PRIMEDIA INC - 10-K Annual Report

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
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[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED: DECEMBER 31, 2002

OR

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

COMMISSION FILE NUMBER: 1-11106

PRIMEDIA INC.
(Exact name of registrant as specified in its charter)

DELAWARE 13-3647573
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)

745 FIFTH AVENUE, NEW YORK, NEW YORK 10151
(Address of principal executive offices) (Zip Code)

(212) 745-0100
(Registrant's telephone number, including area code)

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

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

[ ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2).

Yes__X__ No____

The aggregate market value of the voting common equity of PRIMEDIA Inc.
("PRIMEDIA") which is held by non-affiliates of PRIMEDIA, computed by reference
to the closing price as of the last business day of the registrant's most
recently completed second fiscal quarter, June 28, 2002, was approximately
$120 million. The registrant has no non-voting common stock.

As of February 28, 2003, 259,261,439 shares of PRIMEDIA's Common Stock were
outstanding.

The following documents are incorporated into this Form 10-K by reference:
None.
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TABLE OF GUARANTORS

The address, including zip code, and telephone number, including area code,
of each additional registrant's principal executive office is 745 Fifth Avenue,
New York, New York 10151 (212-745-0100).

These companies are listed as guarantors of the debt securities of the
registrant. The consolidating financial statements of the Company depicting
separately its guarantor and non-guarantor subsidiaries are presented as
Note 26 of the notes to the consolidated financial statements. All of the equity
securities of each of the guarantors set forth in the table above are owned,
either directly or indirectly, by PRIMEDIA, and there has been no default during
the preceding 36 calendar months with respect to any indebtedness or material
long-term leases of PRIMEDIA or any of the guarantors.

ii

PRIMEDIA INC.
ANNUAL REPORT ON FORM 10-K
DECEMBER 31, 2002

iii

PART I

ITEM 1. BUSINESS.

GENERAL

PRIMEDIA Inc. ("PRIMEDIA" or the "Company") is a targeted media company with
leading positions in consumer and business-to-business markets. Our properties
deliver content via print (magazines, books and directories), video (digital
broadband, satellite and cable), live events (trade and consumer shows) and the
Internet. Our products serve highly specialized niches and capitalize on the
growing trend toward targeted rather than mass information distribution.

Many of the Company's products, such as those provided by PRIMEDIA's
consumer magazines, About.com, CHANNEL ONE NEWS, apartment and home guides and
business-to-business magazines afford advertisers an opportunity to directly
reach niche market audiences. In 2002, 48% of PRIMEDIA's total revenue was from
lead generation advertising, 13% was from brand awareness advertising and 39%
was from non-advertising sources (subscription revenue and non-advertising
sales). Unlike general brand awareness advertising, lead generation advertising
is focused on triggering a potential purchase decision by the reader, user or
viewer.

The Company's products compete in two principal segments, Consumer and
Business-to-Business. The Consumer segment produces and distributes magazines,
guides, videos and Internet products for consumers in various niche markets.
This segment consists of the Consumer Magazines and Media Group, Consumer
Guides, PRIMEDIA Television and About, Inc. ("About"). The Company's
Business-to-Business segment produces and distributes magazines, books,
directories, databases, vocational training materials and Internet products to
business professionals in such fields as communications, agriculture,
professional services, media, transportation and healthcare. The
Business-to-Business segment includes the Company's trade magazines and trade
shows (the Business Magazines and Media Group), as well as Workplace Learning, a
provider of video and interactive professional training, and Federal
Sources Inc., an information and consulting provider for government contractors.
These segment results are regularly reviewed by the Company's chief operating
decision maker and the remainder of the executive team to determine how
resources will be allocated to the segment and assess its performance.

CONSUMER SEGMENT

CONSUMER MAGAZINE AND MEDIA GROUP

The Company is one of the largest specialty consumer magazine companies in
the U.S., with over 125 titles including AUTOMOBILE, MOTOR TREND, NEW YORK,
SEVENTEEN, HOT ROD, FLY FISHERMAN and POWER & MOTORYACHT and leadership
positions in such categories as automotive, motorcycle, crafts, teens, home
entertainment technology and outdoor recreation. In 2002, over half of these
specialty consumer magazines were number one in their markets. The principal
sources of specialty consumer magazines sales are lead generation advertising,
circulation and ancillary revenues. For the year ended December 31, 2002, 50% of
sales was from advertising, 34% from circulation and 16% from ancillary sources.

Readers value specialty consumer magazines for their targeted editorial
content and also rely on them as catalogues of products in the relevant topic
areas. This catalogue aspect makes the specialty consumer magazines important
media buys for advertisers. Advertising sales for the Company's specialty
consumer magazines are generated largely by in-house sales forces. The magazines
compete for advertising on the basis of circulation and the niche markets they
serve. Each of the Company'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, which is provided by
in-house and free lance writers.

The Company publishes 44 automotive enthusiast magazines, including
AUTOMOBILE and MOTOR TREND, catering to the high-end automotive market, as well
as such highly specialized enthusiast titles as TRUCKIN' and LOWRIDER, the
largest retail sales magazines in the automotive category, MUSCLE MUSTANG & FAST
FORDS, VETTE and SPORT COMPACT CAR. The Company also publishes nine motorcycle
enthusiast magazines, including MOTORCYCLIST and DIRT RIDER. Supplementing the
print publications, PRIMEDIA has a strong presence on the Internet with a
companion website to each publication or a presence for each publication on the

About.com network. In the high-end and new car markets, PRIMEDIA's publications
compete against CAR AND DRIVER and ROAD AND TRACK, both owned by Hachette
Filipacchi Magazines.

The Company is a leading publisher of magazines for outdoor enthusiasts with
such titles as FLORIDA SPORTSMAN, FLY FISHERMAN, SAIL, POWER & MOTORYACHT, EQUUS
and PRACTICAL HORSEMAN. The Company also publishes numerous magazines targeting
action sports enthusiasts such as SURFER, SURFING, SKATEBOARDER and SNOWBOARDER.
One of the Company's major competitors in the enthusiast market is the
Time4Media division of AOL Time Warner. The Company also competes in individual
enthusiast markets with a number of smaller, privately-owned or regionally-based
magazine publishers.

The Company publishes the flagship magazine for the New York City
metropolitan area. Since it was founded in April 1968, NEW YORK has been New
York City's magazine of record, with New York City centric news, entertainment,
culture, fashion and personalities. NEW YORK competes with other New York-themed
magazines for local and national advertising. Competitors include the NEW YORK
TIMES MAGAZINE, Advance Magazine Publishers Inc.'s THE NEW YORKER and TIME OUT
NEW YORK.

