AMERICAN MEDIA OPERATIONS INC - 10-K Annual Report

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

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

FOR THE FISCAL YEAR ENDED MARCH 31, 2003

OR

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

COMMISSION FILE NUMBER 1-11112

AMERICAN MEDIA OPERATIONS, INC.
(Exact name of the registrant as specified in its charter)

DELAWARE 59-2094424
(State or other jurisdiction of (IRS Employee
incorporation or organization) Identification No.)

1000 AMERICAN MEDIA WAY, BOCA RATON, FLORIDA 33464
(Address of principal executive offices) (Zip Code)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE
(561) 997-7733

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) AND 12(g) OF THE ACT:
NONE

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

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

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes [ ] No [X]

As of June 6, 2003, 7,507.6 shares of registrant's common stock were
outstanding. The common stock is privately held and, to the knowledge of
registrant, no shares have been sold in the past 60 days.

Documents Incorporated by Reference
None
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AMERICAN MEDIA OPERATIONS, INC.

FORM 10-K
FOR THE YEAR ENDED MARCH 31, 2003

PART I
Item 1. Business.................................................... 1
Item 2. Properties.................................................. 11
Item 3. Legal Proceedings........................................... 11
Item 4. Submission of Matters to a Vote of Security Holders......... 12

PART II
Item 5. Market for Registrant's Common Equity and Related Security
Holders..................................................... 12
Item 6. Selected Financial Data..................................... 12
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................... 14
Item 7A. Quantitative and Qualitative Disclosures About Market
Risks....................................................... 20
Item 8. Financial Statements and Supplementary Data................. 22
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.................................... 48

PART III
Item 10. Directors and Executive Officers............................ 48
Item 11. Executive Compensation...................................... 50
Item 12. Security Ownership of Certain Beneficial Owners and
Management.................................................. 51
Item 13. Certain Relationships and Related Transactions.............. 53
Item 14. Controls and Procedures..................................... 54

PART IV
Item 15. Exhibits, Financial Statement Schedules, and Reports on Form
8-K......................................................... 55
Signatures.................................................. 58

PART I

ITEM 1. BUSINESS

Unless the context otherwise requires, references in this Form 10-K to the
"Company" or "us", "we" or "our" are to American Media Operations, Inc. and its
subsidiaries. All references to a particular fiscal year are to the four fiscal
quarters ended the last Monday in March of the fiscal year specified.

We were incorporated under the laws of Delaware in February 1981 and are a
wholly-owned subsidiary of American Media, Inc. ("Media"). We conduct all of
Media's operations and represent substantially all of Media's assets. Our
headquarters and principal executive offices are located at 1000 American Media
Way, Boca Raton, FL 33464 and our telephone number is (561) 997-7733.

On May 7, 1999 all of the common stock of Media was purchased by EMP Group
LLC (the "LLC"), a Delaware limited liability company, pursuant to a merger of
Media and EMP Acquisition Corp. ("EMP"), a wholly owned subsidiary of the LLC.
Proceeds to finance the acquisition included (a) a cash equity investment of
$235 million by the LLC, (b) borrowings of approximately $350 million under a
new $400 million senior bank facility (the "Credit Agreement") and (c)
borrowings of $250 million in the form of senior subordinated notes. These
proceeds were used to (d) acquire all of the outstanding common stock of Media
for $299.4 million, (e) repay $267 million then outstanding under the existing
credit agreement with our banks, (f) retire approximately $199 million of our
$200 million Senior Subordinated Notes due 2004 and (g) pay transaction costs
(all such transactions in (a) through (g) are collectively referred to as the
"Transactions"). Upon consummation of the Transactions, EMP was merged with and
into Media (the "Merger") resulting in a change in ownership control of both
Media and the Company. As a result of this change in control, as of the Merger
date we reflected a new basis of accounting that included the elimination of
historical amounts of certain assets and liabilities and the revaluation of
certain of our tangible and intangible assets.

On November 1, 1999, we acquired all of the common stock of Globe
Communications Corp. and certain of the publishing assets and liabilities of
Globe International, Inc. (collectively, the "Globe Properties") for total
consideration of approximately $105 million, including approximately $100
million in cash and $5 million in equity of the LLC (the "Globe Acquisition").
The Globe Properties consist of several tabloid style magazines, including
Globe, National Examiner and Sun as well as other titles including Mini Mags.

On July 11, 2000, we and the former owner of the Globe Properties signed an
agreement whereby the existing voting shareholders of the LLC repurchased the $5
million of equity in the LLC originally issued to the former owner. Concurrent
with this purchase, the former owner and his son resigned their positions as
directors of the board of the Company.

Additionally, we bought out the remaining term of the former owner's
five-year employment agreement and collected the amount due per the net asset
calculation as required in the initial purchase agreement. The net amount paid
to the former owner for these items and miscellaneous other items was
approximately $3.2 million. This adjustment was a part of the Globe Acquisition
and was therefore accounted for as an increase in goodwill.

On February 14, 2002, we issued $150 million in aggregate principal amount
of 10.25% Series B Senior Subordinated Notes due 2009 through a private
placement. The gross proceeds from the offering were approximately $150.8
million including the premium on the notes. We used the gross proceeds of the
offering to (a) make an approximately $75.4 million distribution to the LLC, (b)
to prepay approximately $68.4 million of the term loans under our credit
facility and (c) pay transaction costs. The notes are unsecured and subordinated
in right of payment to all our existing and future senior indebtedness. The
notes rank equally with all our existing and future senior subordinated
indebtedness. The notes are guaranteed on a senior subordinated basis by all our
current domestic subsidiaries.

On January 23, 2003, we acquired Weider Publications, LLC, a newly formed
company to which the magazine business of Weider Publications, Inc. and Weider
Interactive Networks, Inc. had been contributed by Weider Health and Fitness,
Weider Health and Fitness, LLC and Weider Interactive Networks, Inc.

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(collectively, the "Weider Properties"). The aggregate purchase price paid by us
was $357.3 million, which includes a post-closing working capital adjustment of
$7.3 million. Weider is the leading worldwide publisher of health and fitness
magazines, with a total estimated readership of 25 million in the United States,
more than any other publisher in the health and fitness category. Weider
currently publishes seven magazines, including Muscle & Fitness, Shape, Men's
Fitness, Muscle & Fitness Hers, Flex, Fit Pregnancy and Natural Health, with an
aggregate average circulation of approximately 4 million copies. Proceeds to
finance the acquisition of the Weider Properties included $140 million of a new
tranche C-1 term loan, $150 million of senior subordinated notes, $21.2 million
cash from us, and the issuance of $50 million of new equity in the LLC. These
proceeds were used to acquire Weider Publications and to pay transaction costs
(of which approximately $8.8 million was an equity contribution from the
Sellers).

As previously mentioned in connection with the Weider Properties, we issued
$150 million in aggregate principal amount of 8.875% senior subordinated notes
due 2011. The net proceeds from the offering were approximately $145.9 million
including the discount on the notes. We used the net proceeds of the offering to
fund a portion of the acquisition of Weider Publications LLC. The notes are
unsecured and subordinated in right of payment to all our existing and future
senior indebtedness. The notes rank equally with all our existing and future
senior subordinated indebtedness. The notes are guaranteed on a senior
subordinated basis by all our current domestic subsidiaries.

Our Boca Raton headquarters, which housed substantially all of our
editorial operations (including its photo, clipping and research libraries),
executive offices and certain administrative functions, was closed on October 7,
2001 by the Palm Beach County Department of Health when traces of anthrax were
found on a computer keyboard following the death of a photo editor of the Sun
from inhalation anthrax. The Company entered into a two-year lease for a 53,000
square foot facility two blocks from its current Boca Raton headquarters. In
February 2002, the Palm Beach County of Health quarantined the building for an
additional 18 months.

In May 2002, we and our insurance carrier reached a final compromise
regarding our insurance claim and the Company received a compromised payment.
The insurance proceeds resulted in a net gain on the insurance settlement of
approximately $7.6 million for the fiscal year ended March 31, 2003. During the
fiscal year ended March 31, 2003, the Company incurred costs for maintaining the
Boca facility such as security and utilities, which have been netted against the
gain on insurance settlement. The Company expenses these costs as incurred.

On April 17, 2003, we sold our anthrax-contaminated headquarters in Boca
Raton, Florida to 5401 Broken Sound LLC. As a result of the sale, we will
continue our two-year lease in the 53,000 square foot facility described above.
5401 Broken Sound LLC paid $40,000 as consideration for the transfer of
ownership.

On April 17, 2003, we completed a series of transactions whereby principals
and affiliates of Evercore Partners ("Evercore") and Thomas H. Lee Partners
("T.H. Lee"), David J. Pecker, the Chief Executive Officer of the Company, other
members of management and certain other investors contributed approximately
$434.6 million in cash and existing ownership interests of the LLC, our ultimate
parent, valued at approximately $73.3 million, to a merger vehicle which was
merged with and into the LLC in exchange for newly issued ownership interests of
the LLC. These transactions are referred to collectively as the
"Recapitalization" in this Form 10-K. Please see "Security Ownership of Certain
Beneficial Owners and Management" for a summary of our ownership structure and
Note 14 to the Consolidated Financial Statements.

