<PAGE>   1

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934

    FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000

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

    FOR THE TRANSITION PERIOD FROM ___________ TO ___________

<TABLE>
<CAPTION>

<S>                                 <C>                                           <C>

        Commission File No.333-               Commission File No. 333-                     Commission File No. 333-
                96119                                 96119-01                                   96119-04
           WRC MEDIA INC.                        WEEKLY READER                               COMPASSLEARNING, INC.
                                                  CORPORATION
   (Exact name of registrant as           (Exact name of registrant as               (Exact name of registrant as
     specified in its charter)               specified in its charter)                  specified in its charter)

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

            13-4066536                            13-3603780                                     13-4066535
(I.R.S. Employer Identification         (I.R.S. Employer Identification               (I.R.S. Employer Identification
             Number)                               Number)                                        Number)
</TABLE>

            1 ROCKEFELLER PLAZA, 32ND FLOOR, NEW YORK, NEW YORK 10020
                    (Address of Principal Executive Offices)
                                      10020
                                   (Zip Code)

       Registrant's Telephone Number, including area code: (212) 582-6700

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

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

The number of shares outstanding of each of the registrant's classes of common
stock, par value $0.01 per share, as of September 30, 2000 were:

<TABLE>
<CAPTION>

<S>                                                                                        <C>

WRC MEDIA INC. Common Stock:                                                               6,855,853
WEEKLY READER CORPORATION Common Stock:                                                    2,830,000
COMPASSLEARNING, INC. Common Stock                                                            10,000

</TABLE>

<PAGE>   2



                                TABLE OF CONTENTS


<TABLE>
<CAPTION>

                                                                                                      Page
<C>       <S>                                                                                        <C>
PART I     FINANCIAL INFORMATION                                                                         1

Item 1     FINANCIAL STATEMENTS:

           WRC Media Inc. and subsidiaries consolidated balance sheets                                   2

           WRC Media Inc. and subsidiaries consolidated statement of
           operations for the three months ended September 30, 2000                                      3


           WRC Media Inc. and subsidiaries consolidated statement of
           operations for the nine months ended September 30, 2000                                       4

           WRC Media Inc. and subsidiaries consolidated statement of cash flows
           for the nine months ended September 30, 2000                                                  5

           WRC Media Inc. and subsidiaries notes to consolidated financial
           statements                                                                                    6

           Weekly Reader Corporation and subsidiaries consolidated balance
           sheets                                                                                        7

           Weekly Reader Corporation and subsidiaries consolidated statement
           of operations for the three months ended September 30, 2000                                   8


           Weekly Reader Corporation and subsidiaries consolidated statement
           of operations for the nine months ended September 30, 2000                                    9


           Weekly Reader Corporation and subsidiaries consolidated statement
           of cash flows for the nine months ended September 30, 2000                                   10


           Weekly Reader Corporation and subsidiaries notes to consolidated
           financial statements                                                                         11

           CompassLearning, Inc. consolidated balance sheets                                            12

           CompassLearning, Inc. with Predecessor consolidated statement of
           operations for the three months ended September 30, 2000                                     13


           CompassLearning, Inc. with Predecessor consolidated statement of
           operations for the nine months ended September 30, 2000                                      14


           CompassLearning, Inc. with Predecessor consolidated statement of
           cash flows for the nine months ended September 30, 2000                                      15

           CompassLearning, Inc. notes to consolidated financial statements                             16

</TABLE>



                                      ii

<PAGE>   3



                                TABLE OF CONTENTS


<TABLE>
<CAPTION>

<C>                <S>                                                                                              <C>
Item 2             MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL                                                 17
                   CONDITION AND RESULTS OF OPERATIONS

Item 3             QUANTITATIVE AND QUALITATIVE DISCLOSURES                                                          34
                   ABOUT MARKET RISK

PART II            OTHER INFORMATION                                                                                 35

Item 1.            LEGAL PROCEEDINGS                                                                                 35

Item 2.            CHANGES IN SECURITIES AND USE OF PROCEEDS                                                         35

Item 3.            DEFAULTS UPON SENIOR SECURITIES                                                                   35

Item 4.            SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                               35

Item 5.            OTHER INFORMATION                                                                                 35

Item 6.            EXHIBITS AND REPORTS ON FORM 8-K                                                                  36

Signatures                                                                                                           39

</TABLE>

                                     iii


<PAGE>   4


                         PART I FINANCIAL INFORMATION

                        ITEM 1.  FINANCIAL STATEMENTS













                                      1








<PAGE>   5


                         WRC MEDIA INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>





                                                                                      December 31,             September 30,
                                                                                          1999                      2000
                                                                               -----------------------------------------------
                                                                                                                (unaudited)

<S>                                                                             <C>                             <C>
ASSETS
Current Assets:
Cash and cash equivalents                                                       $         15,521                $       8,240
Accounts receivable, net                                                                  47,394                       57,871
Inventories, net                                                                          14,682                       15,788
Prepaid expenses                                                                           2,961                        2,465
Other current assets                                                                      20,258                       19,830
                                                                               ----------------------   ----------------------
Total current assets                                                                     100,816                      104,194

Property and equipment, net                                                                7,898                        8,240
Purchased software, net                                                                    6,566                        5,173
Goodwill, net                                                                            295,384                      228,946
Deferred financing costs, net                                                              7,843                        6,979
Identified intangible assets, net                                                        153,676                      188,284
Other assets
                                                                                              46                            8
                                                                               ----------------------   ----------------------
Total Assets                                                                    $        572,229                $     541,824
                                                                               ======================   ======================

LIABILITIES AND STOCKHOLDERS EQUITY
Current liabilities:
Accounts payable                                                                $         21,999                $      16,549
Accrued payroll, commissions and benefits                                                 10,917                        8,114
Current portion of deferred revenue                                                       35,961                       46,549
Other accrued liabilities                                                                 38,990                       52,671
Current portion of long-term debt                                                          2,939                        4,100
                                                                               ----------------------   ----------------------
Total current liabilities                                                                110,806                      127,983

Deferred revenue, net of current portion                                                   1,780                        1,659
Due to related party                                                                       2,946                        2,946
Long-term debt                                                                           273,617                      278,302
Other long-term liabilities                                                                   14                            -
                                                                               ----------------------   ----------------------
Total liabilities                                                                        389,163                      410,890
15% Series B preferred stock subject to redemption,
Including accrued dividends and accretion of warrant value                                64,767                       74,368
                                                                               ----------------------   ----------------------
Warrants on preferred stock                                                               11,751                       11,751
                                                                               ----------------------   ----------------------
Common stock subject to redemption                                                         1,265                        1,265
                                                                               ----------------------   ----------------------

Stockholders equity:
Common stock, ($.01 par value, 20,000,000 shares authorized;
6,855,853 shares outstanding)                                                                 69                           69
Aditional paid-in capital                                                                126,063                      126,063
Accumulated deficit                                                                      (20,849)                     (82,582)
                                                                               ----------------------   ----------------------
Total stockholders equity                                                                105,283                       43,550
                                                                               ----------------------   ----------------------
Total liabilities and stockholders equity                                       $        572,229                $     541,824
                                                                               ======================   ======================
</TABLE>

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

<PAGE>   6

                         WRC MEDIA INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF OPERATIONS
             FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1999 AND 2000
                             (DOLLARS IN THOUSANDS)
                                   (UNAUDITED)



<TABLE>
<CAPTION>


                                                                              1999                  2000
                                                                     --------------------    -----------------
<S>                                                                  <C>                         <C>

Sales, net                                                            $       14,847              $    56,391

Cost of goods sold                                                             5,329                   16,940
                                                                     --------------------    -----------------

Gross profit                                                                   9,518                   39,451

Operating costs and expenses:
Sales and marketing                                                            4,971                   11,843
Research and development                                                      10,824                     (161)
Distribution, circulation and fulfillment                                          -                    3,356
Editorial                                                                          -                    2,415
General and administrative                                                     1,382                    6,723
Depreciation and amortization                                                  1,739                   28,035
                                                                     --------------------    -----------------

Total operating costs and expenses                                            18,916                   52,211

Loss from operations                                                          (9,398)                 (12,760)

Interest expense, net including amortization
of deferred financing costs                                                     (914)                  (9,054)
Other, net                                                                        16                       16
                                                                     --------------------    -----------------

Loss before income tax expense                                               (10,296)                 (21,798)

Income tax provision                                                               -                     (552)
                                                                     --------------------    -----------------

Net loss                                                              $      (10,296)             $   (21,246)
                                                                     ====================    =================


</TABLE>


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



                                       3
<PAGE>   7
                       WRC MEDIA INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
                             FOR THE PERIOD FROM
                           INCEPTION (MAY 14, 1999)
                            THROUGH SEPTEMBER 30,
                           1999 AND THE NINE MONTHS
                           ENDED SEPTEMBER 30, 2000
                            (DOLLARS IN THOUSANDS)
                                 (UNAUDITED)
<TABLE>
<CAPTION>
                                                                  For the period from
                                                                   inception (May 14,
                                                                      1999) through
                                                                   September 30, 1999              2000
                                                                  --------------------     ---------------------
<S>                                                               <C>                      <C>
Sales, net                                                            $    14,847              $       153,676

Cost of goods sold                                                          5,329                       47,052
                                                                  --------------------     ---------------------

Gross profit                                                                9,518                      106,624

Operating costs and expenses:
Sales and marketing                                                         4,971                       34,835
Research and development                                                   10,824                        4,097
Distribution, circulation and fulfillment                                       -                        8,691
Editorial                                                                       -                        7,320
General and administrative                                                  1,382                       20,702
Depreciation and amortization                                               1,739                       56,747
                                                                  --------------------     ---------------------

Total operating costs and expenses                                         18,916                      132,392

Loss from operations                                                       (9,398)                     (25,768)

Interest expense, net including amortization
of deferred financing costs                                                  (914)                     (26,205)
Other, net                                                                     16                           30
                                                                  --------------------     ---------------------

Loss before income tax expense                                            (10,296)                     (51,943)

Income tax provision                                                            -                          199
                                                                  --------------------     ---------------------

Net loss                                                              $   (10,296)             $       (52,142)
                                                                  ====================     =====================
</TABLE>

