
ended March 31, 2001 from $4.9 million in 2000 primarily as a result of higher
market coverage with a seasoned sales force, customers accelerating buying
decisions in order to be ready for summer sessions, and reduced market confusion
as a result of many smaller






                                       23




<PAGE>

startup companies exiting the marketplace due to poor sales performance or loss
of additional financing.

<TABLE>
<CAPTION>

                                                                         F (U) Variance
                                          2000          2001             $             %
                                     ----------------------------- ----------------------------

<S>                                        <C>          <C>               <C>        <C>
Software                                  $ 4.9        $ 7.0              2.1        42.9%
Professional Development                    2.7          2.5             (0.2)       (7.4%)
Technical Support                           4.2          3.6             (0.6)      (14.3%)
Hardware                                    2.7           .8             (1.9)      (70.4%)
                                     ----------------------------- ----------------------------
Revenue, net                               14.5         13.9             (0.6)       (4.1%)
Less: Non-core revenues:
Hardware (a)                               (2.7)        (0.8)             1.9           -
Technical Support (b)                      (4.2)        (3.6)             0.6           -
                                     ----------------------------- ----------------------------
Core Revenues                             $ 7.6        $ 9.5              1.9        25.0%
                                     ============================= ============================

</TABLE>

(a)  CompassLearning's hardware business revenues are generally derived
     from reselling hardware to customers who request that CompassLearning
     provide a package of software and hardware. In prior years, CompassLearning
     offered hardware to customers as a wholesaler of private label and other
     products. However, because of the less profitable nature of the business
     compared to CompassLearning's other businesses and to reduce the need for
     inventory and the risk of technological change rendering inventory
     obsolete, CompassLearning began discontinuing its wholesale hardware
     business in the mid 1990's. Currently, CompassLearning has arrangements
     with Apple, IBM, Compaq, Gateway, and Dell computers in order to
     accommodate requests by customers for complete hardware and software
     solutions.
(b)  CompassLearning's service revenues, particularly those attributable
     to renewals of existing services contracts, have been decreasing recently
     as a result of:
      o  the improved quality of our software products, which require less
         technical support;
      o  more customers supplying their own training and support services
         through in-house expertise; and
      o  the allocation by customers of a greater amount of limited resources to
         upgrade their hardware and software systems for Year 2000 compliance.


It is our strategy to grow our core business, which is the electronic courseware
and the related professional development services of training our customers in
implementing that electronic courseware most efficiently. Revenue from these
sources increased $1.9 million or 25.0% to $9.5 million for the period ended
March 31, 2001 compared to $7.6 million in 2000.

Gross profit. For the three months ended March 31, 2001, gross margin increased
$1.4 million, or 18.5%, to $8.7 million from $7.3 million in 2000 primarily due
to higher software revenue. Gross profit as a percent of revenue increased to
62.6% from 50.3% for the same period in 2000.

Costs and expenses. For the three months ended March 31, 2001, costs and
expenses decreased $0.7 million, or 7.2%, to $9.5 million from $10.2 million in
2000, and costs and expenses as a percentage of revenue decreased to 68.4% from
70.4% in 2000. The decrease was primarily due to $0.7 million decrease in
research and development expense and $0.1 million decrease in general and
administrative expenses, offset by $0.1 million increase in depreciation
expense.

Sales and marketing expense remained constant in 2001 at $5.9 million with 2000,
while expense as a percentage of revenue increased to 42.4% from 40.7% in 2000.
Changes




                                       24





<PAGE>


included $0.4 million increase in commissions offset by $0.4 million decrease in
outside services and training expense.

Research and development expense decreased $0.7 million, or 36.5%, to $1.3
million from $2.0 million and as a percentage of revenue decreased to 9.4% from
13.8% in 2000. The decrease was primarily due to a decrease in expenses
resulting from a change in the company strategy to exit LAN/WAN software
development to pursue new WEB strategies.

General and administrative expense decreased $0.1 million, or 4.8%, to $2.0
million from $2.1 million, and as a percentage of revenue decreased to 14.4%
from 14.5% in 2000. There was a $0.3 million decrease in compensation and
recruiting offset by a $0.2 million increase in other operating expenses.

Loss before amortization of goodwill and intangible assets, interest expense,
income taxes and other, net. For the three months ended March 31, 2001, the loss
before amortization of goodwill and intangible assets, interest expense, income
taxes and other, net decreased $2.1 million, or 73.4%, to $0.8 million from $2.9
million in 2000 and, as a percentage of net revenue, decreased to a negative
5.8% from a negative 20.1% in 2000, primarily due to the factors described
above.