INDUSTRY DATA AND CIRCULATION INFORMATION

Information contained in this Form 10-K concerning publishing industry
data, circulation information, rankings, readership information (e.g., multiple
readers per copy) and other industry and market information, including our
general expectations concerning the publishing industry, are based on estimates
prepared by us based on certain assumptions and our knowledge of the publishing
industry as well as data from various third party sources. These sources
include, but are not limited to, the report of the Audit Bureau of Circulations
("ABC"), BPA Circulation Statements, Statement of Ownership figures filed with
the U.S. Postal Service,

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Mediamark Research Inc. ("MRI") syndicated research data and Veronis Suhler
Stevenson research data. While we are not aware of any misstatements regarding
any industry data presented in this Form 10-K we have not independently verified
any of the data from any of these sources and, as a result, this data may be
imprecise. Our estimates, in particular as they relate to our general
expectations concerning the publishing industry, involve risks and uncertainties
and are subject to change based on various factors.

Unless otherwise indicated, all average weekly circulation information for
our tabloid publications is an average of actual weekly single copy circulation
for the fiscal year ended March 31, 2003. Unless otherwise indicated, all
average circulation information for Weider's publications is an average of
actual per issue circulation for the twelve months ended March 31, 2003. All
references to "circulation" are to single copy and subscription circulation,
unless otherwise specified.

THE COMPANY

OVERVIEW

We are a leading publisher in the field of general interest magazines,
publishing National Enquirer, Star, Globe, National Examiner, Weekly World News,
Sun, Country Weekly, Country Music Magazine, MIRA!, Auto World Magazine and
other smaller monthly publications with a current aggregate weekly circulation
of approximately 5.2 million copies. National Enquirer, Star, and Globe, our
premier titles, have the third, fourth and sixth highest weekly single copy
circulation, respectively, of any weekly periodical in the United States. We are
the leader in total weekly single copy circulation of magazines in the United
States and Canada with approximately 35% of total U.S. and Canadian circulation
for audited weekly publications. We derive approximately 79% of our revenues
from circulation, predominantly single copy sales in retail outlets, and the
remainder from advertising and other sources. National Enquirer, Star, Globe and
National Examiner are distributed in approximately 150,000 retail outlets in the
United States and Canada, representing, in the opinion of management,
substantially complete coverage of periodical outlets in these countries.
Distribution Services, Inc. ("DSI"), our subsidiary, arranges for the placement
and merchandising of our publications and third-party publications at retail
outlets throughout the United States and Canada. In addition, DSI provides
marketing, merchandising and information-gathering services for third parties.

Our tabloid publications are among the most well-known and widely
distributed titles in the publishing industry. While our tabloid publications
have a current aggregate weekly newsstand circulation of approximately 4.3
million copies, they enjoy a weekly readership of over 27 million people due to
multiple readers per copy sold. Our other titles (including the Mini Mags, Micro
Mags and Digest) contribute an additional readership of over 21 million, giving
AMI titles a total readership in excess of 48 million. As a result, we believe
our publications enjoy strong consumer brand awareness with a large and loyal
readership base.

On January 23, 2003, we acquired Weider Publications, LLC, a privately held
company controlled by Weider Health and Fitness. Weider is the leading worldwide
publisher of health and fitness magazines, with a total estimated readership of
25 million in the United States, more than any other publisher in the health and
fitness category. The health and fitness category is the fastest growing
advertising segment of special interest magazines. Weider currently publishes
seven magazines, including Muscle & Fitness, Shape, Men's Fitness, Muscle &
Fitness Hers, Flex, Fit Pregnancy and Natural Health, with an aggregate average
circulation of approximately 4 million copies.

Our publications include the following titles:

- National Enquirer is a weekly celebrity focused publication with an
editorial content devoted to investigative reporting, celebrities and
features, human interest stories and articles covering lifestyle topics
such as health, food and household affairs. National Enquirer is the
third highest selling weekly periodical based on U.S., Canadian and U.K.
single copy circulation. AMI sells on average 1.4 million single copies
of National Enquirer per week in the United States, Canada and the United
Kingdom. National Enquirer has a total average weekly circulation of
approximately 1.7 million copies, including subscriptions, with a total
estimated readership in the United States, Canada and the United Kingdom
of 13.9 million.

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- Star is a weekly celebrity news-based periodical dedicated to covering
the stars of movies, television and music, as well as the lives of the
rich and famous from politics, business, royalty and other areas. Star's
editorial content also incorporates fashion, health, fitness and diet
features, all with a celebrity spin. Star is the fourth highest selling
weekly periodical in the United States and Canada based on single copy
circulation, selling on average 1.1 million copies per week. Star has a
total average weekly circulation of approximately 1.3 million copies,
including subscriptions, with a total estimated readership in the United
States and Canada of 6.6 million.

- Globe is a weekly tabloid with celebrity features that are edgier than
National Enquirer and Star, with a greater emphasis on investigative
crime stories. Globe is the sixth highest selling weekly periodical in
the United States and Canada based on single copy circulation, selling on
average 559,000 copies per week. Globe has a total average weekly
circulation of approximately 603,000 copies, including subscriptions,
with an estimated readership of 3.9 million.

- National Examiner's editorial content consists of celebrity and
human-interest stories, differentiating itself from the other titles
through its upbeat positioning as the "gossip, games and good news"
tabloid. National Examiner has an average weekly single copy circulation
of 263,000 copies, with a total average weekly circulation of
approximately 280,000 copies, including subscriptions. Total readership
is estimated at 1.1 million.

- Weekly World News is a tabloid devoted to the publication of bizarre and
strange but true stories. There is much humorous original content and the
paper has created several characters that have become staples of pop
culture. Weekly World News has an average weekly single copy circulation
of 178,000 copies, with a total average weekly circulation of
approximately 197,000 copies, including subscriptions. Total readership
is estimated at 800,000.

- Sun's editorial content is skewed to an older target audience and focuses
on religion, health, holistic remedies, predictions and prophecies. Sun
also includes entertaining and unusual articles from around the world.
Sun has an average weekly single copy circulation of approximately
145,000 copies, with a total readership estimated at 600,000.

- Country Weekly is an entertainment magazine presenting various aspects of
country music and related lifestyles, events and personalities, and has
the highest bi-weekly circulation of any such magazine in its category.
Country Weekly is a bi-weekly publication and has an average single copy
circulation of 215,000 copies, with a total average bi-weekly circulation
of approximately 400,000 copies, including subscriptions. Total
readership is estimated at 3.3 million.

- Country Music is a bi-monthly publication that is also an entertainment
magazine presenting various aspects of country music and related
lifestyles, events and personalities. We acquired Country Music on August
1, 2000. Country Music has an average single copy circulation of
approximately 22,000 copies, with a total average circulation of
approximately 300,000 copies, including subscriptions. Total readership
is estimated at 4.8 million.

- Mini-Mags, Micro-Mags and Digest are pocket-sized books covering such
topics as diets, health, horoscopes, astrology and pets. We believe we
are the largest such publisher in the field, producing approximately 100
million copies annually. With the acquisition of Weider we plan on
leveraging certain Weider brands to enhance the editorial content of
several of our Mini-Mags, Micro-Mags and Digest titles.

- Mira! is a Spanish language magazine that features exclusive news, gossip
and goings-on about the hottest stars in the Latino community, along with
interviews and in-depth stories spotlighting them at work and at play. It
is distributed at checkout counters in supermarkets, bodegas and mass
merchandisers in the top 43 Hispanic markets in the United States. The
magazine was launched in June 2000 and has a total bi-weekly circulation
of approximately 107,000 copies and an estimated total readership of
856,000.

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- Auto World targets the in-market buyer and we believe is the only
automotive magazine sold at checkout counters in supermarkets and mass
merchandisers. The readership is 35% female, which we believe gives Auto
World the highest number of women readers of any automotive title.
Articles focus on buying new and pre-owned cars, road tests, comparison
tests, news, pricing, recalls and rebates.

- New Media. We have web sites for the National Enquirer
(nationalenquirer.com), Star (starmagazine.com), Country Weekly
(countryweekly.com), Country Music (countrymusicmagazine.com), Weekly
World News (weeklyworldnews.com), Auto World (amiautoworld.com) and Nopi
Street Performance Compact (streetperformancecompact.com). The Weekly
World News site was voted one of the 100 Best Internet Sites by PC
Magazine and we have content syndication agreements in place with Lycos,
Yahoo, iWon, Excite and Keen.

Weider's publications include the following titles:

- Muscle & Fitness is a premier monthly fitness-related lifestyle magazine,
appealing to exercise enthusiasts and athletes of all ages, especially
those focused on resistance training, body fat control and sports
nutrition. Muscle & Fitness has more than 60 years of brand equity and
has served as a successful brand extension foundation for new titles.
Muscle & Fitness has a total average monthly circulation of approximately
428,000 copies, with monthly subscriptions of 218,000, and an estimated
total readership of 7.9 million.