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

                                      4

<PAGE>   8
                        WRC MEDIA INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                  FOR THE PERIOD FROM INCEPTION (MAY 14, 1999)
                         THROUGH SEPTEMBER 30, 1999 AND
                    THE NINE MONTHS ENDED SEPTEMBER 30, 2000
                             (DOLLARS IN THOUSANDS)
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                    For the period from
                                                                                     inception (May 14,
                                                                                       1999) through
                                                                                     September 30, 1999           2000
                                                                                   -----------------------  --------------
<S>                                                                                <C>                      <C>
Cash flows from operating activities:
Net loss                                                                            $         (10,296)       $    (52,142)
Adjustments to reconcile net loss to cash
provided by operating activities-
Depreciation and amortization                                                                  11,216              58,730
Gain on disposition of marketable securities                                                      -                   (16)
Amortization of deferred financing fees                                                           185                 744
Accretion of stock discount                                                                       -                   224
Changes in assets and liabilities-
(Increase) decrease in accounts receivable                                                        150             (10,477)
(Increase) decrease in inventories                                                                118              (1,106)
(Increase) decrease in prepaid expenses and other current assets                                 (271)             (1,839)
(Increase) decrease in other noncurrent assets                                                    -               (17,248)
Increase (decrease) in accounts payable                                                            79              (5,455)
Increase (decrease) in deferred revenue                                                           909              10,471
Increase (decrease)in current and noncurrent accrued liabilities                                 (627)             10,896
                                                                                   -----------------------  --------------
Net cash used in operating activities                                                           1,463              (7,218)
                                                                                   -----------------------  --------------

Cash flows from investing activities:
Purchase of acquired business                                                                 (55,493)                -
Capital expenditures                                                                             (167)            (5,666)
Proceeds from disposition of marketable securities                                                -                   16
Investment in tradename                                                                          (375)                -
                                                                                   -----------------------  --------------
Net cash used in investing activities                                                         (56,035)            (5,650)
                                                                                   -----------------------  --------------

Cash flows from financing activities:
Proceeds from issuance of common stock                                                         28,698                 -
Increase in revolving line of credit, net                                                       5,000              7,500
Proceeds from increase in senior subordinated notes                                            19,000                 -
Proceeds from term loan                                                                         3,000                 -

Payment of financing fees                                                                      (1,463)                -
Retirement of senior bank debt                                                                    -               (1,913)
                                                                                   -----------------------  --------------
Net cash provided by financing activities                                                      54,235              5,587
                                                                                   -----------------------  --------------
Decrease in cash and cash equivalents                                                            (337)            (7,281)
Cash and cash equivalents, beginning of period                                                    595             15,521
                                                                                   -----------------------  --------------
Cash and cash equivalents, end of period                                            $             258        $     8,240
                                                                                   =======================  ==============
Supplemental disclosure of cash flow information:
Cash paid during the period for interest                                            $             101        $    19,724
                                                                                   =======================  ==============
</TABLE>


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


                                       5

<PAGE>   9

                         WRC MEDIA INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                   (UNAUDITED)



1.  ORGANIZATION AND DESCRIPTION OF BUSINESS ORGANIZATION

The accompanying 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.

In June 2000 the Company consummated an exchange offer of its outstanding,
unregistered, unsecured 12 3/4% senior subordinated notes due 2009 for
substantially identical unsecured 12 3/4 % senior subordinated notes due 2009.

The separate financial statements of the Subsidiary Guarantors have not been
included because (i) the Subsidiary Guarantors constitute all of the Company'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) the Company 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, 1999. The operating results for the three
and nine-month periods ended September 30, 2000 are not necessarily indicative
of the results that may be expected for a full year.

During the three months ended September 30, 2000 the Company adjusted the
preliminary allocation of the purchase cost that was allocated to major
categories of assets and liabilities acquired based on estimated fair market
values as of December 31, 1999. This adjustment to the allocation of purchase
cost was based on upon an appraisal that was finalized during this period. As a
result of the final appraisal, the Company adjusted its allocation of purchase
price and recorded the cumulative effect of that adjustment in the three month
period ended September 30, 2000.


                                        6
<PAGE>   10


                   WEEKLY READER CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>

                                                                                      December 31,          September 30,
                                                                                          1999                  2000
                                                                                -------------------     -------------------
                                                                                                               (unaudited)

<S>                                                                              <C>                      <C>

ASSETS
Current Assets:
Cash                                                                             $          14,143        $         8,069
Accounts receivable, net                                                                    27,440                 41,475
Inventories, net                                                                            13,952                 14,966
Due from related party, net                                                                    500                 16,227
Prepaid expenses                                                                             1,642                  2,063
Other current assets                                                                        20,234                 19,830
                                                                                -------------------     -------------------
Total current assets                                                                        77,911                102,630

Property and equipment, net                                                                  6,245                  5,648
Other intangible assets, net                                                                44,338                 43,442
Excess of purchase price over net assets acquired, net                                     107,801                105,621
Other non-current assets                                                                        46                      8
                                                                                -------------------     -------------------
Total Assets                                                                     $         236,341        $       257,349
                                                                                ===================     ===================

LIABILITIES AND STOCKHOLDERS EQUITY
Current liabilities:
Accounts payable                                                                 $          19,491        $        14,952
Deferred revenue                                                                            18,989                 32,569
Accrued expenses and other                                                                  36,274                 32,736
Current portion of long-term debt                                                            2,939                  4,100
                                                                                -------------------     -------------------
Total current liabilities                                                                   77,693                 84,357
Long-term debt                                                                             273,617                278,302
Commitments and contingencies
Redeemable preferred stock, plus accrued dividends                                          76,406                 85,328
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)                                  -                      -
Aditional paid-in capital                                                                    9,133                  9,133
Due from parent                                                                            (68,684)               (54,505)
Accumulated deficit                                                                       (131,852)              (145,294)
                                                                                -------------------     -------------------
Total stockholders deficit                                                                (191,375)              (190,638)
                                                                                -------------------     -------------------
Total liabilities and stockholders deficit                                       $         236,341        $       257,349
                                                                                ===================     ===================

</TABLE>


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

                                       7


<PAGE>   11


                   WEEKLY READER CORPORATION AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
             FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1999 AND 2000
                             (DOLLARS IN THOUSANDS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>


                                                                      1999            2000
                                                              ----------------   ---------------
<S>                                                            <C>                <C>
Sales, net                                                     $       39,796      $     43,483

Cost of goods sold                                                     11,987            11,580
                                                              ----------------   ---------------

Gross profit                                                           27,809            31,903

Operating costs and expenses:
Marketing and selling                                                   6,139             7,222
Distribution, circulation and fulfillment                               3,191             3,356
Editorial                                                               2,481             2,415
General and administrative                                              4,469             4,391
Corporate and group overhead                                            1,033               800
Depreciation and amortization                                           3,670             3,251
                                                              ----------------   ---------------

Total operating costs and expenses                                     20,983            21,435

Income from operations                                                  6,826            10,468

Other income (expense) :
Interest expense, including amortization
of deferred financing costs                                            (3,503)           (8,772)
Other, net                                                                (65)               -
                                                              ----------------   ---------------

Income before income tax expense                                        3,258             1,696

Income tax provision (benefit)                                          2,193              (552)
                                                              ----------------   ---------------

Net Income                                                     $        1,065      $      2,248
                                                              ================   ===============
</TABLE>


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


                                       8


<PAGE>   12


                   WEEKLY READER CORPORATION AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
             FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 2000
                             (DOLLARS IN THOUSANDS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>


                                                                               1999                       2000
                                                                     -----------------      ----------------
<S>                                                                   <C>                      <C>
Sales, net                                                            $       101,630          $    108,460

Cost of goods sold                                                             27,921                29,646
                                                                     -----------------      ----------------

Gross profit                                                                   73,709                78,814

Operating costs and expenses:
Marketing and selling                                                          16,487                18,229
Distribution, circulation and fulfillment                                       8,436                 8,691
Editorial                                                                       7,251                 7,320
General and administrative                                                     11,903                13,031
Corporate and group overhead                                                    5,549                 2,308
Depreciation and amortization                                                  11,884                10,685
                                                                     -----------------      ----------------

Total operating costs and expenses                                             61,510                60,264

Income from operations                                                         12,199                18,550

Other income (expense) :
Interest expense, including amortization
of deferred financing costs                                                   (10,287)              (25,466)
Other, net                                                                       (582)                    -
                                                                     -----------------      ----------------

Income (loss) before income tax expense                                         1,330                (6,916)

Income tax provision                                                            1,938                   199
                                                                     -----------------      ----------------

Net loss                                                              $          (608)       $       (7,115)
                                                                     =================      ================

</TABLE>

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


                                       9

<PAGE>   13



                   WEEKLY READER CORPORATION AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
             FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 2000
                             (DOLLARS IN THOUSANDS)
                                   (UNAUDITED)


<TABLE>
<CAPTION>




                                                                             1999                2000
                                                                       ---------------      ---------------
<S>                                                                     <C>                    <C>
Cash flows from operating activities:
Net loss                                                                $       (608)        $      (7,115)
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Depreciation and amortization                                                 11,884                10,690
Amortization of deferred financing fees                                          154                   -
Deferred income taxes                                                          1,181                   -
Changes in operating assets and liabilities:
(Increase) decrease in-
Accounts receivable                                                          (16,430)              (14,035)
Inventories                                                                     (628)               (1,014)
Prepaid expenses                                                                (657)                 (419)
Other assets                                                                    (967)               (2,433)
Increase (decrease) in-
Accounts payable                                                              (1,828)               (4,544)
Deferred revenue                                                               9,940                13,583
Accrued expenses and other liabilities                                           866                (1,263)
                                                                       ---------------      ---------------
Net cash provided (used) in operating activities                               2,907                (6,550)
                                                                       ---------------      ---------------

Cash flows from investing activities:
Payments for businesses acquired                                                (667)                  -
Additions to property, equipment and other, net                               (4,114)               (4,142)
                                                                       ---------------      ---------------

Net cash used in investing activities                                         (4,781)               (4,142)
                                                                       ---------------      ---------------

Cash flows from financing activities:
Proceeds from revolving line of credit                                            -                  7,500
Retirement of senior bank debt                                                    -                 (1,913)
Payment of financing fees                                                       (171)                  -
Intercompany, net                                                              2,365                  (969)
                                                                       ---------------      ---------------
Net cash provided by financing activities                                      2,194                 4,618
                                                                       ---------------      ---------------

Change in cash                                                                   320                (6,074)
Cash, beginning of period                                                      1,964                14,143
                                                                       ---------------      ---------------
Cash, end of period                                                     $      2,284          $      8,069
                                                                       ===============      ===============
Supplemental disclosure of cash flow information:
Cash paid during the period for interest                                $     10,142           $    19,724
                                                                       ===============      ===============


</TABLE>

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

                                       10
<PAGE>   14

                  WEEKLY READER CORPORATION AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
               (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                 (UNAUDITED)


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 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. This amendment was retroactively reflected on the
financial statements. 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 now 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, 1999. The
operating results for the three and nine-month periods ended September 30,
2000 are not necessarily indicative of the results that may be expected for a
full year.