Amortization of goodwill and intangible assets. For the three months ended March
31, 2001, amortization of goodwill and intangible assets decreased $0.1 million,
or 3.8%, to $2.5 million from $2.6 million for the same period in 2000.

Loss from operations. For the three months ended March 31, 2001, loss from
operations decreased $2.2 million, or 40.0%, to $3.3 million from a loss of $5.5
million for the same period in 2000, and loss from operations as a percentage of
net revenue decreased to 23.8% from 38.0% for the same period in 2000. These
decreases were primarily due to the factors described above.

Interest expense. For the three months ended March 31, 2001, interest expense
increased $0.2 million, or 2.4%, to $8.4 million from $8.2 million in 2000.
CompassLearning is jointly and severally liable for debt associated with the
Acquisition and Recapitalization; therefore, the interest expense related to
that debt is reflected in the financial statements of CompassLearning.

Net loss. For the three months ended March 31, 2001, net loss decreased $2.0
million, or 14.6%, to $11.7 million from $13.7 million in 2000, and net loss as
a percentage of net revenue decreased to a negative 84.2% from a negative 94.6%
in 2000, primarily due to the factors described above.

EBITDA. For the three months ended March 31, 2001, EBITDA loss decreased $2.3
million, or 85.2%, to a loss of $0.4 million from a loss of $2.7 million for the
same period in 2000. This increase is primarily attributable to $1.4 million of
greater gross profit for the first quarter of 2001 compared to the same period
in 2000, combined with $0.7 million of lower research and development expenses.
Sales mix, in part, explained the significantly reduced operating loss (measured
in terms of EBITDA) at CompassLearning for the first quarter ended March 31,
2001 versus 2000. CompassLearning gross profit increased $1.4 million, or





                                       25





<PAGE>

18.5%, for the first quarter of 2001 compared to the same period in 2000,
primarily due to the replacement of $0.5 million of hardware gross margin with
$1.5 million of higher software gross margin attributable to higher software
sales. CompassLearning's gross profit margin improved to 62.6% for the first
quarter - from 50.3% for the same period in 2000.

Liquidity and Capital Resources

WRC Media's sources of cash are its operating subsidiaries, Weekly Reader and
CompassLearning, and a $30.0 million revolving credit facility. As of March 31,
2001, $12.0 million of the revolving credit facility has been drawn.
Additionally, we have applied for and received a stand-by letter of credit in
the amount of $2.0 million in connection with a real estate lease. While this
letter of credit is in effect, it reduces available borrowing under our
revolving credit facility by $2.0 million.

For the January through June time period, WRC Media and its subsidiaries usually
experience negative cash flow due to the seasonality of its business. As a
result of this business cycle, borrowings usually increase during the period
January through June, and borrowings generally will be at its lowest point in
October. WRC Media's cash and cash equivalents of $2.9 million at March 31, 2001
did not change from December 31, 2000.

WRC Media and its subsidiaries' principal uses of cash are for debt service,
capital expenditures, working capital and acquisitions. For the three months
ended March 31, 2001, WRC Media and its subsidiaries' operations used $10.6
million in cash.

For the three months ended March 31, 2001, WRC Media and its subsidiaries'
investing activities consisted of capital expenditures of $.4 million. Weekly
Reader's capital expenditures, which consisted primarily of expenditures for
property and equipment, were $0.3 million for the three months ended for March
31, 2001. CompassLearning's capital expenditures, which consisted primarily of
purchases of computer equipment, were $0.1 million for the three months ended
March 31, 2001.

WRC Media and its subsidiaries' financing activities consist of making drawings
from, and repayments to, our revolving credit facility and retiring amounts due
under our senior secured term loans. For the three months ended March 31, 2001,
financing activities provided cash of $11.0 million, which resulted from
borrowings of $12.0 million under the revolving credit facility and a repayment
of $1.0 million of the senior secured term loans.

Working Capital

As of March 31, 2001, working capital for WRC Media and its subsidiaries was a
deficit of $21.7 million. There are no unusual registrant or industry practices
or requirements relating to working capital items.