The Company is the largest publisher of teen media in the United States.
SEVENTEEN is the leading young women's fashion and beauty magazine based on both
circulation and advertising pages, with fashion, boys, beauty, talent and
lifestyle editorial targeted to girls ages 12 to 24. SEVENTEEN'S monthly rate
base is 2.35 million and its total monthly readership is over 14.4 million. The
Company acquired TEEN magazine in 2001. In February 2002, TEEN became a
newsstand only special publication with such topics as back to school and teen
prom. Competition for newsstand sales, advertising dollars and subscribers in
the teen magazine market is especially intense. Competitors of the Company's
publications include Gruner & Jahr's YM, AOL Time Warner's TEEN PEOPLE, Hearst's
COSMOGIRL, Hachette Filipacchi's ELLEGIRL and Conde Nast's TEEN VOGUE. In
December 2002, the Company sold TIGER BEAT and TEEN BEAT. The Company announced
on February 5, 2003 that it was exploring strategic, value-creating options for
SEVENTEEN and a number of related teen properties.

PRIMEDIA publishes the two leading soap opera magazines, SOAP OPERA DIGEST
and SOAP OPERA WEEKLY. Both publications compete for circulation on the basis of
editorial content and quality against SOAPS IN DEPTH which has substantially
lower circulation.

The Company's consumer magazine circulation revenue is divided between
retail sales (largely newsstand and other retail outlets) and subscriptions with
revenue weighted slightly towards subscriptions. To acquire new subscribers, the
Company depends on direct mail, telemarketing and in magazine promotions. The
Internet has also become an efficient, cost-effective source of subscription
sales for the Company. In 2002, the Company generated an estimated 470,000 paid
subscriptions via the Internet.

The Company operates RetailVision, the largest specialty magazine
distribution company in the U.S., which distributes over 700 titles, including
those of the Company and 98 other publishers, to approximately 50,000
independent niche retailers such as auto parts retailers, craft shops, tackle
shops, and record/music stores.

CONSUMER GUIDES

The Company is the largest publisher of rental apartment guides in the U.S.
with 88 local versions, most of which are distributed monthly and provide
informational listings about featured apartment communities. Apartment community
managers, who need to fill vacant apartments, provide virtually 100% of
apartment guide advertising revenues.

The Company is the dominant information provider in apartment listings and
continues to gain in market share due to the cost effectiveness of its products
as measured by cost per lease to the advertiser. The Company's national
competitors include Trader Publishing Company (publishers of FOR RENT) and
Network Communications Inc. The majority of customers purchase 12-month
contracts, and in 2002, approximately 90% of standard listing customers renewed
their contracts when they expired.

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The average number of monthly visitors to the Company's Internet site,
apartmentguide.com, grew to approximately 1,230,000 per month in 2002.
Apartmentguide.com is the exclusive partner of MSN's House & Home. The site,
which carries all of the listings included in the print products, listed
approximately 20,000 properties as of December 31, 2002. Rental leads delivered
to apartment advertisers were up approximately 99%, from approximately 2,260,000
in 2001 to approximately 4,500,000 in 2002. The site offers many premium
features not provided by its print products including virtual tours and search
functionality. Approximately 111,000 of these premium products were sold during
2002.

The Company is a leader in new home guides with guides in 18 major markets
including Northern California, Denver, Phoenix, Dallas-Fort Worth and
Philadelphia.

A major strategic advantage is the Company's DistribuTech Division which is
the nation's largest distributor of free publications, including its own
consumer directories and over 1,300 other titles. In 2002, it distributed
publications to over 19,000 grocery, convenience, video and drug stores in over
80 metropolitan areas, as well as universities, military bases, major employers
and over 30,000 other locations. The majority of these locations are operated
under exclusive distribution agreements. The guides are typically displayed in
free-standing, multi-pocket racks. DistribuTech generates revenues by leasing
rack pockets to other third party publications. DistribuTech competes for
third-party publication distribution primarily on the basis of its prime retail
locations. DistribuTech's principal competitor is Trader Distribution Services,
a division of Trader Publishing Company.

PRIMEDIA TELEVISION

CHANNEL ONE NETWORK'S news program, CHANNEL ONE NEWS, is the only daily,
advertising supported television news program delivered to secondary school
students in their classrooms. The award-winning program contains news stories
and features on issues of concern to teenagers, delivered in a relevant and
engaging way. CHANNEL ONE NEWS broadcasts every school day via satellite to
approximately 8.1 million students, 360,000 classrooms and approximately
400,000 educators in approximately 12,000 secondary schools in the United
States. On an average school day, ten times more teens watch CHANNEL ONE NEWS
than the nightly newscast of ABC, NBC, CBS and the cable networks combined.
Channel One's average audience is 25 times larger than MTV's average prime time
audience.

CHANNEL ONE NETWORK generates the majority of its revenue by selling the two
minutes of advertising shown during each 12-minute CHANNEL ONE NEWS daily
newscast. Because it is shown in schools, CHANNEL ONE NEWS airs only during the
school year, typically September to June. Accordingly, CHANNEL ONE NETWORK earns
the largest share of its revenue in the beginning of the school year, in the
Company's fourth quarter. The CHANNEL ONE NEWS program does not air during the
summer months and, accordingly, CHANNEL ONE NETWORK sees a seasonal revenue drop
in the Company's third quarter each year.

Schools sign up for the CHANNEL ONE NETWORK service under a three-year
contract pursuant to which they agree to show CHANNEL ONE NEWS, in its entirety,
on at least 90% of all school days. CHANNEL ONE NETWORK provides schools with a
turnkey system of videocassette recorders and network televisions. These
products and services are provided to schools at no charge. In addition, CHANNEL
ONE CONNECTION provides a maximum of 120 minutes of educational programming per
school day at no charge.

CHANNEL ONE NETWORK has a library of over 2,300 broadcasts including
approximately 200 single subject series, 95 of which have been released as
videos. The Company's channelone.com online network and its
channeloneteacher.com website provide supplemental information to students and
educators.

3

CHANNEL ONE NEWS has no direct competition in the schools but does compete
for advertising dollars with other media businesses, such as MTV and the WB
Network. The Company's primary competitive advantages are award winning
programming and total audience reach.