- Shape is the leader in circulation and advertising revenues in the
attractive and growing women's active lifestyle category. Shape's mission
is to help women lead a healthier lifestyle by providing useful
information on exercise techniques, nutrition, psychology, beauty and
other inspirational topics. Shape has a total average monthly circulation
of approximately 1.7 million copies, with monthly subscriptions of 1.3
million, and an estimated total readership of 5.7 million.

- Men's Fitness is a leading monthly magazine for men with active
lifestyles. The magazine promotes a multi-training approach towards
exercise and offers information and advice in the areas of fitness,
career, and relationships. Men's Fitness has a total average monthly
circulation of approximately 664,000 copies, with monthly subscriptions
of 565,000, and an estimated total readership of 6.4 million.

- Muscle & Fitness Hers was launched in 2000 as a female focused magazine
from Muscle & Fitness. The magazine targets the underserved market of
female fitness enthusiasts and athletes. The editorial style and content
emphasizes resistance training and sports nutrition designed to improve
physical appearance, strength, health and sports performance. The
magazine was published seven times in calendar 2002, and will be expanded
to ten issues in fiscal 2004. Muscle & Fitness Hers has a total average
circulation per issue of approximately 256,000 copies, with subscriptions
per issue of 82,000, and an estimated total readership of 1.2 million.

- Flex, which was spun off from Muscle & Fitness in 1983, is a monthly
magazine devoted to professional bodybuilding. The magazine delivers
nutrition and performance science information for bodybuilding
enthusiasts. As Flex is a premier title in the bodybuilding segment it
receives a significant share of advertising devoted to this special
interest category. Flex has a total average monthly circulation of
approximately 153,000 copies, with monthly subscriptions of 51,000, and
an estimated total readership of 918,000.

- Fit Pregnancy was spun off from Shape in 1995. Fit Pregnancy's editorial
focus makes it a premier lifestyle magazine for women during pregnancy
and the first couple of years after childbirth. The bi-monthly magazine
delivers authoritative information on health, fashion, food and fitness.
Fit Pregnancy recently increased its editorial emphasis on the two-year
postpartum period and as a result has expanded its postnatal products
advertising. Fit Pregnancy has a total average circulation per issue of
approximately 508,000 copies, with subscriptions per issue of 411,000,
and an estimated total readership of 2.0 million.

- Natural Health is a leading wellness magazine published ten times a year,
offering readers practical information to benefit from the latest
scientific knowledge and advancements in the field of natural

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health, including advice to improve well-being and combat illness.
Published for more than 30 years, Natural Health is one of the longest
continuously published and most widely read paid publications in its
field. Natural Health has a total average circulation per issue of
approximately 327,000 copies, with subscriptions per issue of 272,000,
and an estimated total readership of 785,000.

- New Media. We have web sites for Muscle & Fitness
(muscleandfitness.com), Flex (flexonline.com), Men's Fitness
(mensfitness.com), Muscle & Fitness Hers (muscleandfitnesshers.com),
Shape (shape.com), Natural Health (naturalhealthmagazine.com) and Fit
Pregnancy (fitpregnancy.com). We maintain an online fitness portal
(fitnessonline.com) and also sell a paid subscription based interactive
online weight loss & exercise program, (iShape.com).

CIRCULATION

Total average circulation per issue is approximately 4.3 million copies for
our tabloid publications and 4.0 million copies for our Weider publications, for
an aggregate average circulation of 8.3 million copies. Our tabloid titles have
historically had greater single copy circulation while our Weider titles are
more subscription based. For fiscal 2003, approximately 88% of circulation
revenue and 69% of total operating revenue were generated by single copy
circulation and the remainder of circulation revenues by subscriptions.

Single Copy Circulation. The following table sets forth average weekly
single copy circulation and U.S. cover prices for our publications for the three
fiscal years 2001, 2002 and 2003.

AVERAGE WEEKLY SINGLE COPY CIRCULATION AND U.S. COVER PRICE

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(1) We increased the U.S. cover price on each of the National Enquirer, Star,
Globe and National Examiner from $1.79 to $1.89 on March 13, 2001. On April
2, 2002, we expanded National Enquirer and Star to

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60 pages from 48 pages, comprised primarily of expanded news stories and
additional celebrity photographs. The introduction of the 60 page issues was
initiated with a price increase for National Enquirer and Star from $1.89 to
$2.09. On April 1, 2003, we increased the U.S. cover price on National
Enquirer and Star from $2.09 to $2.19. We increased the U.S. cover price on
Globe and National Examiner to $1.99 on April 2, 2002. On April 1, 2003, we
expanded the Globe from a 48 page to a 60 page format, accompanied with a
cover price increase from $1.99 to $2.19. We increased the U.S. cover price
on Weekly World News and Sun from $1.69 to $1.79 on April 2, 2002 and April
9, 2002 for Weekly World News and Sun, respectively. We increased the U.S.
cover price on Country Weekly from $2.49 to $2.99 on June 26, 2001, and then
to $3.49 on August 6, 2002.

(2) Amount includes nine expanded issues for National Enquirer and Star and
seven expanded issues for the Globe that included 72 pages versus a regular
issue of 48 pages and were priced at $2.89. Excluding these expanded issues,
single copy circulation was 1,680,000, 1,321,000 and 671,000 for the
National Enquirer, Star and Globe, respectively.

(3) Amount includes twelve expanded issues for National Enquirer and eleven
expanded issues for both Star and Globe that included 72 pages versus a
regular issue of 48 pages and were priced at $2.89. Excluding these expanded
issues, single copy circulation was 1,525,000, 1,222,000 and 607,000 for the
National Enquirer, Star and Globe, respectively.

(4) Amount includes eight expanded issues for National Enquirer and nine
expanded issues for Star that included 84 pages versus a regular issue of 60
pages and were priced at $2.99. Amount includes thirteen expanded issues for
Globe that included 72 pages versus a regular issue of 48 pages and were
priced at $2.99. Excluding these expanded issues, single copy circulation
was 1,405,000, 1,123,000 and 573,000 for the National Enquirer, Star and
Globe, respectively.

For fiscal 2003, single copy circulation for our tabloids and Country
Weekly declined. Overall, these titles were down 6.9% in units while the overall
checkout titles, as measured by the Audit Bureau of Circulation, were down 5.5%.
Despite the unit circulation declines during fiscal 2003, we were able to
increase our total tabloid retail dollars (the total amount of gross revenues
generated by retailers) by 2.2% through prudent increases in our cover prices,
while the overall industry's retail dollars increased by 1.6%. We believe that
the principal factors contributing to the unit declines include, a general
industry wide decline in single copy circulation of individual publications due
to an increasing number of publications in the industry and diminished service
levels from wholesalers who distribute magazines to retailers and fill the
pockets at checkout counters as a result of consolidation among wholesalers and
their related efforts to cut expenses. Additionally, we further believe that we
have experienced declines above the industry average as a result of the October
2001 anthrax incident at our Boca Raton headquarters as well as increased
competition from other publications and other forms of media, such as certain
newspapers, television and internet sites concentrating on celebrity news.

The following table sets forth total average circulation and subscription
circulation per issue and U.S. cover prices for Weider's publications for the
fiscal years ended March 2001, 2002 and 2003.

WEIDER'S TOTAL AVERAGE PAID CIRCULATION, SUBSCRIPTION CIRCULATION AND U.S. COVER
PRICE

Overall paid circulation for the Weider titles between fiscal 2003 versus
2002 is virtually flat. Newsstand circulation is down for Muscle & Fitness
(23,000 copies), Shape (15,000 copies) and Muscle & Fitness Hers (22,000
copies), which is in line with the total newsstand market. We believe these
declines are due to overall competition focusing on health and fitness.

SUBSCRIPTION SALES

Our strategy with respect to subscriptions seeks to optimize subscription
revenues and profitability as opposed to subscription circulation. We accomplish
this strategy by focusing on direct sales of our titles by us through inserts,
direct mailings and in-house advertisements in the respective magazines. In
fiscal 2003, approximately 12% of our total revenues from circulation were from
subscription sales.

ADVERTISING REVENUES

Our advertising revenues are generated by national advertisers, including
consumer product, broadcasting, entertainment, packaged goods and pharmaceutical
advertisers, direct response and classified advertisers. Ad pages for the period
from January to December 2002, as measured by the Publishers Information Bureau,
have grown by 15.9% and 27.0% over the prior year period for National Enquirer
and Star, respectively. During this time period the overall industry was down
7.1% in ad pages, as measured by the Publisher Information Bureau. We employ
advertising sales people and maintain advertising sales offices in New York
City, Chicago, Los Angeles, Detroit, Nashville, Miami, Boca Raton and Atlanta.

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Our Weider publications' advertising revenues are derived from vitamin,
nutritional supplement, exercise equipment, sports apparel, beauty and packaged
goods, and automotive advertisers. These advertisers use Weider's publications
to reach an enthusiast-based readership focused on a health and fitness
lifestyle. Our Weider publications employ advertising sales people and maintain
advertising sales offices in New York, Chicago, Los Angeles and Detroit.