Seasonality




                                       26






<PAGE>

Our operating results have varied and are expected to continue to vary from
quarter to quarter as a result of seasonal patterns. Weekly Reader and
CompassLearning's sales are significantly affected by the school year. Weekly
Reader's sales in the third, and to a lesser extent the fourth, quarter are
generally the strongest as products are shipped for delivery prior to the start
of the school year. CompassLearning's sales are generally strongest in the
second quarter, and to a lesser extent the fourth quarter. CompassLearning's
sales are strong in the second quarter generally because schools frequently
combine funds from two budget years, which typically end on June 30 of each
year, to make significant purchases, such as purchases of CompassLearning's
electronic courseware, and because by purchasing in the second quarter, schools
are able to have the software products purchased installed over the summer and
ready to train teachers when they return from summer vacation. CompassLearning's
fourth quarter sales are strong as a result of sales patterns driven in part by
its commissioned sales force seeking to meet year-end sales goals as well as by
schools purchasing software to be installed in time for teachers to be trained
prior to the end of the school year in June.






                                       27




<PAGE>


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risk. Market risk, with respect to our business, is the
potential loss arising from adverse changes in interest rates. We manage our
exposure to this market risk through regular operating and financing activities
and, when deemed appropriate, through the use of derivatives. We use derivatives
as risk management tools and not for trading purposes.

We are subject to market risk exposure related to changes in interest rates on
our $138.4 million (as of March 31, 2001) senior secured term loans under our
senior credit facilities. Interest on borrowings under our senior credit
facilities will bear interest at a rate per annum equal to:

        (1)   for the revolving credit facility maturing in six years and
              the $27.9 million senior secured term loan A facility maturing in
              six years, the LIBO rate as defined in the credit agreement plus
              3.25% or the alternate base rate as defined in the credit
              agreement plus 2.25% subject to performance-based step downs; and
        (2)   for the $98.5 million senior secured term loan B facility
              maturing in seven years, the LIBO rate plus 4.00% or the alternate
              base rate plus 3.00%.

Our senior credit facilities require us to obtain interest rate protection for
at least 50% of our senior secured term loans for the duration of the senior
credit facilities. On May 3, 2000, we entered into an arrangement with a
notional value of $65.0 million, which terminates on November 17, 2001 and
requires us to pay a floating rate of interest based on the three-month LIBO
rate as defined in that arrangement with a cap rate of 8.0%.





                                       28






<PAGE>

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

On April 2, 2001, registrant reported, on Form 8-K, the results for the fiscal
year ended December 31, 2000.

On April 9, 2001, registrant reported, on Form 8-K, a statement issued by the
President of registrant.

On April 26, 2001, registrant reported, on Form 8-K, the results for the fiscal
quarter ended March 31, 2001.


                                   SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

<TABLE>
<CAPTION>
                                                                                  DATE
                                                                                  ----
<S>                                                                            <C>

/s/ David F. Burgstahler                                                      May 7, 2001
-------------------------------------------------
David F. Burgstahler
Director: WRC Media, Weekly Reader and CompassLearning


/s/ Ralph D. Caulo                                                            May 7, 2001
-------------------------------------------------
Ralph D. Caulo
Non-Executive Vice-Chairman: WRC Media


/s/ Timothy C. Collins                                                        May 7, 2001
-------------------------------------------------
Timothy C. Collins
Director: WRC Media, Weekly Reader and CompassLearning


/s/ D. Ronald Daniel                                                          May 7, 2001
-------------------------------------------------
D. Ronald Daniel
Non-Executive Chairman: WRC Media, Weekly Reader and CompassLearning


/s/ Martin E. Kenney, Jr                                                      May 7, 2001
-------------------------------------------------
Martin E. Kenney, Jr.
Director: WRC Media, Weekly Reader and CompassLearning;
Chief Executive Officer: WRC Media and CompassLearning;
President: CompassLearning; and
Executive Vice President, Weekly Reader


/s/ James N. Lane                                                             May 7, 2001
-------------------------------------------------
James N. Lane
Director: WRC Media, Weekly Reader and CompassLearning


/s/ Charles L. Laurey                                                         May 7, 2001
-------------------------------------------------
Charles L. Laurey
Director: WRC Media, Weekly Reader and CompassLearning; and
Secretary: WRC Media, Weekly Reader and CompassLearning


/s/ Robert S. Lynch                                                           May 7, 2001
-------------------------------------------------
Robert S. Lynch
Director: WRC Media, Weekly Reader and CompassLearning; Executive Vice
President, Chief Operating Officer: WRC Media and CompassLearning; and
Treasurer: WRC Media, Weekly Reader and CompassLearning


/s/ Richard Nota                                                              May 7, 2001
-------------------------------------------------
Richard Nota
Vice President, Finance: WRC Media
</TABLE>





                                       29