Films for the Humanities and Sciences ("Films") is a distributor of
approximately 2,250 owned and 9,600 licensed educational videos, DVDs, CD-ROMs
and related products. These products are sold mostly by direct mail to teachers,
instructors and librarians primarily serving students in grades 8 to 12 and the
college markets. Films is the largest distributor of such products to colleges
and high schools and competes on the basis of exclusivity, quality, breadth and
depth of the subject matter.

PRIMEDIA Digital Video ("PDV"), formed in 2000, develops, produces and
distributes video properties based on the Company's brands and franchises, and
recently launched the Video Magazine Rack, a video-on-demand cable TV service
offering a selection of video content related to the Company's print production.
Additionally, PDV manages the Company's Dallas-based video production facility
where video product is developed and produced for both the Company's own
programming needs and for third party customers.

ABOUT

About is a leading producer of information and original content on the
Internet. About generates revenue from three sources: brand advertising on the
About Network, auction-based pay-per-click classified advertising on the About
Network and 3rd party sites, and web-hosting services.

The About Network consists of a network of more than 400 highly-targeted web
sites covering over 10,000 discrete topics. The information and original content
on the web sites are generated by human guides. Each guide is carefully screened
and trained by About. All guides must successfully complete the About training
program and maintain standards in user services and community leadership. The
About and PRIMEDIA sites combined were the 5th most visited sites on the
Internet in December 2002 with over 44 million unique visitors, as measured by
MEDIA METRIX.

In the brand advertising arena, the About Network competes with other
large-scale Internet properties such as America Online, Yahoo and Microsoft
Network, to sell display advertising on About's web sites to national
advertisers.

About's auction-based classified advertising business, Sprinks, enables an
advertiser to bid for link placement on targeted content web pages, search
results and email newsletters on the About Network and on Sprinks affiliate
sites. An advertiser pays About a fee when a consumer clicks their link,
providing the advertiser with a targeted and efficient means of marketing their
services on the Web. Other companies providing pay-per-click classified
advertising of this sort include Overture Services Inc. and Google.

About's web-hosting service allows a consumer to register a domain name and
then pay a monthly fee for hosting and support of his or her personal web site.
Competitors include Yahoo and Terra Lycos.

BUSINESS-TO-BUSINESS SEGMENT

BUSINESS MAGAZINES AND MEDIA GROUP

The Company is a leading publisher of business-to-business magazines in the
U.S. with over 65 titles that provide vital information to professionals in such
fields as communications (TELEPHONY), agriculture (SOYBEAN DIGEST), broadband
(CABLEWORLD), transportation (FLEET OWNER), industrial (ENGINEERING AND MINING
JOURNAL), professional services (REGISTERED REPRESENTATIVE) and entertainment
(BROADCAST ENGINEERING). In 2002, 78% of these titles ranked number one or
number two in their category based on advertising pages. In 2002, over 95% of
magazine revenue was derived from advertising as most copies of these magazines
are distributed on a controlled circulation basis, meaning that they are
distributed free of charge to select qualified readers.

4

Because each of the business-to-business magazines is distributed almost
exclusively to purchasing decision-makers in a targeted industry group, product
and service providers are able to focus their advertising. Advertising rates are
based on the quality and size of the circulation within the target group as well
as competitive factors. These magazines compete for advertising on the basis of
advertising rates, circulation, reach, editorial content and readership
commitment. Advertising sales are made by in-house sales forces and are
supplemented by independent representatives in selected regions and overseas.

The Company sponsors conferences and trade shows, serving the advertisers
and readers of the corresponding publications, including WASTE AGE, LIGHTING
DIMENSIONS and TRANSMISSION & DISTRIBUTION.

On both the publishing and trade show sides of the business, there are
large, domestic and internationally-based competitors that vary by the industry
served. Some of those competitors are Reed Business Information (owned by Reed
Elsevier plc group), VNU Business Media (owned by VNU NV) and Advanstar
Communications.

The Company also publishes periodicals that provide in-depth data on
selected markets. WARD'S AUTOMOTIVE REPORTS is recognized as the authoritative
source for industry-wide statistics on automotive production and sales. In
addition, the Company publishes used vehicle valuation information in print and
electronic formats including EQUIPMENT WATCH. Other databases include THE
ELECTRONICS SOURCE BOOK and AC-U-KWIK.

The Company also operates a business-to-business Internet operation serving
numerous industries and leveraging off of PRIMEDIA's already strong traditional
media presence. In December 2002, these sites collectively received more than
4.5 million page views.

WORKPLACE LEARNING

PRIMEDIA Workplace Learning is a leading provider of integrated training,
education and information solutions, helping public and private enterprises
create and retain qualified, competent workforces. The Company largely delivers
its products via satellite, videotape, CD-ROM, live events and increasingly over
the Internet. It is a leader in such markets as automotive (Automotive Satellite
Television Network), industrial (Industrial Training Systems), healthcare
(Health and Sciences Television Network), pharmaceuticals (Interactive Medical
Networks), government (Law Enforcement Training Network
("LETN")), fire and emergency services (Fire and Emergency Television Network),
and banking (Bankers Training and Consulting Company). To provide online
learning management services in addition to content, the Company has launched
PRIMEnet, a comprehensive e-learning delivery and management platform.

In 2002, the United States Customs Service selected PRIMEDIA Workplace
Learning to implement Customs Television Network, which includes LETN. The
implementation of a satellite-based training and communications network is
designed to provide Customs Officials in 350 locations with the latest
techniques in critical emergency response, homeland security, safety and health
issues.

The Company has numerous direct and indirect competitors, including BVS,
General Physics and Healthstream. In addition, many potential customers continue
to do their own in-house training. The Company is pursuing opportunities to
capture market share in those markets migrating to e-learning solutions. It is
also capitalizing on opportunities to increase product and content sales through
resellers, distributors, associations, and consortia.

ADVERTISING

Over 60% of the Company's revenue is derived from advertising. In general,
the Company sells two types of advertising: lead generation advertising (48% of
total revenue) and brand awareness advertising (13% of total revenue). In a
given media market in which the Company competes (e.g. fishing), lead generation
advertising is purchased by advertisers who are "endemic" to that market (e.g.
fishing rod

5

manufacturers) and are seeking to trigger a direct, specific buying decision.
The Company's specialty magazines, consumer guides, About.com and
Business-to-Business units derive a majority of their revenue from this type of
advertising.

In contrast, brand awareness advertising concentrates on introducing or
reinforcing a product's brand image with the reader, user or viewer. The
Company's larger circulation magazine properties, such as SEVENTEEN, and
television properties, such as CHANNEL ONE NETWORK, generate more of their
revenue from brand awareness advertising, primarily from the fashion, health and
beauty and entertainment sectors.