EDITORIAL

The editorial departments of our publications operate independently. The
editorial headquarters for National Enquirer, Star, Globe, National Examiner,
Weekly World News, Sun, Mira! and Auto World are in Boca Raton, Florida. The
tabloids also have editorial bureaus in Los Angeles, New York, Washington, D.C.,
Toronto and Las Vegas. Country Weekly and Country Music's editorial headquarters
are located in Nashville, Tennessee. The editorial headquarters for Star will
move to New York during our second quarter of fiscal 2004.

In addition to their editorial staffs, National Enquirer, Star and Globe
pay outside news sources for story ideas, for information regarding breaking
stories and for exclusive stories regarding celebrities. They also pay
free-lance photographers and free-lance reporters for their investigative
journalism.

The editorial departments for our Weider publications are located in Los
Angeles and New York. As the leader in the health and fitness category, Weider
attracts significant editorial content from health and fitness experts. We also
have exclusive rights to receive editorial content for our Weider publications
from many of the world's best competitive athletes in bodybuilding.
Additionally, we are the exclusive magazine sponsor for certain International
Federation of Bodybuilding events such as Mr. and Mrs. Olympia, Night of
Champions and Arnold Classic.

PRODUCTION AND DISTRIBUTION

An unrelated third-party performs most of the pre-press operations for our
publications and is responsible for transmitting them electronically to printing
plants. We have a long-term printing agreement with an unrelated domestic
printer to print National Enquirer, Star, Globe, National Examiner, Weekly World
News, Sun and Country Weekly through December 2015 for sales in the United
States, Canada and, to the extent applicable, outside of North America (except
for the United Kingdom). This same printer also prints the majority of our other
publications. National Enquirer has a special United Kingdom edition, which is
printed by another unrelated printer. Once printed, the copies are distributed
primarily by 4 regional wholesalers, who we estimate represent 82% of the
newsstand distribution market, as well as several smaller wholesalers who
represent the remaining 18%, in the United States and Canada, who deliver the
requisite number of copies to approximately 150,000 retail sales locations. We
believe our relationships with our printing companies are adequate and that
there are printing facilities available elsewhere, should the need arise.

The principal raw materials utilized by our publications are paper and ink.
Paper is purchased directly from several suppliers based upon pricing and, to a
lesser extent, availability. Both paper and ink are commodity products with
pricing affected by demand, capacity and economic conditions. We believe that
adequate sources of supply are, and will continue to be, available to fulfill
our requirements. Our operating income may be significantly affected by the
price of paper used in our publications. We have currently committed a
significant portion of our volume and pricing requirements with our major
suppliers through December 2005.

A different unrelated third party performs most of the pre-press operations
for the Weider properties and is responsible for transmitting them
electronically to plants. This same unrelated third party also performs the
printing for the Weider publications. Both the pre-press and printing contracts
for the Weider publications expire in December 2005.

9

MARKETING AND MERCHANDISING

We have established, through DSI, our own marketing organization whose
primary function is to arrange for the placement and merchandising of our
publications and third-party publications at retail outlets throughout the
United States and Canada.

In addition to the services DSI provides for our publications, DSI acts as
a "category captain" for approximately 40% (based on our estimates) of all new
front-end racking programs accounting for 65% of all the racks placed annually
in the United States and Canada by supermarkets and other retailers. Recently,
DSI has begun to leverage its network of field representatives, which are
regularly in retail outlets performing its services, by expanding its services
to provide merchandising, resetting of rack programs and other information
gathering services to consumer product companies outside the publishing
industry. We have begun expanding the distribution of Weider's health and
fitness titles utilizing DSI's retail relationships.

Approximately every three years, supermarkets and other retailers typically
redesign their front-end racks, generally as part of store renovations or new
store openings. As a "category captain", DSI is selected by retailers to
coordinate the design and installation of the front-end racks and the
positioning of magazines for increased sales. Publishers, including AMI, which
are allocated space on a rack enter into contracts directly with the retailer
for the payment of fees (rack display payments) or other charges with respect to
that space. DSI uses its role as category captain of new front-end rack programs
initiated annually by retailers in the United States to achieve better placement
of our publications and of the publications of DSI's third-party publishing
clients.

Some of DSI's third-party clients include Hachette, which publishes Woman's
Day and Elle; Gruner + Jahr, which publishes Family Circle, Fitness, Parents and
YM; Wenner Media Inc., which publishes US Weekly, Rolling Stone and Men's
Journal; Newsweek, Inc., which publishes Newsweek; Bauer Publishing, which
publishes First for Women, Woman's World and In-Touch, Rodale, Inc., which
publishes Prevention, Men's Health and Organic Style, and General Mills, which
publishes Pillsbury and Betty Crocker.

OTHER BUSINESSES

On November 27, 2000, we sold our 80% owned subsidiary, Frontline
Marketing, ("FMI") to the minority shareholder for a $2.5 million note
receivable. (See Note 9 to the Consolidated Financial Statements).

We also had ancillary sales (primarily licensing and syndication sales) of
$2.5 million in fiscal 2003.

In connection with the Weider acquisition, we acquired Weider Interactive
Networks, Inc. ("WIN"). WIN houses the online operations for Weider. WIN
develops and tests new interactive consumer fitness information products in an
effort to develop new revenue streams for Weider. In addition, WIN creates and
operates companion websites and web-delivered applications for Weider's branded
businesses, delivering both development expertise and networking services.
Revenues are generated primarily from a subscription based interactive on-line
weight loss and exercise program, (ishape.com), but also include advertising and
branded product sales.

COMPETITION

National Enquirer, Star, Globe, National Examiner, Weekly World News, Sun,
Mira!, Country Music and Country Weekly compete in varying degrees with other
publications sold at retailers' checkout counters, as well as forms of media
concentrating on celebrity news, such as certain newspapers, magazines and
television and radio programs. We believe that historical declines in single
copy circulation of National Enquirer, Star, Globe and National Examiner have
resulted in part from increased competition from these publications and forms of
media. Competition for circulation is largely based upon the content of the
publication, its placement in retail outlets and, to a lesser extent, its price.
Competition for advertising revenues is largely based upon circulation levels,
readership, demographics, price and advertising results. We believe that our
most significant direct competitors in the print media are AOL Time Warner Inc.
(which publishes People, In Style and

10

Entertainment Weekly), Wenner Media, Inc., (which publishes US Weekly), and
Bauer (which publishes In-Touch).

Each of Weider's specialty consumer magazines faces competition in its
subject area from a variety of publishers and competes for readers on the basis
of the high quality of its targeted editorial content. Competition for
advertising revenues is largely based upon circulation levels, readership,
demographics, price and advertising results. We believe that Weider's most
significant direct competitors include Conde Nast Publications, Inc. (which
publishes Self), Gruner + Jahr Publishing (which publishes Fitness, Parents and
Child), Rodale Inc. (which publishes Men's Health and Organic Style), Wenner
Media, Inc. (which publishes Men's Journal), Advanced Research Press (which
publishes Muscular Development) and Muscle Media Publishing (which publishes
Muscle Media).

DSI competes with two other companies providing marketing and distribution
services.

EMPLOYEE RELATIONS

We currently employ approximately 923 full-time employees and 1,393
part-time employees. Approximately 1,481 of our employees, including almost all
of our part-time employees, work for DSI. None of our employees are represented
by any union or other labor organization. We have had no strikes or work
stoppages during the last five years. We believe that our relations with our
employees are good.

ITEM 2. PROPERTIES

Our Boca Raton headquarters, which housed substantially all editorial
operations (including photo, clipping and research libraries), executive offices
and certain administrative functions, was closed on October 7, 2001 by the Palm
Beach County Health Department when traces of anthrax were found on a computer
keyboard following the death of one of our photo editors from inhalation
anthrax. In response to the closure of our Boca Raton facility, we immediately
implemented our hurricane disaster plan to produce all of our weekly
publications as originally scheduled. While this inhibited the production of our
publications, we printed all of our tabloids that week and we believe that our
operations have substantially returned to normal. In February 2002, the Palm
Beach County Health Department quarantined the Boca Raton facility for an
additional 18 months. We entered into a two year lease for a 53,000 square foot
facility two blocks from our Boca Raton headquarters which expires in February
2004. In May 2002, we reached a final settlement with our property insurance
carrier and received payment. On April 17, 2003, the Company sold its anthrax-
contaminated headquarters in Boca Raton, Florida to 5401 Broken Sound LLC. As a
result of the sale, we will continue our two-year lease in the 53,000 square
foot facility described above. 5401 Broken Sound LLC paid $40,000 as
consideration for the transfer of ownership. As of March 31, 2003, we
established a reserve of approximately $1 million to cover the anticipated
remaining costs associated with the disposal of our proprietary property which
is still in the building, as well as amounts due to unrelated third parties who
assisted in the sale of the building.