                                      11


<PAGE>   15
                             COMPASSLEARNING, INC.
                          CONSOLIDATED BALANCE SHEETS
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                         December 31,          September 30,
                                                                             1999                   2000
                                                                     ---------------------   --------------------
                                                                                                (unaudited)
<S>                                                                    <C>                    <C>
ASSETS
Current Assets:
Cash                                                                    $             102      $             171
Accounts receivable, net                                                           19,954                 16,396
Due from parent                                                                       598                      -
Inventories, net                                                                      730                    822
Prepaid expenses                                                                    1,319                    402
Other current assets                                                                   24                      -
                                                                      --------------------   --------------------
Total current assets                                                               22,727                 17,791

Intercompany payable, net                                                               -                 (2,321)
Purchased software, net                                                             6,566                  5,173
Other acquired intangible assets, net                                              48,156                 41,720
Fixed assets, net                                                                   1,653                  2,592
                                                                      --------------------   --------------------
Total Assets                                                            $          79,102      $          64,955
                                                                      ====================   ====================

LIABILITIES AND STOCKHOLDERS EQUITY
Current liabilities:
Accounts payable                                                        $           2,508      $           1,597
Due to related party                                                                  500                      -
Accrued salaries and related items                                                  5,895                  3,909
Other accrued liabilities                                                          10,795                  3,779
Current portion of deferred revenue                                                16,971                 13,980
Current portion of long-term debt                                                   2,939                  4,100
                                                                      --------------------   --------------------
Total current liabilities                                                          39,608                 27,365
Deferred revenue, net of current portion                                            1,780                  1,659
Long-term debt                                                                    273,617                278,302
Due to related party                                                                2,160                  2,160
Other long-term liabilities                                                            15                      -
                                                                      --------------------   --------------------
Total liabilities                                                                 317,180                309,486
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)                                                   -                      -
Aditional paid-in capital                                                          31,316                 31,316
Accumulated deficit                                                               (18,708)               (49,104)
Due from parent                                                                  (250,674)              (226,721)
Cumulative other comprehensive loss                                                   (12)                   (22)
                                                                      --------------------   --------------------
Total stockholders deficit                                                       (238,078)              (244,531)
                                                                      --------------------   --------------------
Total liabilities and stockholders deficit                              $          79,102      $          64,955
                                                                      ====================   ====================
</TABLE>

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





                                       12
<PAGE>   16




                    COMPASSLEARNING, INC. WITH PREDECESSOR
                      CONDENSED STATEMENT OF OPERATIONS
   FOR THE PERIOD FROM INCEPTION (JULY 14, 1999) THROUGH SEPTEMBER 30, 1999
                AND THE THREE MONTHS ENDED SEPTEMBER 30, 2000
                             (DOLLARS IN THOUSANDS)
                                  (UNAUDITED)



<TABLE>
<CAPTION>
                                                          For the period from
                                                           inception(July 14,
                                                             1999) through
                                                           September 30, 1999                  2000
                                                       ---------------------------        ----------------
<S>                                                      <C>                               <C>
Revenue, net                                              $                14,847           $      12,908

Cost of products sold                                                       5,329                   5,360
                                                       ---------------------------        ----------------

Gross Profit                                                                9,518                   7,548

Operating expenses:
Sales and marketing                                                         4,971                   4,621
Research and development                                                   10,824                    (161)
General and administrative                                                  1,382                   1,260
Corporate overhead                                                              -                     272
Amortization of intangible assets                                           1,739                   2,148
                                                       ---------------------------        ----------------

Total operating costs and expenses                                         18,916                   8,140

Loss from operations                                                       (9,398)                   (592)

Interest expense, net                                                        (914)                 (8,837)
Other income, net                                                              16                      16
                                                       ---------------------------        ----------------

Loss before income tax expense                                            (10,296)                 (9,413)

Income tax expense                                                              -                       -
                                                       ---------------------------        ----------------

Net loss                                                  $               (10,296)          $      (9,413)
                                                       ===========================        ================
</TABLE>


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

                                      13






<PAGE>   17





                    COMPASSLEARNING, IN. WITH PREDECESSOR
                      CONDENSED STATEMENT OF OPERATIONS
                            (DOLLARS IN THOUSANDS)
                                  (UNAUDITED)


<TABLE>
<CAPTION>
                                                                          For the period from
                                                    Predecessor           inception(July 14,           For the nine months
                                                     January 1-              1999) through                    ended
                                                   July 13, 1999          September 30, 1999            September 30, 2000
                                                 -------------------   ---------------------------   ---------------------------
                                                  <S>                   <C>                           <C>
Revenue, net                                      $          34,023     $                  14,847     $                  45,216

Cost of products sold                                        13,374                         5,329                        17,406
                                                 -------------------   ---------------------------   ---------------------------

Gross profit                                                 20,649                         9,518                        27,810

Operating expenses:
Sales and marketing                                          11,038                         4,971                        16,606
Research and development                                      3,831                        10,824                         4,097
General and administrative                                    3,978                         1,382                         4,587
Corporate overhead                                                -                             -                           776
Amortization of intangible assets                               131                         1,739                         6,436
                                                 -------------------   ---------------------------   ---------------------------

Total operating costs and expenses                           18,978                        18,916                        32,502

Income (loss) from operations                                 1,671                        (9,398)                       (4,692)

Interest expense, net                                        (2,854)                         (914)                      (25,616)
Other income, net                                               405                            16                            30
                                                 -------------------   ---------------------------   ---------------------------

Loss before income tax expense                                 (778)                      (10,296)                      (30,278)

Income tax expense                                                -                             -                             -
                                                 -------------------   ---------------------------   ---------------------------

Net loss                                          $            (778)                      (10,296)    $                 (30,278)
                                                 ===================   ===========================   ===========================
</TABLE>


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


                                      14


<PAGE>   18



                    COMPASSLERNING, INC. WITH PREDECESSOR
                     CONSOLIDATED STATEMENT OF CASH FLOWS
                            (DOLLARS IN THOUSANDS)
                                  (UNAUDITED)


<TABLE>
<CAPTION>
                                                                                   For the period from
                                                                Predecessor         inception(July 14,     For the nine months
                                                                 January 1-           1999) through               ended
                                                               July 13, 1999        September 30, 1999      September 30, 2000
                                                             -------------------  -----------------------  ---------------------
<S>                                                             <C>                    <C>                    <C>
Cash flows from operating activities:
Net loss                                                         $         (778)        $        (10,296)      $        (30,278)
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation and amortization                                    $        1,713                   11,216                  8,414
Gain on disposition of marketable securities                               (396)                       -                    (16)
Amortization of deferred financing fees                                     204                      185                      -
Changes in assets and liabilities:
(Increase) decrease in accounts receivable                                1,191                      150                  3,558
(Increase) decrease in inventories                                          269                      118                    (92)
(Increase) decrease in prepaid expenses                                   1,107                     (271)                   917
(Increase) decrease in other assets                                           -                        -                     36
Increase (decrease) in accounts payable                                    (554)                      79                   (911)
Increase (decrease) in deferred revenue                                  (6,267)                     909                 (3,112)
Increase (decrease) in other accrued liabilities
and long-term liabilities                                                (1,052)                    (627)                (4,979)
                                                             -------------------  -----------------------  ---------------------
Net cash provided by (used in) operating activities                      (4,563)                   1,463                (26,463)
                                                             -------------------  -----------------------  ---------------------

Cash flows from investing activities:
Purchase of acquired business                                                 -                  (55,493)                     -
Capital expenditures                                                       (142)                    (167)                (1,524)
Proceeds from disposition of marketable securities                          396                        -                     16
Investment in tradename                                                       -                     (375)                     -
                                                             -------------------  -----------------------  ---------------------
Net cash provided by (used in) investing activities                         254                  (56,035)                (1,508)
                                                             -------------------  -----------------------  ---------------------

Cash flows from financing activities:
Proceeds from issuance of common stock                                        -                   28,698                      -
Increase in revolving line of credit, net                                 4,904                    5,000                      -
Proceeds from increase in senior subordinated notes                           -                   19,000                      -
Proceeds from term loan                                                       -                    3,000                      -
Payment of financing fees                                                     -                   (1,463)                     -
Change in intercompany balances                                               -                        -                 28,040
                                                             -------------------  -----------------------  ---------------------
Net cash provided by financing activities                                 4,904                   54,235                 28,040
                                                             -------------------  -----------------------  ---------------------
Change in Cash                                                              595                     (337)                    69
Cash, beginning of period                                                     -                      595                    102
                                                             -------------------  -----------------------  ---------------------
Cash, end of period                                              $          595         $            258       $            171
                                                             ===================  =======================  =====================
Supplemental disclosure of cash flow information:
Cash paid during the period for interest                         $          925         $            101       $         19,724
                                                             ===================  =======================  =====================
</TABLE>


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

                                      15

<PAGE>   19




                            COMPASSLEARNING, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
               (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                 (UNAUDITED)


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 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. Accordingly, the accompanying financial statements for the period,
January 1, 1999 through July 13, 1999 are of the Predecessor, while the
financial statements for the nine months ended September 30, 2000 are of the
Company. 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. Accordingly, the accompanying financial statements
of the Predecessor and Company are not comparable in all material respects
since those financial statements report financial position, results of
operations, and cash flows of two separate entities.

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 CompassLearning, Inc.'s financial statements and related
notes for the period ended December 31, 1999. The operating results for the
three and nine-month periods ended September 30, 2000 are not necessarily
indicative of the results that may be expected for a full year.


                                      16






<PAGE>   20


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 September 30, 2000 of WRC Media Inc. ("WRC Media") and its
subsidiaries and their results of operations for the three-month and
nine-month periods ended September 30, 1999 and September 30, 2000. You should
read the following discussion in conjunction with the financial statements of
WRC Media, Weekly Reader Corporation ("Weekly Reader") and CompassLearning,
Inc. ("CompassLearning," formerly JLC Learning Corporation) 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," formerly PRIMEDIA Reference, Inc.).
Unless the context otherwise requires, the terms "we," "our," and "us" refer
to WRC Media and its subsidiaries and their predecessor companies 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 SEPTEMBER 30, 2000 -- 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.

WRC Media was founded on May 14, 1999. For purposes of the financial
presentation and discussion of WRC Media's results of operations included
here, we are comparing: (1) the unaudited 1999 historical income statements on
a combined basis for the three-month and nine-month periods ended September
30, 1999 of CompassLearning and Weekly Reader to (2) the unaudited 2000
historical income statements for the three-month and nine-month periods ended
September 30, 2000 of WRC Media and its subsidiaries.