PRIMEDIA's focus on lead generation advertising from endemic buyers gives
the Company a stable base of advertising revenue, less susceptible to the
fluctuations of the business cycle than the brand advertising market. PRIMEDIA's
2001 acquisitions of EMAP and About and its divestiture in 2002 of large
circulation magazine titles such as MODERN BRIDE and AMERICAN BABY, have
accelerated the Company's trend toward more targeted, niche media and endemic
advertising.

In addition, PRIMEDIA has successfully expanded beyond its base in
publishing into related, high growth media such as video (Primedia Digital
Video) and Internet (About, Consumer Magazine and Media Group and Consumer
Guides Internet sites) serving the same base of niche-focused enthusiasts and
advertisers. The Company has implemented an integrated sales effort (PRISM) to
garner additional revenues from national advertisers across these media
platforms and properties.

ACQUISITIONS AND DIVESTITURES

Historically, PRIMEDIA has actively sought to acquire magazines and other
media properties to strengthen its competitive position in the segments and
markets in which it competes. The Company has also traditionally managed its
portfolio of media assets by opportunistically divesting assets no longer core
to the Company's overall strategy. In 2002, PRIMEDIA focused on improving its
operating results through the integration of its 2001 acquisitions of EMAP Inc.
("EMAP", formerly known as Petersen Publishing) and About, and reducing the
amount of debt on its balance sheet through the divestiture of several large
consumer magazine properties.

In February 2001, About, a leading producer of information and original
content on the Internet, was merged into a subsidiary of PRIMEDIA and as a
result became a wholly-owned subsidiary of PRIMEDIA. About's financial results
are included in the Company's Consumer segment for the last ten months of 2001
and for the full year 2002. PRIMEDIA has integrated About's operations into the
Company's Consumer segment, where it provides a vital platform for the delivery
of Internet-based content and advertising. About also serves as a source of
subscribers for the Company's magazine businesses. The integration of About has
driven headcount reductions and has decreased capital spending and expenses
across the Company's Internet and new media businesses.

In August 2001, the Company acquired EMAP from UK-based magazine publisher
EMAP plc. EMAP had more than 60 consumer titles reaching over 75 million
enthusiasts through a combination of magazines, live events, television shows
and web sites. In 2002, these operations were fully integrated into PRIMEDIA's
Consumer Magazine and Media Group and its financial results are reported in the
Consumer segment for the full year. The results of the acquired EMAP assets are
included for the last four months of 2001.

With EMAP, the Company has been able to add scale in the automotive
enthusiast market, particularly as the result of the combination of sales
efforts for AUTOMOBILE and MOTOR TREND magazines. The acquisition of EMAP also
enhanced PRIMEDIA's market position in the action sports and home entertainment
technology magazine markets. Finally, the Company expects to continue to achieve
efficiencies through increased scale of operations in the areas of paper
purchasing, circulation, production, technology and finance.

6

In July 2001, at the time of announcement of the EMAP acquisition, PRIMEDIA
announced its intention to sell $250 million of assets in order to pay down debt
associated with the acquisition. Since that time, the Company has sold assets
for proceeds of over $345 million. Asset sales in 2002 accounted for
approximately $228 million of that total.

Major 2002 divestitures included the American Baby Group, CHICAGO magazine,
MODERN BRIDE and other small enthusiast titles. The American Baby Group which is
comprised of the AMERICAN BABY magazine, web site and cable television show, as
well as the Baby Faire consumer expo was sold to Meredith Corporation at the end
of 2002 for $115 million. The Company also sold CHICAGO magazine in August 2002
for $35 million to an affiliate of The Chicago Tribune Company and sold the
Modern Bride Group ("MBG"), including MODERN BRIDE magazine, in February 2002 to
Advance Magazine Publishers Inc. for $50 million. Other 2002 divestitures
included the sale of ExitInfo, a publisher of free local travel guides and
coupon books, to Trader Publishing for $24 million, as well as a number of small
magazine divestitures including the sale of HORTICULTURE to F&W Publications,
DOLL READER to Ashton International Media, Inc. and IN NEW YORK to Best Read
Guides LLC. Financial results for these divestitures are reported in
Discontinued Operations.

Prior to 2001, the Company was an active acquirer of consumer and
business-to-business magazines, rental apartment and other real estate guides,
trade shows, directories, educational training content providers and other media
businesses. In 2000, major acquisitions included Adams/Laux Company, Inc. and
Adams/Intertec International Inc., publishers of business-to-business magazines
and other publications relating to the meetings and conference industry and the
electric power industry. In that year, the Company also acquired the assets of
Paul Kagan Associates Inc. and the stock of Kagan World Media Inc. and certain
of its affiliated companies, which is a newsletter, conference, consulting
service and content business focused on the media and telecommunications
industries.

Management's Discussion and Analysis of Financial Condition and Results of
Operations (Item 7, page 13) provides a description of segment results.

PRODUCTION AND FULFILLMENT

Virtually all of the Company's print products are printed and bound by
independent printers. The Company believes that because of its buying power,
outside printing services can be purchased at favorable prices. The Company
provides most of the content for its electronically delivered products but
outsources technology and production.

The principal raw material used in the Company's products is paper. PRIMEDIA
purchases paper directly from several paper mills, including the three major
paper mills. The Company has used strategic sourcing principles to gain stable
supplies at favorable prices.

The Company uses the U.S. Postal Service for distribution of many of its
products and marketing materials and is therefore subject to postage rate
changes. Many of the Company's products are packaged and delivered to the U.S.
Postal Service directly by the printer. Other products are sent from warehouses
and other facilities operated by the Company.

As discussed below in Item 7 under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Impact of Inflation
and Other Costs", postal rates increased in 2002 while paper prices decreased.
Going forward, the Company may be impacted by future cost increases, driven by
inflation or market conditions in these categories.

EMPLOYEES

As of December 31, 2002, the Company had approximately 5,100 full-time
equivalent employees. During 2002, the Company's headcount declined primarily
due to divestitures and consolidation of

7

functions. None of these employees are union members. Management considers its
relations with its employees to be good.

COMPANY ORGANIZATION

PRIMEDIA was incorporated on November 22, 1991 in the State of Delaware. The
principal executive office of the Company is located at 745 Fifth Avenue, New
York, New York, 10151; telephone number (212) 745-0100.