We also lease 11,800 square feet in New York, New York for advertising and
editorial personnel, 16,400 square feet in Delray Beach, Florida for certain
back office functions, 12,500 square feet in West Palm Beach, Florida for DSI
and 4,200 square feet for Country Weekly and Country Music in Nashville,
Tennessee. Various other smaller properties are leased primarily in New York,
Los Angeles, Detroit, Chicago, Atlanta, Miami, Washington D.C. and Toronto for
certain of our other operations. Further, our Weider properties lease 67,638
square feet in Woodland Hills, California and 39,844 square feet in New York,
for advertising, editorial and support personnel. Various other properties are
leased in Boston, Chicago and Harrogate, United Kingdom. We believe that all of
our properties are in generally good condition and are adequate for current
operations.

ITEM 3. LEGAL PROCEEDINGS

We are involved in a number of litigation matters which have arisen in the
ordinary course of our business. Because the focus of our publications often
involves controversial celebrities or subjects, the risk of defamation or
invasion of privacy litigation arises in the ordinary course of our business.
Our experience

11

suggests that the claims for damages made in such lawsuits are heavily inflated
and, in any event, any reasonably foreseeable material liability or settlement
would be covered by insurance. We have not experienced any difficulty obtaining
such insurance and do not expect to experience any material difficulty in the
future. We have provided a $1.9 million reserve as of March 31, 2003, for
pending legal cases.

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

No items were submitted to a vote of our security holders during the fourth
quarter of fiscal 2003.

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SECURITY HOLDERS

All of the Company's common stock is owned by Media. Accordingly, there is
no established public trading market for our common stock.

ITEM 6. SELECTED FINANCIAL DATA

The selected financial data for each of the five fiscal years in the period
ended March 31, 2003 below have been derived from the consolidated financial
statements of the Company, which have been audited by independent certified
public accountants. The following selected financial data should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations", the Company's Consolidated Financial Statements and
Notes thereto and other financial information appearing elsewhere in this Form
10-K. As discussed above, the parent of American Media Operations, Inc. was
purchased on May 7, 1999 resulting in a change in the historical cost basis of
various assets and liabilities. Accordingly, the historical financial
information provided herein, for periods prior to May 7, 1999 is not comparable
to post acquisition financial information. For purposes of presentation, all
historical financial information for periods prior to May 7, 1999 will be
referred to as the "Predecessor Company" and all periods subsequent to May 6,
1999 will be referred to as the "Company". The period from May 7, 1999 through
March 27, 2000 will be referred to as the "Inception Period". [A solid black
vertical line has been inserted in tables where financial information may not be
comparable across periods.]

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

(1) Includes 8 weeks of operations of the Weider Properties, as well as 53 weeks
of operations for the AMI titles. All prior annual periods presented include
52 weeks of operations.

(2) SFAS No. 142 was adopted during the fiscal year ended March 31, 2003, at
which time we ceased amortization of goodwill and other indefinite lived
intangible assets.

(3) Other income (expense) for the fiscal year ended March 26, 2001 includes
minority interest income of $376,000 and interest income of $570,000. The
fiscal years ended March 31, 2003 and March 25, 2002 includes $341,000 and
$82,000 interest income, respectively, as well as miscellaneous
non-recurring items.

(4) We define EBITDA as operating income before depreciation and amortization.
EBITDA is not a measure of performance defined by accounting principles
generally accepted in the United States of America ("GAAP"). EBITDA should
not be considered in isolation or as a substitute for net income or cash
flows from operating activities, which have been prepared in accordance with
GAAP or as a measure of our operating performance, profitability or
liquidity. We believe EBITDA provides useful information regarding our
ability to service our debt, and we understand that such information is
considered by certain investors to be an additional basis for evaluating a
company's ability to pay interest and repay debt. EBITDA is a widely used
performance measure for publishing companies and is provided here as a
supplemental measure of operating performance to operating income calculated
in accordance with GAAP. A reconciliation from operating income to EBITDA is
as follows:

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

(1) Includes a $7.6 million gain on insurance settlement.

(2) In previous disclosures we included adjustments to EBITDA which
reflected $1.2 million of management fees included in other income in
fiscal 1999. In response to recent SEC guidelines, we have excluded
this adjustment from the reconciliation of EBITDA.

13

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

The following is a discussion of our financial condition and results of
operations for the three fiscal years ended March 31, 2003. This discussion
should be read in conjunction with our consolidated financial statements and the
related notes thereto. Please note that our fiscal year ended March 31, 2003
includes 53 weeks of operations versus 52 weeks for the prior fiscal years.

OVERVIEW

We are a leading publisher in the field of general interest magazines,
publishing National Enquirer, Star, Globe, National Examiner, Weekly World News,
Sun, Country Weekly, Country Music Magazine, MIRA!, Auto World Magazine and
other monthly publications. We generate revenues from circulation, predominantly
single copy sales in supermarkets and other retail outlets, as well as from
advertising and other sources.

On January 23, 2003, we acquired Weider Publications, LLC, a newly formed
company to which the magazine business of Weider Publications, Inc. and Weider
Interactive Networks, Inc. had been contributed by Weider Health and Fitness,
Weider Health and Fitness, LLC and Weider Interactive Networks, Inc. Weider
Publications LLC currently publishes seven magazines, including Muscle &
Fitness, Shape, Men's Fitness, Muscle & Fitness Hers, Flex, Fit Pregnancy and
Natural Health. Accordingly, our fiscal 2003 results include 8 weeks of
operations from the Weider Properties.

In fiscal 2003 and 2002, approximately 79% and 84% of our total operating
revenues were from circulation, respectively. Single copy sales accounted for
approximately 88% of such circulation revenues in fiscal years 2003 and 2002,
respectively, and the remainder was from subscription sales. Over the past three
years, circulation revenues have been generally stable as circulation declines
have been offset in part by increases in the cover prices of our publications.

Our primary operating costs and expenses are comprised of editorial,
production, distribution, circulation and other costs of sales and selling,
general and administrative expenses. The largest components of our costs are
related to production, which includes printing and paper expenses, and to
distribution, circulation and other costs of sales. Distribution, circulation
and other costs of sales primarily include the costs associated with operating
DSI, subscription fulfillment and subscription postage.

RESULTS OF OPERATIONS

Please note that our fiscal year ended March 31, 2003 includes 53 weeks of
operations versus 52 weeks for the prior fiscal years. The additional 53rd week
in the fiscal year ended March 31, 2003, provided $5.6 million of additional
operating revenues. Further, fiscal 2003 includes 8 weeks of operations from the
Weider Properties.

COMPARISON OF FISCAL YEAR ENDED MARCH 31, 2003 TO FISCAL YEAR ENDED MARCH 25,
2002

Total operating revenues were $399,733,000 for fiscal 2003. Operating
revenues increased by $31,602,000 or 8.6%, from the prior year due to the Weider
acquisition ($29,393,000), as well as an increase of $2,209,000 from the
American Media titles. Circulation revenue increased by $5,280,000 primarily due
to the Weider acquisition. American Media's circulation revenues declined by
$3,529,000 primarily due to an increased discount to wholesalers of
approximately $9 million.

Circulation revenues (which include all single copy and subscription sales)
were $314,089,000 for the current fiscal year. Circulation revenues increased by
$5,280,000 or 1.7%, when compared to the prior fiscal year as mentioned above.

Subscription revenues increased by $318,000, or 0.9%, when compared to the
prior fiscal year. This increase was primarily due to the Weider acquisition.

Advertising revenues were $61,303,000 for the current fiscal year.
Advertising revenues increased by $21,388,000 or 53.6%, when compared to the
prior fiscal year of $39,915,000. This increase was primarily due

14

to the Weider acquisition ($19,645,000), coupled with a $1,744,000 (4%) increase
for the AMI titles despite a weak industry-wide advertising climate.

Total operating expenses for the current fiscal year decreased by
$38,221,000 when compared to the prior fiscal year. This decrease was primarily
due to the elimination of the amortization of goodwill and tradenames due to our
adoption of SFAS No. 142 during the current fiscal year ($51,882,000), a net
gain on our insurance settlement related to the Boca building ($7,613,000) and
production savings for the American Media titles due to management's negotiation
of production related agreements ($2,732,000). These amounts were partially
offset by Weider's operating expenses ($24,627,000).

Interest expense decreased for the current fiscal year by $5,102,000 to
$60,065,000 compared to the same prior fiscal year. This decrease in interest
expense relates to payments received in fiscal 2003 for various interest rate
swap transactions ($7,255,000) and also a lower effective interest rate during
fiscal 2003, partially offset by the increased debt incurred as a result of the
Weider acquisition.

Other income (expense) was $288,000 for fiscal 2003, compared to other
expense of $(139,000) for fiscal 2002. Included in other income is interest
income of $341,000 for fiscal 2003.

Our effective income tax rates exceed the federal statutory income tax rate
of 35% because of the effect of certain goodwill amortization, which is not
deductible for income tax reporting purposes.