In analyzing WRC Media's results for the three and nine months ended September
30, 1999 and 2000, respectively, the seasonal nature of WRC Media's business
should be considered. As a result of seasonality, approximately 21% of WRC
Media's publications and related services usually result in its first quarter,
23% in its second quarter, and 56% 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.

                                      17


<PAGE>   21

<TABLE>
<CAPTION>
                                                                        Three Months Ended September 30
                                                                1999                                  2000
                                                  -----------------------------------  ---------------------------------------
                                                      Amount          % of Net Sales       Amount          % of Net Sales
                                                  -----------------  ----------------  ----------------  ---------------------
                                                                             (Dollars in millions)
<S>                                                <C>                     <C>          <C>                <C>
Sales, net                                         $      56.3               100.0%     $     56.4                     100.0%
Cost of goods sold                                        18.2                32.4%           16.9                      30.0%
                                                  -----------------  ----------------  ----------------  ---------------------
Gross profit                                       $     $38.1                67.6%     $     39.5                      70.0%
Operating costs and expenses
                 Sales and marketing                      11.4                20.3%           11.8                      21.0%
                 Research and development                 11.1                19.7%              -                         -
                 Distribution, circulation and
                 fulfillment                               3.2                 5.7%            3.4                       6.0%
                 Editorial                                 2.5                 4.4%            2.4                       4.3%
                 General and administrative                6.0                10.7%            5.5                       9.7%
                 Corporate and group overhead              1.0                 1.8%            1.1                       1.9%
                 Depreciation and amortization             5.6                10.0%           28.0                      49.7%
                                                  -----------------  ----------------  ----------------  ---------------------
                 Total operating costs and
                 expenses                                 40.8                72.6%           52.2                      92.6%
Loss from operations                                      (2.7)               (5.0%)         (12.7)                    (22.6%)
Interest expense, including amortization
of deferred financing costs                               (4.6)               (8.2%)          (9.1)                    (16.1%)
Other, net                                                   -                (0.1%)             -                       0.0%
                                                  -----------------  ----------------  ----------------  ---------------------
Loss before income tax expense                            (7.3)              (13.3%)         (21.8)                    (38.7%)
Income tax provision (benefit)                             1.9                 3.4%           (0.6)                     (1.0%)
                                                  -----------------  ----------------  ----------------  ---------------------
Net loss                                           $      (9.2)              (16.7%)    $    (21.2)                    (37.7%)
                                                  =================  ================  ================  =====================
</TABLE>



-----------------------------------------

Three Months Ended September 30, 2000 Compared to Three Months Ended September
30, 1999

Sales, net. For the three months ended September 30, 2000, net sales increased
$0.1 million, or 0.2%, to $56.4 million from $56.3 million for the same period
in 1999. This increase was primarily due to an increase in sales at Weekly
Reader of $3.7 million, or 9.3%, to $43.5 million for the three months ended
September 30, 2000 from $39.8 million for the same period in 1999, combined
with a decrease in sales at CompassLearning of $3.6 million, or 21.7%, to
$12.9 million for the three months ended September 30, 2000 from $16.5 million
for the same period in 1999. The increase in sales at Weekly Reader was due to
(1) an increase in sales at American Guidance Service of $2.1 million, or
13.4%, to $18.0 million for the three months ended September 30, 2000 from
$15.9 million for the same period in 1999 as a result of increases in sales of
our curriculum products, primarily textbooks and increases in sales of
assessment products primarily driven by the release of our revised GFTA
assessment (Goldman-Fristoe Test of Articulation); (2) an increase in catalog
and telemarketing sales of $0.6 million or 4.9% at World Almanac's school
library sales segments and (3) an increase in Weekly Reader's sales, not
including World Almanac and American Guidance, of $1.0 million, or 8.0%, to
$13.6 million for the three months ended September 30, 2000 from $12.6 million
for the same period in 1999, primarily as a result of increased sales in
skills books. The decrease in sales at CompassLearning was due to (1) a
decrease in software revenue of $1.5 million, or 17.2%, to $6.9 million for
the three months ended September 30, 2000, from $8.4 million for the same
period in 1999 primarily as a result of lower sales volume; (2) a decrease in
service revenue of $1.8 million, or 24.2%, to $5.7 million for the three
months ended September 30, 2000, from $7.5 million for the same period in 1999
primarily as a result of lower service contract renewal sales, and (3) a
decrease in hardware revenue of $0.3 million, or 51.4%, to $0.3 million for
the three months ended September 30, 2000, from $0.6 million for the same
period in 1999, resulting from our strategy to exit the hardware business.

Gross profit. For the three months ended September 30, 2000, gross profit
increased by $1.4 million, or 3.7%, to $39.5 million from $38.1 million for
the same period in 1999. This increase was due to an


                                      18


<PAGE>   22


increase in gross profit at Weekly Reader of $4.1 million, or 14.7%, to $31.9
million for the three months ended September 30, 2000 from $27.8 million for
the same period in 1999 partially offset by a decrease in gross profit at
CompassLearning of $2.9 million, or 27.7%, to $7.5 million for the three
months ended September 30, 2000 from $10.4 million for the same period in
1999. The increase in gross profit at Weekly Reader was a result of (1) an
increase in gross profit at American Guidance of $1.4 million, or 11.9%, to
$13.1 million for the three months ended September 30, 2000 from $11.7 million
for the same period in 1999 due to the increased sales described above; (2) an
increase in gross profit at World Almanac of $1.6 million, or 25.8%, to $7.9
million for the three months ended September 30, 2000 from $6.3 million for
the same period in 1999 due to the increased sales described above and an
inventory related charge of $1.2 million taken in the third quarter of 1999 by
World Almanac's Gareth Stevens division and (3) an increase in gross profit at
Weekly Reader, not including World Almanac and American Guidance, of $1.1
million, or 10.9%, to $10.9 million for the three months ended September 30,
2000 from $9.8 million for the same period in 1999 due to the increased sales
described above and a favorable cost of goods sold rate variance, resulting in
a 2.0 percentage point improvement in gross margin percentage to 80.2% from
78.2%.The decrease in gross profit at CompassLearning of $2.9 million was
primarily due to the decrease in software revenue, combined with lower service
revenue as described above. Gross profit as a percentage of sales increased to
70.0% for the three months ended September 30, 2000 from 67.6% for the same
period in 1999, primarily due to the inventory related charge taken in 1999 by
World Almanac previously noted.

Operating costs and expenses. For the three months ended September 30, 2000,
operating costs and expenses increased by $11.4 million, or 28.0%, to $52.2
million from $40.8 million for the same period in 1999. This was primarily
attributable to WRC Media's higher depreciation and goodwill and intangible
asset amortization of $22.4 million resulting from the Acquisition and
Recapitalization; and higher sales and marketing expense of $0.4 million for
the three months ended September 30, 2000 compared to the same period last
year offset by lower research and development costs of $11.1 million due to a
$9.0 million write down of research and development costs at CompassLearning
in the prior year. Weekly Reader's operating costs and expenses increased by
$0.5 million, or 2.0%, to $21.5 million for the three months ended September
30, 2000 from $21.0 million for the same period in 1999 primarily due to an
increase in sales and marketing expenses of $1.1 million offset by lower
depreciation and amortization expenses of $0.4 million due to intangible
assets with lower amortization schedules in the later part of their lives and
intangible assets that were fully amortized in 1999; partially offset by $0.2
million increase in distribution, circulation and fulfillment expenses.
CompassLearning operating costs and expenses decreased $11.6 million, or
58.8%% for the three months ended September 30, 2000, to $8.1 million from
$19.7 million for the same period in 1999. The decrease was primarily due to
$11.0 million decrease in research and development expense, $0.7 million
decrease in sales and marketing expense, and a $0.3 decrease in general and
administrative expense (net of corporate overhead expense), offset by $0.4
million increase in amortization of goodwill and other intangibles. Operating
costs and expenses as a percentage of sales increased to 92.6% for the three
months ended September 30, 2000 from 72.5% for the same period in 1999 due to
the increased amortization at WRC Media described above partially offset by
lower research and development at CompassLearning.

Loss from operations. For the three months ended September 30, 2000, loss from
operations increased by $10.0 million, or 367.2%, to $12.7 million from a loss
from operations of $2.7 million for the same period in 1999 and loss from
operations as a percentage of sales increased to negative 22.6% from negative
5.0% for the same period in 1999. These decreases were primarily due to the
$22.4 million increase in amortization of goodwill and other intangible assets
at WRC Media resulting from the Acquisition and Recapitalization described
above.

Interest expense, including amortization of deferred financing costs. For the
three months ended September 30, 2000, interest expense increased by $4.5
million, or 96.3%, to $9.1 million from $4.6 million for the same period in
1999 and interest expense as a percentage of sales increased to 16.1% from
8.2% for the same period in 1999. Interest expense for the three months ended
September 30, 2000 relates to debt and amortization of deferred financing
costs associated with the Acquisition and Recapitalization. Interest expense
for the three months ended September 30, 1999 relates to (1) for Weekly
Reader, interest charged by PRIMEDIA Inc. to Weekly Reader on outstanding
intercompany debt



                                      19


<PAGE>   23


and (2) for CompassLearning, borrowings from its previous ownership prior to
its acquisition by WRC Media on July 14, 1999.

Income tax provision (benefit). For the three months ended September 30, 2000,
provision for income taxes decreased by $2.5 million or 128.8% to an income
tax benefit of $0.6 million from a provision for income taxes of $1.9 million
for the same period in 1999. In the current period, the Company recorded an
income tax benefit of $0.6 million resulting from income tax refunds related
to estimated tax overpayments made during the period ended September 30, 2000.

Net loss. For the three months ended September 30, 2000, net loss increased by
$12.0 million, or 128.6%, to $21.2 million from $9.2 million for the same
period in 1999 primarily as a result of the $22.4 million increase in
amortization expenses for intangible assets and $4.5 million increase in
interest expense resulting from the Acquisition and Recapitalization described
above partially offset by $11.1 million decrease in research and development at
CompassLearning and a decrease in provision for income taxes of $2.5 million.
Net loss as a percentage of net sales increased to negative 37.7% for the
three months ended June 30, 2000 from negative 16.7% for the same period in
1999.

RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 -- WRC
MEDIA INC. AND SUBSIDIARIES

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

<TABLE>
<CAPTION>
                                                                                  Nine Months Ended September 30
                                                                       1999                                          2000
                                                           ---------------------------------------------------------------------
                                                              Amount    % of Net Sales           Amount         % of Net Sales
                                                           ---------------------------------------------------------------------
                                                                                      (Dollars in millions)

<S>                                                        <C>               <C>         <C>               <C>
Sales, net                                                  $     150.5          100.0%   $     153.7                    100.0%
Cost of goods sold                                                 46.8           31.1%          47.1                     30.6%
                                                           ----------------  ----------  ----------------  ---------------------
Gross profit                                                $     103.7           68.9%   $     106.6                     69.4%
Operating costs and expenses

                Sales and marketing                                32.4           21.6%          34.8                     22.7%
                Research and development                           14.7            9.7%           4.1                      2.7%
                Distribution, circulation and fulfillment           8.4            5.6%           8.7                      5.7%
                Editorial                                           7.2            4.8%           7.3                      4.8%
                General and administrative                         17.2           11.4%          17.6                     11.5%
                Corporate and group overhead                        5.6            3.7%           3.1                      2.0%
                Depreciation and amortization                      13.7            9.1%          56.7                     36.9%
                                                           ----------------  ----------  ----------------  ---------------------
               Total operating costs and expenses                  99.2           65.9%         132.3                     86.3%
Income (loss) from operations                                       4.5            3.0%         (25.7)                   (16.9%)
Interest expense, including amortization
of deferred financing costs                                       (14.0)          (9.3%)        (26.2)                   (17.1%)
Other, net                                                         (0.2)          (0.1%)          0.0                      0.0%
                                                           ----------------  ----------  ----------------  ---------------------
Loss before income tax expense                                     (9.7)          (6.4%)        (51.9)                   (34.0%)
Income tax provision                                                1.9            1.3%           0.2                      0.1%
                                                           ----------------  ----------  ----------------  ---------------------
Net loss                                                    $     (11.6)          (7.7%)  $     (52.1)                   (34.1%)
                                                           ================  ==========  ================  =====================
</TABLE>




-------------------------------------

Nine Months Ended September 30, 2000 Compared to Nine Months Ended September
30, 1999

Sales, net. For the nine months ended September 30, 2000, net sales increased
$3.2 million, or 2.1%, to $153.7 million from $150.5 million for the same
period in 1999. This increase was primarily due to an increase in sales at
Weekly Reader of $6.8 million, or 6.7%, to $108.4 million for the nine months
ended


                                      20


<PAGE>   24

September 30, 2000 from $101.6 million for the same period in 1999
offset by a decrease in sales at CompassLearning of $3.7 million, or 7.5%, to
$45.2 million for the nine months ended September 30, 2000 from $48.9 million
for the same period in 1999. The increase in sales at Weekly Reader was due to
(1) an increase in sales at American Guidance Service of $4.1 million, or
10.4%, to $43.6 million for the nine months ended September 30, 2000 from
$39.5 million for the same period in 1999 as a result of increases in
curriculum sales and sales of assessment products primarily driven by the
release of our revised GFTA assessment (Goldman-Fristoe Test of Articulation);
(2) an increase in sales at World Almanac of $2.6 million, or 7.5% to $36.8
million for the nine months ended September 30, 2000 from $34.2 million for
the same period in 1999 as a result of catalog and telemarketing sales of
World Almanac's Library Services and Gareth Stevens, Inc. segments and (3)an
increase in Weekly Reader's sales, not including World Almanac and American
Guidance, of $0.1 million, or 0.6%, to $28.1 million for the nine months ended
September 30, 2000 from $28.0 million for the same period in 1999, primarily
attributable to higher Skills Books revenue, $0.9 million; higher shipments in
Lifetime Learning Systems, $0.7 million partially offset by lower Licensing
revenue, $0.7 million; unfavorable Periodical revenue, $0.5 million; and the
discontinuation of Summer Weekly Reader, $0.3 million.

The decrease in sales at CompassLearning was due to (1) a decrease in software
revenue of $0.3 million, or 1.2%, to $23.8 million for the nine months ended
September 30, 2000, from $24.1 million for the same period in 1999 primarily
as a result of lower sales volume; (2) a decrease in service revenue of $2.9
million, or 12.6%, to $19.5 million for the nine months ended September 30,
2000, from $22.4 million for the same period in 1999 primarily as a result of
lower service contract renewal sales and (3) a decrease in hardware revenue of
$0.5 million, or 22.5%, to $1.9 million for the nine months ended September
30, 2000, from $2.4 million for the same period in 1999 resulting from our
strategy to exit the hardware business.

Gross profit. For the nine months ended September 30, 2000, gross profit
increased by $2.9 million, or 2.9%, to $106.6 million from $103.7 million for
the same period in 1999. This increase was due to (1) an increase in gross
profit at Weekly Reader of $5.3 million, or 7.0%, to $78.8 million for the
nine months ended September 30, 2000 from $73.5 million for the same period in
1999 offset by a decrease in gross profit at CompassLearning of $2.4 million,
or 7.8%, to $27.8 million for the nine months ended September 30, 2000 from
$30.2 million for the same period in 1999. The increase in gross profit at
Weekly Reader was a result of (1) an increase in gross profit at American
Guidance of $2.7 million, or 8.9%, to $31.7 million for the nine months ended
September 30, 2000 from $29.0 million for the same period in 1999 due to the
increased sales described above; (2) an increase in gross profit at World
Almanac of $2.5 million, or 11.6%, to $24.4 million for the nine months ended
September 30, 2000 from $21.9 million for the same period in 1999 due to the
increased sales described above and an inventory related charge of $1.2
million taken in the third quarter of 1999 by World Almanac's Gareth Stevens
division and and (3) an increase in gross profit at Weekly Reader, not
including World Almanac and American Guidance, of $0.1 million, or 0.3%, to
$22.7 million for the nine months ended September 30, 2000 from $22.6 million
for the same period in 1999 due to the increased sales described above
slightly offset by an unfavorable cost of goods sold rate variance, resulting
in a 0.2 percentage point reduction in gross margin percentage to 80.7% from
80.9%. The decrease in gross profit at CompassLearning of $2.4 million, or
7.8%, to $27.8 million for the nine months ended September 30, 2000 from $30.2
million for the same period in 1999 was primarily due to a decrease in
software revenue, combined with lower service revenue as described above.
Gross profit as a percentage of sales increased to 69.4% for the three months
ended September 30, 2000 from 68.9% for the same period in 1999 primarily due
to the inventory related charge taken in 1999 by World Almanac previously
noted.

Operating costs and expenses. For the nine months ended September 30, 2000,
operating costs and expenses increased by $33.1 million, or 33.5%, to $132.3
million from $99.2 million for the same period in 1999, primarily as a result
of $43.0 million higher depreciation and goodwill and intangible asset
amortization expense for the nine months ended September 30, 2000 compared to
the same period last year, resulting from the Acquisition and
Recapitalization, offset by $10.6 million lower research and development costs
at CompassLearning for the nine months ended September 30, 2000 compared to
the same period last year.




                                      21


<PAGE>   25


Weekly Reader's operating costs and expenses decreased by $1.3 million, or
1.7%, to $60.2 million for the nine months ended September 30, 2000 from $61.5
million for the same period in 1999 primarily due to (1) a decrease in
allocated PRIMEDIA Inc. corporate and group overhead expenses of $3.2 million
offset by $1.1 million of higher general and administrative expenses and (2)
lower depreciation and amortization expenses of $1.2 million due to intangible
assets with lower amortization schedules in the later part of their lives and
intangible assets that were fully amortized in 1999 partially offset by an
increase in sales and marketing expenses of $1.7 million primarily at American
Guidance and World Almanac attributable to the higher sales volume described
above. CompassLearning's operating costs and expenses decreased $5.5 million,
or 14.2%, to $32.5 million for the nine months ended September 30, 2000 from
$38.0 million for the same period in 1999. The decrease was primarily due to
$10.6 million decrease in research and development expense, offset by $4.5
million increase in amortization of goodwill and other intangibles, and $0.6
million increase in sales and marketing expense. The decrease of $10.6 million
in research and development expense was primarily due to a $9.0 million
write-off of purchased in-process research and development costs in 1999
following the change in ownership. WRC Media's operating costs and expenses as
a percentage of sales increased to 86.2% for the nine months ended September
30, 2000 from 65.9% for the same period in 1999 due to the increased
amortization at WRC Media described above.

Income (loss) from operations. For the nine months ended September 30, 2000,
income from operations decreased by $30.2 million, or 675.8%, to a loss from
operations of $25.7 million from income from operations of $4.5 million for
the same period in 1999 and income from operations as a percentage of sales
decreased to negative 16.9% from positive 3.0% for the same period in 1999.
These decreases were primarily a result of $43.0 million of higher
depreciation and amortization of goodwill and intangible assets for the nine
months ended September 30, 2000 compared to 1999 due to (1) a $39.6 million
increase in amortization of goodwill and other intangible assets at WRC Media
and (2) a $4.5 million increase in amortization of goodwill and other
intangible assets at CompassLearning resulting from the Acquisition and
Recapitalization described above.

Interest expense, including amortization of deferred financing costs. For the
nine months ended September 30, 2000, interest expense increased by $12.2
million, or 86.6%, to $26.2 million from $14.0 million for the same period in
1999 and interest expense as a percentage of sales increased to 17.1% from
9.3% for the same period in 1999. Interest expense for the nine months ended
September 30, 2000 relates to debt and amortization of deferred financing
costs associated with the Acquisition and Recapitalization. Interest expense
for the nine months ended September 30, 1999 relates to (1) for Weekly Reader,
interest charged by PRIMEDIA Inc. to Weekly Reader on outstanding intercompany
debt and (2) for CompassLearning, borrowings from its previous ownership prior
to its acquisition by WRC Media on July 14, 1999.

Other, net. For the nine months ended September 30, 2000, other, net increased
by $0.2 million, to $0.0 million from negative $0.2 million for the same
period in 1999. This increase was primarily a result of a $0.6 million
decrease in other expense at Weekly Reader partially offset by $0.4 million
decrease in other income, net at CompassLearning.

Income tax provision (benefit). For the nine months ended September 30, 2000,
provision for income taxes decreased by $1.7 million or 89.7% to an income tax
provision of $0.2 million from a provision for income taxes of $1.9 million
for the same period in 1999. The Company has a much lower income tax provision
in the current period, primarily a result of $43.0 million of higher
depreciation and amortization of goodwill and intangible assets for the nine
months ended September 30, 2000 compared to 1999 resulting from the
Acquisition and Recapitalization described above. .