The Company holds regular meetings to inform investors about the Company. To
obtain information on these meetings or to learn more about the Company please
contact:

James Magrone
Senior Vice President, Investor Relations
Tel: 212-745-0634
Email: jmagrone@primedia.com

The 2003 PRIMEDIA Annual Meeting will be held on Wednesday, May 14, 2003 at
10:00 a.m., at the Four Seasons Hotel, 57 East 57th Street, New York, NY.

AVAILABLE INFORMATION

The Company's Internet address is: www.primedia.com. The Company makes
available free of charge through its web site its annual report on Form 10-K,
quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to
those reports filed or furnished pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934, as amended, as soon as reasonably practicable
after such documents are electronically filed with, or furnished to, the
Securities and Exchange Commission.

ITEM 2. PROPERTIES.

During 2002 and 2001, in connection with the cost reduction and integration
plans, the Company has closed and consolidated in excess of 44 office locations.

The Company's principal leased properties used by the Consumer segment are
located in Alabama, Arizona, Arkansas, California, Colorado, Connecticut,
Florida, Georgia, Illinois, Indiana, Kansas, Kentucky, Maryland, Massachusetts,
Michigan, Missouri, Nebraska, Nevada, New Jersey, New Mexico, New York, North
Carolina, Ohio, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Utah,
Vermont, Virginia, Washington and Wisconsin; and the principal leased properties
used by the Business-to-Business segment are located in Alabama, California,
Colorado, Connecticut, Georgia, Illinois, Indiana, Kansas, Maryland,
Massachusetts, Michigan, Minnesota, Mississippi, Missouri, New Jersey, New York,
Pennsylvania, Tennessee, Texas, United Kingdom, Virginia, Washington and
Washington D.C.

Property is owned by the Company and used in the Consumer segment in
Minnesota and Mississippi and in the Business-to-Business segment in
Mississippi. The Company's only production facilities are small printing
operations for Films, broadcast production facilities for PDV, PRIMEDIA
Workplace Learning and Channel One and video duplicating facilities for PRIMEDIA
Workplace Learning and Films. The Company's distribution properties and their
capacity is adequate to satisfy the Company's needs.

ITEM 3. LEGAL PROCEEDINGS.

There are no material pending legal proceedings and no material legal
proceedings including any that were terminated in the fourth quarter of 2002, to
which the Company is or was a party.

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

There were no matters submitted to a vote of security holders during the
fourth quarter of 2002.

8

PART II

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

MARKET INFORMATION

PRIMEDIA Common Stock is listed on the New York Stock Exchange, under Ticker
Symbol "PRM". As of February 28, 2003, there were 419 holders of record of
PRIMEDIA Common Stock. The Company has not paid and has no present intention to
pay dividends on its Common Stock. In addition, the Company's bank credit
facility and Senior Notes impose certain limitations on the amount of dividends
permitted to be paid on the Company's Common Stock. See Item 7 of Part II,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources--Financing Arrangements." High, low
and closing sales prices for 2002 and 2001 were as follows:

The closing stock price decreased by 52.6% from December 31, 2001 to
December 31, 2002. From January 1, 2003 through March 21, 2003, the high price
for the stock was $3.05, the low price was $1.87 and the closing price on March
21, 2003 was $2.08.

EQUITY COMPENSATION PLAN INFORMATION

Information required by this item with respect to equity compensation plans
of the Company is included in Part III, Item 12 of this Form 10-K under the
caption "Equity Compensation Plan Information."

RECENT SALES OF UNREGISTERED SECURITIES

In February 2002, May 2002 and August 2002, the Company issued to KKR 1996
Fund L.P. ("KKR 1996 Fund") unregistered warrants to purchase 1 million,
1.25 million and 1.5 million shares of the Company's Common Stock, respectively.
The warrants were issued in connection with the equity financing by KKR 1996
Fund in August 2001 as more fully described under "Certain Relationships and
Related Transactions" in Item 13 of this Form 10-K.

In November 2002, the Company issued 78,000 shares of its unregistered
Common Stock to Paul Kagan as deferred purchase price payable in connection with
the acquisition by the Company in November 2000 of the assets of Paul Kagan
Associates, Inc. and the stock of certain of its affiliated companies. The
aggregate purchase price paid by the Company in connection with the transaction
was 1,190,000 shares of the Company's Common Stock, of which 390,000 shares are
payable in five equal annual installments of 78,000 shares on each annual
anniversary of the closing date of the transaction.

In February 2003, the Company issued to Michael Tokarz, a former Director of
the Company, 29,284 shares of the Company's unregistered Common Stock as
compensation for his services as a director from October 1998 to May 2002. Mr.
Tokarz, was permitted to defer the payment of his director's fees and receive
the fees in the form of Common Stock pursuant to the Directors' Deferred
Compensation Plan. Mr. Tokarz deferred the payment of an aggregate of $186,367
of directors' fees that he would have otherwise received in cash at the time the
services were provided.

The above issuances of securities were made by the Company in reliance on
exemptions from registration contained in Section 4(2) of the Securities Act of
1933, as amended, and the rules and regulations thereunder, as offerings not
involving a public offering.

9

ITEM 6. SELECTED FINANCIAL DATA.

The selected consolidated financial data were derived from the audited
consolidated financial statements of the Company as of December 31, 2002 and
2001 and for the years ended December 31, 2002, 2001 and 2000. The data should
be read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the consolidated financial statements
and the related notes thereto included elsewhere herein. On January 1, 2002, the
Company adopted Statement of Financial Accounting Standards ("SFAS") No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS 144").
As a result of this adoption, prior year results have been reclassified to
reflect the results of the Modern Bride Group, ExitInfo, Chicago, Horticulture,
Doll Reader, the American Baby Group and IN New York as discontinued operations
for the periods prior to their respective divestiture dates. On January 1, 2002,
the Company also adopted Emerging Issues Task Force ("EITF") Consensus
No. 00-25, "Vendor Income Statement Characterization of Consideration Paid to a
Reseller of the Vendors Products," ("EITF 00-25") and EITF Consensus No. 01-9,
"Accounting for Consideration Given by a Vendor to a Customer (Including a
Reseller of the Vendor's Products)" ("EITF 01-9") which resulted in a net
reclassification of product placement costs previously recorded as operating
expenses to reductions of sales from such activities.

PRIMEDIA INC. AND SUBSIDIARIES

(See notes on the following page)

10

NOTES TO SELECTED FINANCIAL DATA

(1) As a result of the adoption of EITF 00-25, EITF 01-9 and SFAS 144, the
Company reclassified amounts from sales, net, for the years ended
December 31, 2001, 2000, 1999 and 1998, as follows:

(2) Includes an impairment of long-lived assets of $11,610 for the year ended
December 31, 2002.