COMPARISON OF FISCAL YEAR ENDED MARCH 25, 2002 TO FISCAL YEAR ENDED MARCH 26,
2001

Total operating revenues were $368,131,000 for fiscal 2002. Operating
revenues decreased by $4,070,000, or 1.1%, from the prior year. Results in the
2002 fiscal year reflect a loss of revenue from sold operations of $4.5 million.
Circulation revenue for continuing publications decreased $4.1 million primarily
due to the cancellation of several expanded issues and decreased newsstand
copies sold, we believe primarily due to the anthrax incident. Advertising
revenues increased 7.5%, from $37.1 million to $39.9 million, despite a weak
industry-wide advertising climate.

Circulation revenues (which include all single copy and subscription sales)
were $308,809,000 for fiscal 2002. Circulation revenues decreased by $5,688,000
or 1.8%, when compared to the prior fiscal year.

Subscription revenues increased by $1,470,000, or 4.2% for fiscal 2002,
when compared to the prior fiscal year. This increase was primarily due to the
August 2000 acquisition of Country Music Magazine, increased Globe subscription
revenue due to both increased rates and unit volume and Country Weekly due to
increased unit volume.

Advertising revenues were $39,915,000 for fiscal 2002. Advertising revenues
increased by $2,774,000 or 7.5% for fiscal 2002, when compared to the prior
fiscal year of $37,141,000. This increase was primarily due to additional
advertising from our core tabloids (National Enquirer and Star magazines, which
increased 16% and 9%, respectively) and new advertising from MIRA! magazine and
our custom publishing magazines. These increases were offset by decreased
advertising revenue from Auto World Magazine as a result of a reduction in
frequency from 22 issues in fiscal 2001 versus 14 issues in fiscal 2002.

Total operating expenses for fiscal 2002 increased by $11,667,000 when
compared to the prior fiscal year. This increase was primarily due to increased
depreciation expense of $11,744,000 and increased production costs of
$1,144,000. These increases were offset by a reduction in our editorial costs of
$2,259,000, which were primarily the result of a reduction in frequency of Auto
World Magazine described above.

Interest expense decreased for fiscal 2002 by $6,575,000 to $65,167,000
compared to the same prior fiscal year. This decrease in interest expense
relates to a lower average effective interest rate during fiscal 2002 and an
average lower level of indebtedness despite our bond offering on February 14,
2002.

Other income (expense) was $(139,000) for fiscal 2002, compared to other
income of $751,000 for fiscal 2001. Included in other income was minority
interest income of $376,000 for fiscal 2001.

Our effective income tax rates exceed the federal statutory income tax rate
of 35% because of the effect of certain goodwill amortization, which is not
deductible for income tax reporting purposes.

15

LIQUIDITY AND CAPITAL RESOURCES

We have substantially increased our indebtedness in connection with the
Weider acquisition. Our liquidity requirements have been significantly
increased, primarily due to increased interest and principal payment obligations
under the Credit Agreement and our subordinated notes. We believe that the net
cash generated from operating activities and amounts available under the $60.0
million revolving credit facility will be sufficient to fund our debt service
requirements under the Credit Agreement and the subordinated notes, to make
capital expenditures and to cover working capital requirements. As of March 31,
2003, there were no amounts outstanding on the revolving credit facility. We
believe, however, that based upon our current level of operations and
anticipated growth, it will be necessary to refinance the subordinated notes
upon their maturity. To the extent we make future acquisitions, we may require
new sources of funding, including additional debt, equity financing or some
combination thereof. There can be no assurances that such additional sources of
funding will be available to us on acceptable terms.

Our ability to make scheduled payments of principal and interest under the
Credit Agreement and the subordinated notes, as well as our other obligations
and liabilities, is subject to our future operating performance which is
dependent upon general economic, financial, competitive, legislative,
regulatory, business and other factors beyond our control.

At March 31, 2003, we had cash and cash equivalents of $40.5 million and a
working capital deficiency of $46.6 million. We do not consider our working
capital deficiency as a true measure of our liquidity position as our working
capital needs typically are met by cash generated by our business. Our working
capital deficiencies result principally from:

- our policy of using available cash to reduce borrowings which are
recorded as noncurrent liabilities, thereby reducing current assets
without a corresponding reduction in current liabilities;

- our minimal accounts receivable level relative to revenues, as most of
our sales revenues are received from national distributors as advances
based on estimated single copy circulation; and

- accounting for deferred revenues as a current liability. Deferred
revenues are comprised of deferred subscriptions, advertising and single
copy revenues and represent payments received in advance of the period in
which the related revenues will be recognized.

Historically, our primary sources of liquidity have been cash generated
from operations and amounts available under our credit agreements, which have
been used to fund shortfalls in available cash. Cash generated from operations
for the fiscal year ended March 31, 2003 was used to fund working capital
requirements, fund capital expenditures and to make term loan principal
repayments.

We made capital expenditures in the fiscal years ended March 31, 2003 and
March 25, 2002 totaling $24.7 million and $27.9 million, respectively.

At March 31, 2003, our outstanding indebtedness totaled $1,019.6 million,
of which $468.8 million represented borrowings under the Credit Agreement. In
connection with the acquisition of the Globe Properties in fiscal 2000, we
increased our Credit Agreement by $90 million. Additionally, in connection with
the acquisition of Weider Publications LLC, we further increased our credit
facility by $140 million. The effective interest rate under the Credit
Agreement, including amounts borrowed under the term loan commitments and
revolving credit commitment, as of March 31, 2003, was 4.3%, and the weighted
average interest rates for the fiscal years 2001, 2002 and 2003 were 10.0%, 7.5%
and 5.0%, respectively. On March 22, 2002, we amended our Credit Agreement. This
amendment decreased the marginal interest rate on our term loans by 1% for a fee
of $1,050,000.

We are subject to interest risk on our credit facilities and any future
financing requirements. Our fixed rate debt consists primarily of senior
subordinated notes. In November 2000, we entered into a $90 million interest
rate swap agreement which expired in May 2002, under which we paid a fixed rate
of 6.53%. This interest rate swap agreement effectively converted a portion of
our variable-rate debt to fixed-rate debt.

16

Effective March 26, 2002, we entered into two interest rate swap
agreements, which effectively converted a portion of our fixed-rate debt to
variable rate debt. The first agreement, which was originally scheduled to
expire in May 2004, had a notional amount of $125 million. Under this agreement,
we were to receive a fixed rate of 10.25% and were to pay LIBOR in arrears plus
a spread of 5.265%. The second agreement, which was originally scheduled to
expire in May 2005, had a notional amount of $25 million. Under this agreement,
we were to receive a fixed rate of 10.25% and we were to pay LIBOR in arrears
plus a spread of 4.885%. On June 29, 2002, we received $3,277,000 to terminate
these two interest rate swap agreements. This amount received was recognized as
a reduction of interest expense for the quarter ended June 24, 2002.

Additionally, effective June 28, 2002, we entered into two new interest
rate swap agreements, which effectively converted a portion of fixed-rate debt
to variable rate debt. The first agreement, which was originally scheduled to
expire in May 2004, had a notional amount of $125 million. Under this agreement,
we were to receive a fixed rate of 10.25% and pay LIBOR in arrears plus a spread
of 6.49%. The second agreement, which was originally scheduled to expire in May
2005, had a notional amount of $25 million. Under this agreement, we were to
receive a fixed rate of 10.25% and pay LIBOR in arrears plus a spread of 5.99%.
On October 8, 2002, we received $3,978,000 to terminate these two interest rate
swap agreements, which was recognized as a reduction of interest expense for the
fiscal year ended March 31, 2003. We currently have no interest rate swap
agreements outstanding.

We have no material assets or operations other than the investments in our
subsidiaries. The subordinated notes are unconditionally guaranteed, on a senior
subordinated basis, by all of our material subsidiaries. Each domestic
subsidiary that will be organized in the future by us, unless such subsidiary is
designated as an unrestricted subsidiary, will jointly, severally, fully and
unconditionally guarantee the subordinated notes on a senior subordinated basis.
Note guarantees are joint and several, full and unconditional and general
unsecured obligations of the note guarantors. The note guarantors are our wholly
owned domestic subsidiaries. At present, the note guarantors comprise all of our
direct and indirect subsidiaries. Note guarantees are subordinated in right of
payment to all existing and future senior debt of the note guarantors, including
the Credit Agreement, and are also effectively subordinated to all secured
obligations of note guarantors to the extent of the assets securing such
obligations, including the Credit Agreement. Furthermore, the notes indenture
permits note guarantors to incur additional indebtedness, including senior debt,
subject to certain limitations. We have not presented separate financial
statements and other disclosures concerning each of the note guarantors, as
these disclosures are not applicable under SEC rules and regulations.

So long as the factors set forth in the paragraph immediately above remain
true and correct, under applicable SEC rules and regulations, our note
guarantors will not need to individually comply with the reporting requirements
of the Exchange Act, nor will we have to include separate financial statements
and other disclosures concerning each of the note guarantors in its Exchange Act
reports.

The following table and discussion summarizes EBITDA for the fiscal years
ended March 26, 2001, March 25, 2002 and March 31, 2003.

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

(1) Includes a $7.6 million gain on insurance settlement.