Net loss. For the nine months ended September 30, 2000, net loss increased by
$40.5 million, or 346.3%, to $52.1 million from $11.6 million for the same
period in 1999 primarily as a result of the $43.0 million increase in
depreciation and amortization expenses for intangible assets and $12.2 million
increase in interest expense resulting from the Acquisition and Recapitalization
described above partially offset by $10.6 million lower research and
development expense at CompassLearning and a decrease in provision for



                                      22


<PAGE>   26

income taxes of $1.7 million. Net loss as a percentage of net sales increased
to negative 34.1% for the nine months ended September 30, 2000 from negative
7.7% for the same period in 1999.


                                      23


<PAGE>   27


RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000-- WEEKLY
READER CORPORATION AND SUBSIDIARIES

The financial information for Weekly Reader through November 17, 1999,
included in this Management's Discussion and Analysis of Financial Condition
and Results of Operation reflects the contribution by PRIMEDIA Inc. of 100% of
the capital stock of American Guidance and World Almanac to Weekly Reader. For
accounting purposes, the contribution by PRIMEDIA Inc. has been reflected as a
reorganization using the historical carrying value of the stock of American
Guidance and World Almanac.

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 September 30
                                                                    1999                             2000
                                                         ------------------------------------------------------------------
                                                            Amount      % of Net Sales     Amount        % of Net Sales
                                                         ------------------------------------------------------------------
                                                                              (Dollars in millions)
<S>                                                       <C>                 <C>        <C>                        <C>
Sales, net                                                $       39.8          100.0%   $      43.5                 100.0%
Cost of goods sold                                                12.0           30.1%          11.6                  26.6%
                                                         -------------- --------------- -------------   -------------------
Gross profit                                              $       27.8           69.9%   $      31.9                  73.4%
Operating costs and expenses
                      Sales and marketing                          6.1           15.4%           7.2                  16.6%
                      Research and development                      -             0.0%            -                    0.0%
                      Distribution, circulation and
                      fulfillment                                  3.2            8.0%           3.4                   7.7%
                      Editorial                                    2.5            6.2%           2.4                   5.6%
                      General and administrative                   4.5           11.2%           4.4                  10.1%
                      Corporate and group overhead (a)             1.0            2.6%           0.8                   1.8%
                      Depreciation and amortization                3.7            9.2%           3.3                   7.5%
                                                         -------------- --------------- -------------   -------------------
Total operating costs and expenses                                21.0           52.6%          21.5                  49.3%
Income from operations                                             6.8           17.3%          10.4                  24.1%
Interest expense, including amortization
of deferred financing costs (b)                                   (3.5)          (8.8%)         (8.8)                (20.2%)
Other, net                                                          -             0.0%            -                    0.0%
                                                         -------------- --------------- -------------   -------------------
Income before income tax expense                                   3.3            8.5%           1.6                   3.9%
Income tax provision (benefit)                                     2.2            5.5%          (0.6)                 (1.3%)
                                                         -------------- --------------- -------------   -------------------
Net income                                                $        1.1            3.0%   $       2.2                   5.2%
                                                         ============== =============== =============   ===================
</TABLE>



--------------------------------

(a) Prior to the recapitalization on November 17, 1999, Weekly Reader was
    allocated a corporate and group overhead charge which included costs for:
    (1) amounts allocated as corporate overhead to Weekly Reader by PRIMEDIA
    Inc. for services and administrative functions shared with PRIMEDIA Inc.
    and its other operating companies including, but not limited to, executive
    management costs, salaries and fringe benefits for various legal,
    financial, information technology and human resources personnel,
    information technology expenses, real estate expenses, and third-party
    costs; and (2) direct group overhead costs, such as salaries, fringe
    benefits and expenses for PRIMEDIA Inc. staff directly involved in Weekly
    Reader. As of November 17, 1999 these charges were eliminated.


(b) Includes the allocation of interest expense prior to November 17, 1999,
    arising from borrowings at the PRIMEDIA Inc. corporate level.

Three Months Ended September 30, 2000 Compared to Three Months Ended September
30, 1999

Sales, net. For the three months ended September 30, 2000, net sales increased
$3.7 million, or 9.3%, to $43.5 million from $39.8 million for the same period
in 1999. This increase was due to (1) an increase in



                                      24


<PAGE>   28

sales at American Guidance Service of $2.1 million, or 13.4%, to $18.0 million
for the three months ended September 30, 2000 from $15.9 million for the same
period in 1999 as a result of increases in sales of assessment products
primarily driven by the release of our revised GFTA assessment
(Goldman-Fristoe Test of Articulation); (2) an increase in catalog and
telemarketing sales of $0.6 million or 4.9% at World Almanac's school library
sales segments and (3) an increase in Weekly Reader's sales, not including
World Almanac and American Guidance, of $1.0 million, or 8.0%, to $13.6
million for the three months ended September 30, 2000 from $12.6 million for
the same period in 1999, primarily as a result of increased sales in skills
books.

Gross profit. For the three months ended September 30, 2000, gross profit
increased by $4.1 million, or 14.7%, to $31.9 million from $27.8 million for
the same period in 1999. The increase in gross profit at Weekly Reader was a
result of (1) an increase in gross profit at American Guidance of $1.4
million, or 11.9%, to $13.1 million for the three months ended September 30,
2000 from $11.7 million for the same period in 1999 due to the increased sales
described above; (2) an increase in gross profit at World Almanac of $1.6
million, or 25.8%, to $7.9 million for the three months ended September 30,
2000 from $6.3 million for the same period in 1999 due to the increased sales
described above and an inventory related charge of $1.2 million taken in the
third quarter of 1999 by World Almanac's Gareth Stevens division and (3) an
increase in gross profit at Weekly Reader, not including World Almanac and
American Guidance, of $1.1 million, or 10.9%, to $10.9 million for the three
months ended September 30, 2000 from $9.8 million for the same period in 1999
due to the increased sales described above and a favorable cost of goods sold
rate variance, resulting in a 2.0 percentage point improvement in gross margin
percentage to 80.2% from 78.2%. Gross profit as a percentage of sales
increased to 73.4% for the three months ended September 30, 2000 from 69.9%
for the same period in 1999, primarily due to the inventory related charge
taken in 1999 by World Almanac previously noted.

Operating costs and expenses. For the three months ended September 30, 2000,
operating costs and expenses increased by $0.5 million, or 2.0%, to $21.5
million for the three months ended September 30, 2000 from $21.0 million for
the same period in 1999 primarily due to an increase in sales and marketing
expenses of $1.1 million offset by lower depreciation and amortization
expenses of $0.4 million due to intangible assets with lower amortization
schedules in the later part of their lives and intangible assets that were
fully amortized in 1999; partially offset by $0.2 million increase in
distribution, circulation and fulfillment expenses.

Operating costs and expenses as a percentage of sales decreased to 49.3% for
the three months ended September 30, 2000 from 52.6% for the same period in
1999 primarily as a result of $3.7 million of higher revenue generated this
year compared to the same period in 1999.

Income from operations. For the three months ended September 30, 2000, income
from operations increased by $3.6 million, or 53.4%, to $10.4 million from
$6.8 million for the same period in 1999 and operating income as a percentage
of sales increased to 24.1% from 17.3% for the same period in 1999. These
increases were primarily due to the factors described above.

Interest expense. For the three months ended September 30, 2000, interest
expense increased by $5.3 million, or 150.4%, to $8.8 million from $3.5
million for the same period in 1999 and interest expense as a percentage of
sales increased to 20.2% from 8.8% for the same period in 1999. The interest
expense for the three months ended September 30, 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. The
interest expense for the three months ended September 30, 1999 represents
interest charged by PRIMEDIA Inc. to Weekly Reader on outstanding intercompany
debt.

Income tax provision (benefit). For the three months ended September 30, 2000,
provision for income taxes decreased by $2.8 million or 127.2% to an income tax
benefit of $0.6 million from a provision for income taxes of $2.2 million for
the same period in 1999. In the current period, the Company recorded an income
tax benefit of $0.6 million resulting from income tax refunds related to
estimated tax overpayments made during the period ended September 30, 2000.



                                      25


<PAGE>   29

Net income. For the three months ended September 30, 2000, net income
increased by $1.1 million, or 111.1%, to $2.2 million from $1.1 million for
the same period in 1999. Net income as a percentage of net sales increased to
5.2% for the three months ended September 30, 2000 from 3.0% for the same
period in 1999. These increases were primarily due to the factors described
above.

                                      26




<PAGE>   30
RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000-- 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>
                                                                   Nine Months Ended September 30
                                                                   1999                      2000
                                                ---------------------------------------------------------------------
                                                   Amount         % of Net Sales       Amount        % of Net Sales
                                                ----------------  -------------------  ------------  ------------------
                                                                       (Dollars in millions)

<S>                                              <C>              <C>                  <C>           <C>

Sales, net                                       $   101.6                 100.0%       $ 108.4                 100.0%
Cost of goods sold                                    27.9                  27.5%          29.5                  27.3%
                                                ----------------  -------------------  ------------  ------------------
Gross profit                                     $    73.7                  72.5%       $  78.9                  72.7%
Operating costs and expenses
      Sales and marketing                             16.5                  16.2%          18.2                  16.8%
      Research and development                         -                     0.0%           -                     0.0%
      Distribution, circulation and fulfillment        8.4                   8.3%           8.7                   8.0%
      Editorial                                        7.3                   7.1%           7.3                   6.7%
      General and administrative                      11.9                  11.7%          13.0                  12.0%
      Corporate and group overhead (a)                 5.5                   5.5%           2.3                   2.1%
      Depreciation and amortization                   11.9                  11.7%          10.7                   9.9%
                                                ----------------  -------------------  ------------  ------------------
Total operating costs and expenses                    61.5                  60.5%          60.2                  55.5%
Income from operations                                12.2                  12.0%          18.7                  17.2%
Interest expense, including amortization
of deferred financing costs (b)                      (10.3)                (10.1%)        (25.5)                (23.5%)

Other, net                                            (0.6)                 (0.6%)           -                    0.0%
                                                ----------------  -------------------  ------------  ------------------
Income (loss) before income tax expense                1.3                   1.3%          (6.8)                 (6.3%)

Income tax provision
                                                       1.9                   1.9%           0.2                   0.2%
                                                ----------------  -------------------  ------------  ------------------
Net loss                                         $    (0.6)                 (0.6%)      $  (7.0)                 (6.5%)
                                                ================  ===================  ============  ==================

</TABLE>

--------------------------------

(a)    Prior to the recapitalization on November 17, 1999, Weekly Reader
  was allocated a corporate and group overhead charge which included
  costs for: (1) amounts allocated as corporate overhead to Weekly
  Reader by PRIMEDIA Inc. for services and administrative functions
  shared with PRIMEDIA Inc. and its other operating companies
  including, but not limited to, executive management costs,
  salaries and fringe benefits for various legal, financial,
  information technology and human resources personnel, information
  technology expenses, real estate expenses, and third-party costs;
  and (2) direct group overhead costs, such as salaries, fringe
  benefits and expenses for PRIMEDIA Inc. staff directly involved in
  Weekly Reader. As of November 17, 1999 these charges were
  eliminated.