(3) Includes an impairment of intangible assets, goodwill and other, of
$154,828, $444,699 and $275,788 for the years ended December 31, 2002, 2001
and 1999, respectively.

(4) Represents non-cash compensation and non-recurring charges of $15,665,
$58,181 and $35,210 for the years ended December 31, 2002, 2001 and 2000,
respectively, a provision for severance, closures and restructuring related
costs of $51,914, $43,920, $20,798 and $22,000 for the years ended
December 31, 2002, 2001, 2000 and 1999, respectively, and loss (gain) on
the sale of businesses and other, net, of $7,247, ($57,233), ($14,438),
($235,580) and ($7,216) for the years ended December 31, 2002, 2001, 2000,
1999 and 1998, respectively.

(5) Represents impairments of the Company's investment in CMGI, Inc. of
approximately $7,000 and $155,500 for the years ended December 31, 2001 and
2000, respectively, the Company's investment in Liberty Digital of
approximately $700 and $21,900 for the years ended December 31, 2001 and
2000, respectively, the Company's investments in various assets-for-equity
transactions of approximately $10,000 and $84,000 for the years ended
December 31, 2002 and 2001, respectively, and various other PRIMEDIA
investments of approximately $9,200, $14,900 and $11,200 for the years
ended December 31, 2002, 2001 and 2000, respectively.

(6) Historically, the Company did not need a valuation allowance for the
portion of the tax effect of net operating losses equal to the amount of
deferred income tax liabilities related to tax-deductible goodwill and
trademark amortization expected to occur during the carryforward period of
the net operating losses based on the timing of the reversal of these
taxable temporary differences. As a result of the adoption of SFAS
No. 142, "Goodwill and Other Intangible Assets", the reversal will not
occur during the carryforward period of the net operating losses.
Therefore, the Company recorded a deferred income tax expense of
approximately $52,000 on January 1, 2002 and $20,500 during 2002 which
would not have been required prior to the adoption of SFAS 142. The charge
recorded to increase the valuation allowance was reduced by the reversal of
tax liabilities of $23,000 during the third quarter of 2002 as a result of
the impairments of goodwill and certain indefinite lived intangible assets.
The income tax expense recorded in 2002 is net of tax refunds received.
During 2001 and 2000, the Company increased its valuation allowance due to
continued historical operating losses and the impairment of long-lived
assets, primarily goodwill and investments, resulting in a net provision
for income taxes of $135,000 and $41,200, respectively. At December 31,
1999 and 1998, the Company's management determined that no adjustment to
net deferred income tax assets was required. In 1999, the Company recorded
income tax expense of $6,500 related to a provision for current state and
local taxes incurred as a result of the gain on the sale of the
Supplemental Education Group. At December 31, 2002, the Company had
aggregate net operating and capital loss carryforwards of $1,722,781 which
will be available to reduce future taxable income.

(7) In connection with the adoption of SFAS 142 on January 1, 2002, the Company
recorded an impairment charge related to its goodwill and certain
indefinite lived intangible assets as a cumulative effect of a change in
accounting principle.

(8) Includes the premiums paid on the redemptions of the $11.625 Series B
Exchangeable Preferred Stock in 1998, a $32,788 gain on exchange of
exchangeable preferred stock in 2002 and the issuance

11

of warrants valued at $5,891 and $498 to KKR 1996 Fund during 2002 and
2001, respectively, in connection with the EMAP acquisition.

(9) Basic and diluted loss per common share, as well as the basic and diluted
common shares outstanding, were computed as described in Note 15 of the
notes to the consolidated financial statements included elsewhere in this
Annual Report.

(10) Includes current maturities of long-term debt and net assets held for
sale, where applicable. Consolidated working capital reflects certain
industry working capital practices and accounting principles, including
the expensing of certain editorial and product development costs when
incurred and the recording of deferred revenue from subscriptions as a
current liability. Advertising costs are expensed when the promotional
activities occur except for certain direct-response advertising costs
which are capitalized and amortized over the estimated period of future
benefit.

(11) Excludes current maturities of long-term debt.

12

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS).

INTRODUCTION

The following discussion and analysis summarizes the financial condition and
operating performance of the Company and its two segments and should be read in
conjunction with the Company's historical consolidated financial statements and
notes thereto included elsewhere in this Annual Report.

FORWARD-LOOKING INFORMATION

PRIMEDIA, in its fourth quarter 2002 earnings conference call with investors
and related earnings release on February 12, 2003, indicated that it expected
modest revenue growth and high single-digit Segment EBITDA growth in 2003 as
compared to 2002. As noted in the conference call and related earnings release,
the Company's revenue and earnings guidance does not factor in the consequences
of extended geopolitical conflict and may change as circumstances warrant.
PRIMEDIA's 2003 guidance followed a 2002 in which the Company significantly
increased its Segment EBITDA by integrating its 2001 acquisitions of About and
EMAP, including their results for the full year 2002, and by materially reducing
the Company's operating costs.

This report contains certain forward-looking statements concerning the
Company's operations, economic performance and financial condition. These
statements are based upon a number of assumptions and estimates, which are
inherently subject to uncertainties and contingencies, many of which are beyond
the control of the Company, and reflect future business decisions, which are
subject to change. Some of the assumptions may not materialize and unanticipated
events will occur which can affect the Company's results.

WHY WE USE SEGMENT EBITDA

PRIMEDIA believes that Segment EBITDA is the most accurate indicator of its
segments' results, because it focuses on revenue and operating cost items driven
by operating managers' performance, and excludes non-recurring items and items
largely outside of operating managers' control. Internally, the Company's chief
operating decision maker and the remainder of the executive team measure
performance primarily based on segment EBITDA. Segment EBITDA represents
earnings before interest, taxes, depreciation, amortization and other charges
(income) ("Segment EBITDA"). Other charges (income) include non-cash
compensation and non-recurring charges, provision for severance, closures and
restructuring related costs and (gain) loss on the sale of businesses and other,
net.

Segment EBITDA is not intended to represent cash flows from operating
activities and should not be considered as an alternative to net income or loss
(as determined in conformity with generally accepted accounting principles) as
an indicator of the Company's operating performance, or to cash flows as a
measure of liquidity. Segment EBITDA may not be available for the Company's
discretionary use as there are requirements to redeem preferred stock and repay
debt, among other payments. Segment EBITDA as presented may not be comparable to
similarly titled measures reported by other companies since not all companies
necessarily calculate Segment EBITDA in identical manners, and therefore, it is
not necessarily an accurate measure of comparison between companies. See
reconciliation of Segment EBITDA to operating income detailed below under the
caption "Segment Data."