We define EBITDA as operating income before depreciation and amortization.
EBITDA is not a measure of performance defined by GAAP. EBITDA should not be
considered in isolation or as a substitute for net income or cash flows from
operating activities, which have been prepared in accordance with GAAP or

17

as a measure of our operating performance, profitability or liquidity. We
believe EBITDA provides useful information regarding our ability to service our
debt, and we understand that such information is considered by certain investors
to be an additional basis for evaluating a company's ability to pay interest and
repay debt. EBITDA is a widely used performance measure for publishing companies
and is provided here as a supplemental measure of operating performance to
operating income calculated in accordance with GAAP.

NEW ACCOUNTING PRONOUNCEMENTS

In June 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 141, "Business
Combinations" and SFAS No. 142, "Goodwill and Other Intangible Assets". These
standards change the accounting for business combinations by, among other
things, prohibiting the use of pooling-of-interests accounting. In addition,
SFAS No. 142 prescribes that, goodwill, including the goodwill included in the
carrying value of investments accounted for using the equity method of
accounting, and certain other intangible assets deemed to have an indefinite
useful life, are no longer amortized. We ceased amortizing goodwill and other
indefinite lived intangible assets in fiscal 2003. Goodwill and indefinite lived
intangible assets must be periodically assessed for impairment using fair value
measurement techniques. The Company completed its initial impairment review as
of the beginning of fiscal 2003, and found no impairment. All remaining and
future acquired goodwill and other indefinite lived intangible assets will be
subject to an annual impairment test, or earlier if indicators of potential
impairment exist, using a fair-value based approach. The Company performed its
annual impairment test for fiscal 2003 as of the beginning of the fourth quarter
of fiscal 2003 and found no impairment.

In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets". SFAS No. 144 provides guidance on
the accounting for the impairment or disposal of long-lived assets. SFAS No. 144
supercedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to Be Disposed Of", and establishes a single accounting
model based on the framework established in SFAS No. 121 for long-lived assets
to be disposed of by sale, whether previously held and used or newly acquired.
Our adoption of this Statement, at the beginning of fiscal year 2003, did not
have a significant impact on the Company's financial position or results of
operations.

In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities". SFAS No. 146 superceded EITF
Consensus No. 94-3, "Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity (Including Certain Costs Incurred
in a Restructuring)". SFAS No. 146 affects the timing of the recognition of
costs associated with an exit or disposal plan by requiring them to be
recognized when incurred rather than at the date of a commitment to an exit or
disposal plan. SFAS No. 146 is to be applied prospectively to exit or disposal
activities initiated after December 31, 2002. The adoption of SFAS No. 146 did
not have a material impact on the Company's consolidated financial statements.

In November 2002, the FASB issued Interpretation No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others". This Interpretation expands the
disclosures to be made by a guarantor about its obligations under certain
guarantees and requires that, at the inception of a guarantee, a guarantor
recognize a liability for the fair value of the obligation undertaken in issuing
the guarantee. The initial recognition and measurement provisions of this
Interpretation are effective for guarantees issued or modified after December
31, 2002. We do not expect the adoption of the initial recognition and
measurement provisions of this Interpretation to have a material effect on our
consolidated financial statements.

In January 2003, the FASB issued Interpretation No. 46, "Consolidation of
Variable Interest Entities ("FIN 46")". This Interpretation requires variable
interest entities (commonly referred to as SPEs) to be consolidated by the
primary beneficiary of the entity if certain criteria are met. FIN 46 is
effective immediately for all new variable interest entities created or acquired
after January 31, 2003. For variable interest entities created or acquired prior
to February 1, 2003, the provisions of FIN 46 must be applied for the first
interim or annual period beginning after June 15, 2003. We do not have any
SPE's, therefore, the adoption of this Interpretation will have no effect on our
consolidated financial statements.

18

In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities". This Statement amends and
clarifies financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts
(collectively referred to as derivatives) and for hedging activities under SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities". This
Statement is effective for contracts entered into or modified after June 30,
2003. We do not expect the implementation of SFAS No. 149 to have a material
impact on our consolidated financial statements.

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of Both Liabilities and Equity". This
Statement establishes standards for how an issuer classifies and measures
certain financial instruments with characteristics of both liabilities and
equity. It requires that an issuer classify a financial instrument that is
within its scope as a liability (or an asset in some circumstances). This
Statement is effective for financial instruments entered into or modified after
May 30, 2003, and otherwise is effective at the beginning of the first interim
period beginning after June 15, 2003. We do not expect the implementation of
SFAS No. 150 to have a material impact on our consolidated financial statements.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The discussion and analysis of our financial condition and results of
operations is based upon our consolidated financial statements, which have been
prepared in accordance with GAAP. The preparation of these financial statements
require us to make estimates and assumptions that affect the reported amounts of
assets, liabilities, revenues and expenses and related disclosures of contingent
assets and liabilities. On an on-going basis, we evaluate our estimates,
including those related to allowances for doubtful accounts, reserves for sales
returns and allowances and the recoverability of long-lived assets including
excess of purchase price over net assets acquired. We base our estimates on
historical experience and on various other assumptions that we believe are
reasonable under the circumstances. These form the basis of our judgments about
the carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates which would effect
our reported results from operations. We believe the following is a description
of the critical accounting policies and estimates used in the preparation of our
consolidated financial statements.

Allowances for doubtful accounts are estimated losses resulting from our
customers' failure to make required payments. We continually monitor collections
from customers and provide a provision for estimated credit losses. We
aggressively pursue collection efforts on these overdue accounts. If future
payments by our customers were to differ from our estimates, we may need to
increase or decrease our allowances for doubtful accounts.

Revenues from copy sales are net of reserves provided for expected sales
returns, which are established in accordance with GAAP after considering such
factors as sales history and available market information. We continually
monitor the adequacy of the reserves and make adjustments when necessary.

We record purchase price allocations for our acquisitions based on
preliminary information received at the date of acquisition and based on our
acquisition experience. These allocations are subject to adjustments and are
finalized once additional information concerning asset and liability valuations
is obtained, typically from an independent appraisal. The final asset and
liability fair values may differ from the preliminary allocations. If the final
allocations for the acquisitions differ from the preliminary allocations, we may
need to increase or decrease our depreciation and/or amortization expense for
the acquired assets.

We periodically evaluate whether events or circumstances have occurred that
would indicate that long-lived assets, including property and equipment,
goodwill and other intangible assets, may not be recoverable or that the
remaining useful life may be impaired. When such events or circumstances are
present, the Company assesses the recoverability of long-lived assets by
determining whether the carrying value will be recovered through the expected
future cash flows resulting from the use of the asset. If the results of this
testing indicates an impairment of the carrying value of the asset, an
impairment loss equal to the excess of the asset's carrying value over its fair
value is recorded. The long-term nature of these assets requires the estimation
of its cash

19

inflows and outflows several years into the future and only takes into
consideration circumstances known at the time of the impairment test. Future
adverse changes in market conditions or poor operating results of the related
business may indicate an inability to recover the carrying value of the assets,
thereby possibly requiring an impairment charge to the carrying value of the
asset in the future.

FORWARD-LOOKING STATEMENTS

Some of the information presented in this Form 10-K constitutes
forward-looking statements, including, in particular, the statements about our
plans, strategies and prospects under the heading "Management's Discussion and
Analysis of Financial Condition and Results of Operations". We have based these
forward-looking statements on our current assumptions, expectations and
projections about future events. We caution you that a variety of factors could
cause business conditions and results to differ materially from what is
contained in the forward-looking statements. These forward-looking statements
are subject to risks, uncertainties and assumptions about us, including, among
other things:

- - our high degree of leverage and significant debt service obligations,
- - our ability to increase circulation and advertising revenues,
- - market conditions for our publications,
- - our ability to develop new publications and services,
- - outcomes of pending and future litigation,
- - the effects of terrorism, including bio-terrorism, on our business,
- - increasing competition by domestic and foreign media companies,
- - lower than expected valuations associated with cash flows and revenues may
result in the inability to realize the value of recorded intangibles and
goodwill,
- - changes in the costs of paper used by us,
- - any future changes in management,
- - general risks associated with the publishing industry,
- - declines in spending levels by advertisers and consumers,
- - the ability in a challenging environment to continue to develop new sources of
circulation,
- - increased costs and business disruption resulting from diminished service
levels from our wholesalers, and
- - the introduction and increased popularity over the long term of alternative
technologies for the provision of news and information.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

We are exposed to certain market risks that are inherent in our financial
statements. We are subject to interest risk on our credit facilities and any
future financing requirements. Our fixed rate debt consists primarily of senior
subordinated notes. In November 2000, we entered into a $90 million interest
rate swap agreement which expired in May 2002, under which we paid a fixed rate
of 6.53%. This interest rate swap agreement effectively converted a portion of
our variable-rate debt to fixed-rate debt.