(b) Includes the allocation of interest expense prior to November 17, 1999,
    arising from borrowings at the PRIMEDIA Inc. corporate level.

Nine Months Ended September 30, 2000 Compared to Nine Months Ended September 30,
1999

Sales, net. For the nine months ended September 30, 2000, net sales increased
$6.8 million, or 6.7%, to $108.4 million from $101.6 million for the same period
in 1999. The increase in sales at Weekly Reader was due to (1) an increase in
sales at American Guidance Service of $4.1 million, or 10.4%, to $43.6 million
for the nine months ended September 30, 2000 from $39.5 million for the same
period in 1999 as a result of increases in curriculum sales and sales of
assessment products primarily driven by the release of our revised GFTA
assessment (Goldman-Fristoe Test of Articulation); (2) an increase in sales at
World Almanac of $2.6 million, or 7.5% to $36.8 million for the nine months
ended September 30, 2000 from $34.2 million for the same period in 1999 as a
result of catalog and telemarketing sales of World Almanac's Library Services
and Gareth Stevens, Inc. segments and (3)an increase in Weekly Reader's sales,
not including World Almanac and American Guidance, of $0.1 million, or 0.6%, to
$28.1 million for




                                       27

<PAGE>   31

the nine months ended September 30, 2000 from $28.0 million
for the same period in 1999, primarily attributable to higher Skills Books
revenue, $0.9 million; higher shipments in Lifetime Learning Systems, $0.7
million partially offset by lower Licensing revenue, $0.7 million; unfavorable
Periodical revenue, $0.5 million; and the discontinuation of Summer Weekly
Reader, $0.3 million.

Gross profit. For the nine months ended September 30, 2000, gross profit
increased $5.2 million or 7.0% to $78.9 million from $73.7 million for the same
period in 1999. This increase was a result of (1) an increase in gross profit at
American Guidance of $2.6 million, or 8.9%, to $31.8 million for the nine months
ended September 30, 2000 from $29.2 million for the same period in 1999 due to
the increased sales described above; (2) an increase in gross profit at World
Almanac of $2.5 million, or 11.6%, to $24.4 million for the nine months ended
September 30, 2000 from $21.9 million for the same period in 1999 due to the
increased sales described above and an inventory related charge of $1.2 million
taken in the third quarter of 1999 by World Almanac's Gareth Stevens division
and (3) an increase in gross profit at Weekly Reader, not including World
Almanac and American Guidance, of $0.1 million, or 0.3%, to $22.7 million for
the nine months ended September 30, 2000 from $22.6 million for the same period
in 1999 due to the increased sales described above slightly offset by an
unfavorable cost of goods sold rate variance, resulting in a 0.2 percentage
point reduction in gross margin percentage to 80.7% from 80.9%. Gross profit as
a percentage of sales increased to 72.7% for the nine months ended September 30,
2000 from 72.5% for the same period in 1999, primarily due to the inventory
related charge taken in 1999 by World Almanac previously noted.

Operating costs and expenses. For the nine months ended September 30, 2000,
operating costs and expenses decreased by $1.3 million, or 1.7%, to $60.2
million from $61.5 million for the same period in 1999 primarily due to (1) a
decrease in allocated PRIMEDIA Inc. corporate and group overhead expenses of
$3.2 million offset by $1.1 million of higher general and administrative
expenses and (2) lower depreciation and amortization expenses of $1.2 million
due to intangible assets with lower amortization schedules in the later part of
their lives and intangible assets that were fully amortized in 1999 partially
offset by (a) an increase in sales and marketing expenses of $1.7 million
primarily at American Guidance and World Almanac attributable to the higher
sales volume described above. Operating costs and expenses as a percentage of
sales decreased to 55.5% for the nine months ending September 30, 2000 from
60.5% for the same period in 1999 primarily due to the decreases in operating
costs and increased sales previously noted.

Income from operations. For the nine months ended September 30, 2000, income
from operations increased by $6.5 million, or 52.1%, to $18.7 million from $12.2
million for the same period in 1999 and operating income as a percentage of
sales increased to 17.2% from 12.0% for the same period in 1999. These increases
were primarily due to the factors described above.

Interest expense. For the nine months ended September 30, 2000, interest expense
increased by $15.2 million, or 147.6%, to $25.5 million from $10.3 million for
the same period in 1999 and interest expense as a percentage of sales increased
to 23.5% from 10.3% for the same period in 1999. The interest expense for the
nine months ended September 30, 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. The interest expense for the nine
months ended September 30, 1999 represents interest charged by PRIMEDIA Inc. to
Weekly Reader on outstanding intercompany debt.

Other, net. For the nine months ended September 30, 2000, other, net increased
to $0 from negative $0.6 million for the same period in 1999. This increase was
the result of a $0.4 million increases in other, net at Weekly Reader, excluding
American Guidance and World Almanac and a $0.2 million increase in other, net at
American Guidance.

Income tax provision. For the nine months ended September 30, 2000, provision
for income taxes decreased by $1.7 million or 89.7% to an income tax provision
of $0.2 million from a provision for income taxes of $1.9 million for the same
period in 1999. The Company has a much lower income tax provision in the current
period, primarily a result of a greater net loss for the nine months ended
September 30, 2000 compared to 1999.



                                       28

<PAGE>   32



Net loss. For the nine months ended September 30, 2000, net loss increased by
$6.4 million, or 1070.2%, to $7.0 million from $0.6 million for the same period
in 1999. Net loss as a percentage of net sales increased to negative 6.5% for
the nine months ended September 30, 2000 from negative 0.6% for the same period
in 1999. The increase to net loss was primarily due to the factors described
above.



                                       29

<PAGE>   33


RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000 --
COMPASSLEARNING, INC.


CompassLearning was acquired by WRC Media on July 14, 1999. CompassLearning's
statement of operations for the periods prior to July 14, 1999, relate to
predecessor operations. The Securities and Exchange Commission deems an acquired
business to be a predecessor when the registrant is in substantially the same
business as the entity acquired and the registrant's own operations, prior to
the acquisition, appear insignificant to the business acquired. The purchase
method of accounting was used to record assets acquired and liabilities assumed.
This accounting method generally results in increased amortization and
depreciation reported in periods after the date of acquisition. Accordingly, the
statements of operations of CompassLearning pre- and post-acquisition are not
comparable in all material respects.

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

<TABLE>
<CAPTION>
                                                                       Three Months Ended September 30
                                                                 1999                                  2000
                                                 ----------------------------------------------------------------------------
                                                     Amount         % of Net Sales         Amount         % of Net Sales
                                                 ----------------------------------------------------------------------------
                                                                            (Dollars in millions)
<S>                                               <C>               <C>                  <C>              <C>

Revenue, net                                      $    16.5                 100.0%       $    12.9                100.0%
Cost of products sold                                   6.1                  36.9%             5.4                 41.5%
                                                 ----------------   ------------------   --------------   -------------------
Gross profit                                      $    10.4                  63.1%       $     7.5                 58.5%
Operating expenses
      Sales and marketing                               5.3                  32.3%             4.6                 35.8%
      Research and development                         11.0                  67.1%              -                   0.0%
      General and administrative                        1.7                  10.0%             1.1                  8.6%
      Corporate overhead                                 -                    0.0%             0.3                  2.1%
      Amortization of intangible assets                 1.7                  10.3%             2.1                 16.6%
                                                 ----------------   ------------------   --------------   -------------------
Total operating costs and expenses                     19.7                 119.7%             8.1                 63.1%
Loss from operations                                   (9.3)                (56.6%)            (0.6)               (4.6%)
Interest expense                                       (1.1)                 (6.7%)            (8.8)              (68.5%)
Other income, net                                        -                    0.0%              -                   0.0%
                                                 ----------------   ------------------   --------------   -------------------
Loss before income tax expense                        (10.4)                (63.3%)            (9.4)              (73.1%)
Income tax expense                                       -                    0.0%              -                   0.0%
                                                 ----------------   ------------------   --------------   -------------------
Net loss                                          $   (10.4)                (63.3%)      $     (9.4)              (73.1%)
                                                 ================   ==================   ==============   ===================


</TABLE>



------------------------
Three Months Ended September 30, 2000 Compared to Three Months Ended September
30, 1999

Revenue, net. For the three months ended September 30, 2000, net revenue
decreased $3.6 million, or 21.7%, to $12.9 million from $16.5 million for the
same period in 1999. This decrease was due to (1) a decrease in software revenue
of $1.5 million, or 17.2%, to $6.9 million for the three months ended September
30, 2000, from $8.4 million for the same period in 1999 primarily as a result of
lower sales volume that resulted from increased competition from internet
startup companies offering cheaper products without the depth of content of
CompassLearning. The company hasn't necessarily lost business to these startup
companies but the marketplace confusion created as a result of their entry into
the market has extended the sales cycle (2) a decrease in service revenue of
$1.8 million, or 24.2%, to $5.7 million for the three months ended September 30,
2000, from $7.5 million for the same period in 1999 primarily as a result of
lower service contract renewal sales, and (3) the decrease in hardware revenue
of $0.3 million, or 51.4%, to $0.3 million for the three months ended September
30, 2000, from $0.6 million for the same period in 1999, resulting from our
strategy to exit the low margin hardware business.

                                       30
<PAGE>   34
Gross profit. For the three months ended September 30, 2000, gross profit
decreased $2.9 million, or 27.7%, to $7.5 million from $10.4 million for the
same period in 1999 and gross profit as a percent of revenue deceased to 58.5%
from 63.1% for the same period in 1999 primarily due to service revenue and
the fixed costs associated with managing the service business.

Operating expenses. For the three months ended September 30, 2000, operating
expense decreased $11.6 million, or 58.8%%, to $8.8 million from $19.7 million
for the same period in 1999 and operating expense as a percentage of revenue
decreased to 63.1% from 119.7% for the same period in 1999. The decrease was
primarily due to $11.0 million decrease in research and development expense,
$0.7 million decrease in sales and marketing expense, and a $0.3 decrease in
general and administrative expense (net of corporate overhead expense), offset
by $0.4 million increase in amortization of goodwill and other intangibles.

Sales and marketing expense decreased $0.7 million, or 13.2%, to $4.6 million
from $5.3 million for the same period in 1999. This decrease was primarily due
to $0.7 million decrease in compensation and $0.2 million decrease in outside
services and other expenses, offset by $0.2 million increase in travel
expense.