The Company's two segments are Consumer and Business-to-Business. PRIMEDIA
groups its businesses into these two segments based on the nature of the
products and services they provide and the type or class of customer for these
products or services. The Company's Consumer segment produces and distributes
content through magazines, guides, videos and over the Internet to consumers
primarily in niche and enthusiast markets. The Consumer segment includes the
Consumer Magazine and Media Group, Consumer Guides, PRIMEDIA Television and
About.com. The Company's Business-to-Business

13

segment produces and distributes content via magazines, books, video, exhibits,
the internet and databases to business professionals in such fields as
communications, agriculture, professional services, media, transportation and
healthcare. The Business-to-Business segment includes the Business Magazines &
Media Group, PRIMEDIA Workplace Learning and PRIMEDIA Information. Corporate
represents items not allocated to other business segments such as general
corporate administration.

INTRACOMPANY AND INTERCOMPANY TRANSACTIONS

In addition, the information presented below includes certain allocations
and intracompany and intercompany transactions and is, therefore, not
necessarily indicative of the results had the operations existed as stand-alone
businesses. Eliminations represent intracompany and intercompany content and
brand licensing, advertising and other services, which are billed at what
management believes are prevailing market rates. These intracompany and
intercompany transactions, which represent transactions between operating units
within the same business segment or transactions between operating units in
different business segments, are eliminated in consolidation. Intracompany
eliminations were $104,271, $61,621 and $44,696 for the years ended
December 31, 2002, 2001 and 2000, respectively. Intercompany eliminations were
$6,106, $3,830 and $1,616 for the years ended December 31, 2002, 2001 and 2000,
respectively.

NON-CORE BUSINESSES

Management believes a meaningful comparison of the results of operations for
2002, 2001 and 2000 is obtained by using the segment information and by
presenting results from continuing businesses ("Continuing Businesses") which
exclude the results of the non-core businesses ("Non-Core Businesses"). The
Non-Core Businesses are those businesses that have been divested, discontinued
or that management is evaluating for turnaround or shutdown. The Non-Core
Businesses include: QWIZ, Inc. (divested in April 2001), Bacon's (divested in
November 2001) and certain titles of the Business Magazines and Media Group and
the Consumer Magazines & Media Group which are discontinued or divested. In
addition, the Company has restructured or consolidated several new media
properties, whose value can only be realized through the far greater efficiency
of having select functions absorbed by the core operations and has included
these properties in Non-Core Businesses. For the year ended December 31, 2002,
the Company has reclassified certain product lines as Non-Core Businesses and in
certain instances has reclassified prior periods accordingly. The Company
believes that the amounts that have not been reclassified are not significant.
Since June 30, 2002, the Company has not classified any additional businesses as
Non-Core Businesses nor have any additional costs been allocated to the Non-Core
Businesses subsequent to this date.

DISCONTINUED OPERATIONS AND RECLASSIFICATIONS OF PRODUCT PLACEMENT COSTS

Prior years' results have been restated to reflect the adoption SFAS 144,
EITF 00-25 and EITF 01-9.

On January 1, 2002, the Company adopted SFAS 144. As a result of this
adoption, prior year results have been reclassified to reflect the results of
the Modern Bride Group, ExitInfo, Chicago, Horticulture, Doll Reader, the
American Baby Group and IN New York as discontinued operations for the periods
prior to their respective divestiture dates.

On January 1, 2002, the Company also adopted EITF 00-25 and EITF 01-9, which
resulted in a net reclassification of product placement costs previously
recorded as operating expenses to reductions of sales from such activities.

14

SEGMENT DATA

Segment data for the Company organized on the foregoing basis are presented
below:

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

(1) Segment EBITDA represents earnings before interest, taxes, depreciation,
amortization and other charges (income) including non-cash compensation and
non-recurring charges of $15,665, $58,181, and $35,210 for the years ended
December 31, 2002, 2001 and 2000, respectively, provision for severance,
closures and restructuring related costs of $51,914, $43,920 and $20,798 for
the years ended December 31, 2002, 2001 and 2000, respectively, and loss
(gain) on sale of businesses and other, net of $7,247, ($57,233) and
($14,438) for the years ended December 31, 2002, 2001 and 2000,
respectively. Segment EBITDA excludes $8,537 of additional restructuring
related costs included in general and administrative expenses for the year
ended December 31, 2001. Segment EBITDA is not intended to represent cash
flows from operating activities and should not be considered as an
alternative to net income or loss (as determined in conformity with
generally accepted accounting principles) as an indicator of the Company's
operating performance or to cash flows as a measure of liquidity. It is
presented herein as the Company evaluates and measures each business unit's
performance based on their Segment EBITDA results. Segment EBITDA may not be
available for the Company's discretionary use as there are requirements to
redeem preferred stock and repay debt, among other payments. Segment EBITDA
as presented may not be comparable to similarly titled measures reported by
other companies, since not all companies necessarily calculate Segment
EBITDA in identical manners, and therefore, is not necessarily an accurate
measure of comparison between companies.

15

The following represents a reconciliation of Segment EBITDA to operating
income (loss) by segment for the years ended December 31, 2002, 2001 and
2000.

Consolidated EBITDA represents operating income (loss) before depreciation
of property and equipment and amortization of intangible assets, goodwill
and other. Operating income (loss) excludes interest and taxes.
Consolidated EBITDA is presented in order to reconcile Segment EBITDA to
operating income (loss). Consolidated EBITDA is not intended to represent
cash flows from operating activities and should not be considered as an
alternative to net income or loss (as determined in conformity with
generally accepted accounting principles) as an indicator of the Company's
operating performance, or to cash flows as a measure of liquidity.
Consolidated EBITDA may not be available for the Company's discretionary
use as there are requirements to redeem preferred stock and repay debt,
among other payments. Consolidated EBITDA as presented may not be
comparable to similarly titled measures reported by other companies, since
not all companies necessarily calculate Consolidated EBITDA in identical
manners, and, therefore, is not necessarily an accurate measure of
comparison between

16

companies. See reconciliation of Segment EBITDA to Consolidated EBITDA and
then to operating income (loss) for the three years ended December 31, 2002
detailed below.

(2) Includes reversals of sales tax accruals that were no longer required of
$1,321 and $4,000 in 2002 and 2001, respectively. Also includes a one time
insurance refund of $521 in 2002 related to the prior year.