Effective March 26, 2002, we entered into two interest rate swap
agreements, which effectively converted a portion of our fixed-rate debt to
variable rate debt. The first agreement, which was originally scheduled to
expire in May 2004, had a notional amount of $125 million. Under this agreement,
we were to receive a fixed rate of 10.25% and were to pay LIBOR in arrears plus
a spread of 5.265%. The second agreement, which was originally scheduled to
expire in May 2005, had a notional amount of $25 million. Under this agreement,
we were to receive a fixed rate of 10.25% and we were to pay LIBOR in arrears
plus a spread of 4.885%. On June 29, 2002, we received $3,277,000 to terminate
these two interest rate swap agreements. This amount received was recognized as
a reduction of interest expense for the quarter ended June 24, 2002.

Additionally, effective June 28, 2002, we entered into two new interest
rate swap agreements, which effectively converted a portion of fixed-rate debt
to variable rate debt. The first agreement, which was originally scheduled to
expire in May 2004, had a notional amount of $125 million. Under this agreement,
we were to receive a fixed rate of 10.25% and pay LIBOR in arrears plus a spread
of 6.49%. The second agreement, which was originally scheduled to expire in May
2005, had a notional amount of $25 million. Under this agreement, we were to
receive a fixed rate of 10.25% and pay LIBOR in arrears plus a spread of

20

5.99%. On October 8, 2002, we received $3,978,000 to terminate these two
interest rate swap agreements, which was recognized as a reduction of interest
expense for the fiscal year ended March 31, 2003. We currently have no interest
rate swap agreements outstanding.

The following table presents the future principal payment obligations and
weighted average interest rates (excluding any amounts that may be borrowed
under the credit commitment or required to be prepaid under the excess cash flow
provision) associated with our existing long-term instruments assuming our
actual level of indebtedness (dollars in 000's):

Interest rate changes result in increases or decreases in our income before
taxes and cash provided from operating activities. Pro forma for the additional
$140 million of debt incurred on January 23, 2003 as a result of the Weider
transaction, a 1% change in our weighted interest rate on our variable debt
would have resulted in a change of $4.7 million in our interest expense for the
year ended March 31, 2003.

Our primary market risk exposures relate to (1) the interest rate risk on
long-term and short-term borrowings, (2) our ability to refinance our senior
subordinated notes at maturity at market rates, (3) the impact of interest rate
movements on our ability to meet interest expense requirements and comply with
financial covenants and (4) the impact of interest rate movements on our ability
to obtain adequate financing to fund acquisitions. We manage the interest rate
risk on our outstanding long-term and short-term debt through our use of fixed
and variable rate debt. While we cannot predict or manage our ability to
refinance existing debt or the impact interest rate movements will have on our
ability to refinance existing debt, we continue to evaluate our financial
position on an ongoing basis.

21

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

FINANCIAL STATEMENTS:

Schedules have been omitted since the information is not applicable, not
required or because the required information is included in the Consolidated
Financial Statements or Notes thereto.

22

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholder of American Media Operations, Inc.:

We have audited the accompanying consolidated balance sheet of American
Media Operations, Inc., a wholly-owned subsidiary of American Media, Inc., and
subsidiaries (the "Company") as of March 31, 2003 and the related consolidated
statements of income (loss), comprehensive income (loss), stockholder's equity,
and cash flows for the fiscal year then ended. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on the fiscal year 2003 consolidated
financial statements based on our audit. The Company's consolidated financial
statements as of March 25, 2002 and for each of the years in the two-year period
then ended, before the inclusion of the revised disclosures discussed in Notes 1
and 3 to the consolidated financial statements, were audited by other auditors
who have ceased operations. Those auditors expressed an unqualified opinion on
those consolidated financial statements in their report dated May 10, 2002.

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

In our opinion, such 2003 consolidated financial statements present fairly,
in all material respects, the financial position of the Company as of March 31,
2003 and the results of its operations and its cash flows for the fiscal year
then ended, in conformity with accounting principles generally accepted in the
United States of America.

As discussed in Notes 1 and 3 to the consolidated financial statements, the
Company changed its method of accounting for goodwill and other intangible
assets in fiscal year 2003 to conform to Statement of Financial Accounting
Standards No. 142.

As discussed above, the consolidated financial statements of the Company,
as of March 25, 2002 and for each of the years in the two-year period then ended
were audited by other auditors who have ceased operations. These consolidated
financial statements have been revised as follows: (a) as described in Note 3
under the heading "Goodwill and Other Intangible Assets", these consolidated
financial statements have been revised to include the disaggregation of other
intangible assets and the transitional disclosures required by Statement of
Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets,
which was adopted by the Company as of March 26, 2002. Our audit procedures with
respect to other intangible assets as of March 25, 2002 described in Note 3
included (i) agreeing the previously reported amounts to the Company's
underlying records obtained from management, and (ii) testing the mathematical
accuracy of the disaggregation. Our audit procedures with respect to the
transitional disclosures in Note 3 for fiscal year 2002 and fiscal year 2001
included (i) agreeing the previously reported net income to the previously
issued consolidated financial statements and the adjustments to reported net
income representing amortization expense (including any related tax effects)
recognized in those periods to the Company's underlying records obtained from
management, and (ii) testing the mathematical accuracy of the reconciliation of
adjusted net income to reported net income; (b) accrued legal expense as of
March 25, 2002 has been disaggregated from other accrued expenses under the
heading "Accrued Expenses" in Note 1. Our audit procedures with respect to
accrued legal expense as of March 25, 2002 described in Note 1 included (i)
agreeing the previously reported amounts to the Company's underlying records
obtained from management, and (ii) testing the mathematical accuracy of the
disaggregation; and (c) rent expense for fiscal year 2002 and fiscal year 2001
has been disclosed in Note 13. Our audit procedures with respect to rent expense
described in Note 13 included agreeing the amounts for fiscal year 2002 and
fiscal year 2001 to the Company's underlying records obtained from management.
In our opinion, such disclosures and disaggregations are appropriate and have
been properly applied. However, we were not engaged to audit, review, or apply
any procedures to the fiscal

23

year 2002 and fiscal year 2001 consolidated financial statements of the Company
other than with respect to such disclosures and disaggregations, and
accordingly, we do not express an opinion or any other form of assurance on the
fiscal year 2002 and fiscal year 2001 consolidated financial statements taken as
a whole.

DELOITTE & TOUCHE LLP
Certified Public Accountants

Fort Lauderdale, Florida
June 2, 2003

24

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To American Media Operations, Inc.:

We have audited the accompanying consolidated balance sheets of American
Media Operations, Inc. (a Delaware corporation) and subsidiaries (the "Company")
as of March 25, 2002 and March 26, 2001 and the related consolidated statements
of income (loss), comprehensive income (loss), stockholder's equity and cash
flows for the fiscal years ended March 25, 2002 and March 26, 2001, and for the
period from May 7, 1999 through March 27, 2000. We have also audited the
accompanying consolidated statements of income (loss), comprehensive income
(loss), stockholder's equity and cash flows of the Predecessor Company of
American Media Operations, Inc. (the "Predecessor Company") for the period from
March 30, 1999 through May 6, 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of American Media Operations,
Inc. and subsidiaries as of March 25, 2002 and March 26, 2001, and the results
of their operations and their cash flows for the fiscal years ended March 25,
2002 and March 26, 2001 and for the period from May 7, 1999 through March 27,
2000 and the results of the Predecessor Company's operations and cash flows for
the period from March 30, 1999 through May 6, 1999 in conformity with accounting
principles generally accepted in the United States.

ARTHUR ANDERSEN LLP

New York, New York
May 10, 2002

NOTE: The report of Arthur Andersen LLP presented above is a copy of a
previously issued Arthur Andersen LLP report. This report has not been
reissued by Arthur Andersen LLP nor has Arthur Andersen LLP provided a
consent to the inclusion of its report in this Form 10-K.

NOTE: The consolidated financial statements as of March 25, 2002 and for each of
the years in the two-year period then ended have been revised to include:
(i) the disaggregation of other intangible assets and transitional
disclosures required by Statement of Financial Accounting Standards No.
142, Goodwill and Other Intangible Assets, which was adopted by the
Company as of March 26, 2002 (see Note 3 under the heading "Goodwill and
Other Intangible Assets"); (ii) the disaggregation of accrued legal
expense as of March 25, 2002 from other accrued expenses under the heading
"Accrued Expenses" in Note 1; and (iii) the disclosure of rent expense for
fiscal year 2002 and fiscal year 2001 under the heading "Operating Leases"
in Note 13. The report of Arthur Andersen LLP presented above does not
extend to these changes.

25

AMERICAN MEDIA OPERATIONS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
AS OF MARCH 25, 2002 AND MARCH 31, 2003
(IN 000'S, EXCEPT SHARE INFORMATION)

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

26

AMERICAN MEDIA OPERATIONS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (LOSS)
FOR THE THREE FISCAL YEARS IN THE PERIOD ENDED MARCH 31, 2003
(IN 000'S)

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

27

AMERICAN MEDIA OPERATIONS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
FOR THE THREE FISCAL YEARS IN THE PERIOD ENDED MARCH 31, 2003
(IN 000'S)