Research and development expense decreased $11.0 million, or 100.0%, to $0
from $11.0 million for the same period in 1999. This decrease was primarily
due to the $9.0 million write-off of purchased, in-process research and
development costs following the change in ownership in 1999 and $2 million
decrease in research and development spending for the three months ended
September 30, 2000.

General and administrative expense decreased $0.6 million, or 33.5%, to $1.1
million from $1.7 million for the same period in 1999. There was a $0.3
million decrease in compensation combined with $0.3 million decrease in
outside services. There was a $0.3 million corporate overhead expense
allocation to CompassLearning from WRC Media, Inc.

Loss from operations. For the three months ended September 30, 2000, loss from
operations decreased $8.7 million, or 93.7%, to $0.6 million from $9.3 million
for the same period in 1999 and loss from operations as a percentage of net
revenue decreased to negative 4.6% from negative 56.6% for the same period in
1999, primarily due to the factors described above.

Interest expense. For the three months ended September 30, 2000, interest
expense increased $7.7 million, or 699.0%, to $8.8 million from $1.1 million
for the same period in 1999 primarily due to the change in debt structure
following the change in ownership for the same period in 1999. Since
CompassLearning is jointly and severally liable for debt associated with the
Acquisition and Recapitalization, the interest expense related to that debt is
reflected in the financial statements of CompassLearning.

Net loss. For the three months ended September 30, 2000, net loss decreased
$1.0 million, or 9.5%, to $9.4 million from $10.4 million for the same period
in 1999 and net loss as a percentage of net revenue increased to a negative
73.1% from a negative 63.3% for the same period in 1999. These changes were
primarily due to the factors described above.



                                      31


<PAGE>   35



RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 --
COMPASSLEARNING, INC.

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

<TABLE>
<CAPTION>
                                                           Nine Months Ended September 30
                                                       1999                             2000
                                          -----------------------------------------------------------------
                                             Amount      % of Net Sales      Amount       % of Net Sales
                                          ------------  ----------------  -------------  ------------------
                                                               (Dollars in millions)
<S>                                        <C>                  <C>        <C>                  <C>
Revenue, net                               $     48.9            100.0%    $      45.2              100.0%
Cost of products sold                            18.7             38.3%           17.4               38.5%
                                          ------------  ----------------  -------------  ------------------
Gross profit                               $     30.2             61.7%    $      27.8               61.5%
Operating expenses
     Sales and marketing                         16.0             32.8%           16.6               36.7%
     Research and development                    14.7             30.0%            4.1                9.1%
     General and administrative                   5.4             11.0%            4.6               10.1%
     Corporate overhead                             -              0.0%            0.8                1.7%
     Amortization of intangible assets            1.9              3.8%            6.4               14.2%
                                          ------------  ----------------  -------------  ------------------
Total operating costs and expenses               38.0             77.6%           32.5               71.8%
Loss from operations                             (7.8)           (15.9%)          (4.7)             (10.3%)
Interest expense                                 (3.8)            (7.7%)         (25.6)             (56.7%)

Other income, net                                 0.4              0.9%              -                0.0%
                                          ------------  ----------------  -------------  ------------------
Loss before income tax expense                  (11.2)           (22.7%)         (30.3)             (67.0%)
Income tax expense                                  -              0.0%              -                0.0%
                                          ------------  ----------------  -------------  ------------------
Net loss                                   $    (11.2)           (22.7%)   $     (30.3)             (67.0%)
                                          ============  ================  =============  ==================
</TABLE>


-------------------------------

Nine Months Ended September 30, 2000 Compared to Nine Months Ended September
30, 1999

Revenue, net. For the nine months ended September 30, 2000, net revenue
decreased $3.7 million, or 7.5%, to $45.2 million from $48.9 million for the
same period in 1999. This decrease was due to 1) a decrease in software
revenue of $0.3 million, or 1.2%, to $23.8 million for the nine months ended
September 30, 2000, from $24.1 million for the same period in 1999 primarily
as a result of lower sales volume, 2) a decrease in service revenue of $2.9
million, or 12.6%, to $19.5 million for the nine months ended September 30,
2000, from $22.4 million for the same period in 1999 primarily as a result of
lower service contract renewal sales and 3) a decrease in hardware revenue of
$0.5 million, or 22.5%, to $1.9 million for the nine months ended September
30, 2000, from $2.4 million for the same period in 1999 resulting from our
strategy to exit the low margin hardware business.

Gross profit. For the nine months ended September 30, 2000, gross profit
decreased $2.4 million, or 7.8%, to $27.8 million from $30.2 million for the
same period in 1999 and gross profit as a percent of revenue decreased to
61.5% from 61.7% for the same period in 1999 primarily due to the lower
service revenue and fixed costs associated with managing the service business.

Operating expenses. For the nine months ended September 30, 2000, operating
expenses decreased $5.5 million, or 14.2%, to $32.5 million from $38.0 million
for the same period in 1999, and operating expense as a percentage of revenue
decreased to 71.8% from 77.6% for the same period in 1999. The decrease was
primarily due to $10.6 million decrease in research and development expense,
offset by $4.5 million increase in amortization of goodwill and other
intangibles, and $0.6 million increase in sales and marketing expense.



                                      32


<PAGE>   36



Sales and marketing expense increased $0.6 million, or 3.7%, to $16.6 million
from $16.0 million for the same period in 1999. This increase was primarily
due to $0.2 million increase in compensation, $0.8 million increase in travel
and meeting expense, and $0.4 million company name change expense, offset by
$0.8 million decrease in outside services and facilities expense.

Research and development expense decreased $10.6 million, or 72.0%, to $4.1
million from $14.7 million for the same period in 1999. This decrease was
primarily due to a $9.0 million write-off of purchased in-process research and
development costs in 1999 following the change in ownership.

General and administrative expense decreased $0.8 million to $4.6 million or
14.4% for the same period in 1999. There was a $0.7 million decrease in
outside services and $0.1 million decrease in facilities and other expenses.
For the nine months ended September 30, 2000 there was $0.8 million overhead
expense allocated to CompassLearning from WRC Media, Inc.

Loss from operations. For the nine months ended September 30, 2000, loss from
operations decreased $3.1 million, or 39.3%, to a $4.7 million loss from
operations from $7.8 million loss from operations for the same period in 1999
and loss from operations as a percentage of net revenue decreased to a
negative 10.3% from a negative 15.9% for the same period in 1999, primarily
due to the factors described above.

Interest Expense. For the nine months ended September 30, 2000, interest
expense increased $21.8 million, or 579.8%, to $25.6 million from $3.8 million
for the same period in 1999 primarily due to the change in debt structure
following the change in ownership in 1999. Since CompassLearning is jointly
and severally liable for debt associated with the Acquisition and
Recapitalization, the interest expense related to that debt is reflected in
the financial statements of CompassLearning.

Other income, net. For the nine months ended September 30, 2000, other income
decreased to $0 from $0.4 million for the same period in 1999 due to a
non-recurring gain resulting from a sale of a marketable security in 1999.

Net loss. For the nine months ended September 30, 2000, net loss increased
$19.1 million, or 173.4%, to $30.3 million from $11.2 million for the same
period in 1999 and net loss as a percentage of net revenue increased to a
negative 67.0% from a negative 22.7% for the same period in 1999. These
decreases were primarily due to the factors described above.


                                      33


<PAGE>   37


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
September 30, 2000, $7.5 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 the this business cycle, borrowings usually increase during the
period January through June time period, and borrowings generally will be at
its lowest point in October. The Company's cash and cash equivalents decreased
by $7.3 million during the nine-month period ended September 30, 2000.

WRC Media and its subsidiaries' principal uses of cash are for debt service,
capital expenditures, working capital and acquisitions. For the nine months
ended September 30, 2000, WRC Media and its subsidiaries' operations used $7.2
million in cash.

For the nine months ended September 30, 2000, WRC Media and its subsidiaries'
investing activities consisted of capital expenditures of $5.7 million. Weekly
Reader's capital expenditures, which consisted primarily of expenditures for
property and equipment and prepublication costs at American Guidance, were
$4.1 million for the nine months ended for September 30, 2000 and 1999.
CompassLearning's capital expenditures, which consisted primarily of purchases
of computer equipment, were $1.5 million for the nine months ended September
30, 2000, compared to $0.3 million of purchases of computer equipment for the
same period in 1999. We expect our capital expenditures for the remaining
three months of the fiscal year ending December 31, 2000 to be approximately
$4.3 million, including approximately $4.0 million of capitalized
prepublication costs for American Guidance.

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 nine months ended
September 30, 2000, financing activities provided cash of $5.6 million, which
resulted from a $7.5 million borrowing under the revolving credit facility and
a repayment of $1.9 million of the senior secured term loans.

WORKING CAPITAL

As of September 30, 2000, working capital for WRC Media and its subsidiaries
was a deficit of $23.8 million. There are no unusual registrant or industry
practices or requirements relating to working capital items.

SEASONALITY

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.


                                      34


<PAGE>   38


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 $128.5 million (as of September 30, 2000) 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
              $29.5 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 $99.0 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%.

                                      35



<PAGE>   39


                            PART II OTHER INFORMATION


ITEM 1.       LEGAL PROCEEDINGS

None

ITEM 2.       CHANGE IN SECURITIES AND USE OF PROCEEDS

None

ITEM 3.       DEFAULTS UPON SENIOR SECURITIES

None

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

None

ITEM 5.       OTHER INFORMATION

None



                                      36



<PAGE>   40


                            PART II OTHER INFORMATION



ITEM 6.       EXHIBITS AND REPORTS ON FORM 8-K

(a)      List of Exhibits

         None

(b)      Reports on Forms 8-K - On August 11, 2000, WRC Media Inc. filed a
         Current Report on Form 8-K dated August 10, 2000, reporting under
         Item 5 thereof the results for the second quarter and first half
         ended June 30, 2000.





                                      38


<PAGE>   41




                                   SIGNATURES


         Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrants have duly caused this report to be signed on their behalf by
the undersigned thereunto duly authorized.



November 10, 2000                   WRC MEDIA INC.
                                    (REGISTRANT)

                                    By:   /s/ Charles L. Laurey
                                          ------------------------------------

                                          Charles L. Laurey
                                          Secretary


                                    WEEKLY READER CORPORATION
                                    (REGISTRANT)


                                    By:   /s/ Charles L. Laurey
                                          ------------------------------------

                                          Charles L. Laurey
                                          Secretary


                                    COMPASSLEARNING, INC.
                                    (REGISTRANT)


                                    By:   /s/ Charles L. Laurey
                                          ------------------------------------

                                          Charles L. Laurey
                                          Secretary




                                       39