(3) Depreciation includes an impairment of long lived assets of $11,610 for the
year ended December 31, 2002. Amortization includes an impairment of
intangible assets, goodwill and other of $154,828 and $444,699 for the years
ended December 31, 2002 and 2001, respectively. Other charges (income)
include non-cash compensation and non-recurring charges, a provision for
severance, closures and restructuring related costs, loss (gain) on the sale
of businesses and other, net and other restructuring related costs included
in general and administrative expenses referred to in Note (1) above.

RESULTS OF OPERATIONS

2002 COMPARED TO 2001

CONSOLIDATED RESULTS:

SALES, NET

Consolidated sales from Continuing Businesses increased 4.6% to $1,574,073
in 2002 from $1,504,822 in 2001. 2002 sales growth is attributable mostly to the
inclusion of the full year results of EMAP, acquired in the latter part of 2001,
in the Consumer segment. The increase in the Consumer segment of $179,629 was
partially offset by a decline in the Business-to-Business segment of $65,452
before intercompany and intracompany eliminations. Further details about segment
performance is included in the segment specific sections below.

Total sales, including Continuing and Non-Core Businesses, increased 0.6% to
$1,587,564 in 2002 from $1,578,357 in 2001. The adoption of EITF 00-25 and 01-9,
on January 1, 2002, resulted in a net reclassification of product placement
costs previously classified as distribution, circulation and fulfillment expense
on the statements of consolidated operations to reductions of sales from such
activities. The change in classification had no impact on the Company's results
of operations, cash flows or financial position. The reclassification resulted
in a net decrease in sales and a corresponding decrease in operating expenses of
$20,614 for the year ended December 31, 2001.

The Company had entered various assets-for-equity investments in start-ups
and early stage companies in 2001 and did so to a much lesser extent in 2002.
Some of these transactions included cash consideration paid by the Company. The
non-cash consideration was comprised of advertising, content licensing and other
services to be rendered by the Company in exchange for equity in these entities.
The Company recognizes revenue when these services are delivered in accordance
with the Company's revenue recognition policies. Revenue recognized in
connection with these assets-for-equity transactions was approximately $7,600
and $46,900 during the years ended December 31, 2002 and 2001, respectively. The
revenue from these transactions declined substantially throughout 2002 and will
continue to decline in future periods. In addition, for the years ended
December 31, 2002 and 2001, revenue from barter transactions was approximately
$18,200 and $36,600, respectively, with equal related expense amounts in each
year.

17

SEGMENT EBITDA

Segment EBITDA from Continuing Businesses increased 32.7% to $250,085 in
2002 from $188,519 in 2001 due to an increase of $86,031 in the Consumer segment
partially offset by a decline in the Business-to-Business segment of $24,063,
further detailed below. Total Segment EBITDA, including Continuing and Non-Core
Businesses, increased 54.1% to $246,832 in 2002 from $160,179 in 2001.

OPERATING INCOME (LOSS)

Operating loss from Continuing Businesses was $114,765 in 2002 compared to
$586,693 in 2001. The decrease was primarily due to a decrease in amortization
expense ($383,076), primarily due to higher impairments of goodwill and other
intangible assets in 2001 ($192,679) as well as the elimination of goodwill and
trademark amortization upon the adoption of SFAS 142 on January 1, 2002
($181,141). In addition, Segment EBITDA from Continuing Businesses increased by
$61,566 in 2002 over 2001.

NET LOSS

Interest expense decreased by $5,071 or 3.5% in 2002 compared to 2001
primarly due to lower average levels of indebtedness as a result of the
Company's use of divestiture proceeds to pay down borrowings under the Company's
credit facilities, as well as a reduction in interest rates.

In connection with the adoption of SFAS 142 effective January 1, 2002, the
Company recorded an impairment charge related to its goodwill and certain
indefinite lived intangible assets of $388,508, as a cumulative effect of a
change in accounting principle.

The total impairment charge recorded in depreciation and amortization under
SFAS 142 and SFAS 144 for the year end December 31, 2002 was $146,934 related to
goodwill, intangibles and other assets and $11,610 related to property and
equipment. In addition, the Company recorded $49,500 of related non-cash
deferred income tax expense. See Recent Accounting Pronouncements for further
discussion of SFAS 142 and SFAS 144.

During 2002, the Company completed the sales of the Modern Bride Group
("MBG"), ExitInfo, Chicago, Horticulture, Doll Reader, IN New York and the
American Baby Group and, as a result of adopting SFAS 144, reclassified the
financial results of these divested units into discontinued operations on the
statements of consolidated operations for the years ended December 31, 2002 and
2001. SFAS 144 requires sales or disposals of long-lived assets that meet
certain criteria to be classified on the statement of operations as discontinued
operations and to reclassify prior periods accordingly. These divestitures
resulted in a gain of $111,449 and were part of the Company's planned program
which targeted the divestiture of $250,000 of assets.

CONSUMER SEGMENT (INCLUDING CONSUMER MAGAZINE AND MEDIA GROUP, CONSUMER GUIDES,
PRIMEDIA TELEVISION AND ABOUT):

SALES, NET

Sales from Continuing Businesses increased 15.7% to $1,326,698 in 2002 from
$1,147,069 in 2001 before eliminations primarily due to the inclusion of the
full year results of EMAP (191.8%) acquired in the latter part of 2001, and
growth at Consumer Guides (5.8%). Consumer Guides revenue growth was
attributable to strong performance at the unit's Apartment Guides division,
continuing the sales trend of recent years. The Consumer Magazines and Media
Group, excluding EMAP, saw a decline in brand advertising revenues primarily in
the Company's larger circulation titles. The revenue decline can also be
attributed to a reduction of non-cash revenue items such as barter and
assets-for-equity revenue transactions primarily at the PRIMEDIA Television and
About units.

These sales include new media sales from Continuing Business which increased
6.4% to $88,136 in 2002 from $82,868 in 2001, primarily due to the inclusion of
EMAP for the period subsequent to the acquisition date and the organic growth at
apartmentguide.com, partially offset by the decreases at About. In general, new
media sales reflect the results of About, the Consumer Guides Internet
properties including apartmentguide.com, and Internet operations associated with
the Company's consumer magazine brands. These new media sales include the
allocation of bundled revenues (print and online billed

18

together) and various intracompany and intercompany transactions, which are
eliminated in consolidation. As a result, the new media sales from Continuing
Businesses are not necessarily indicative of the results had the new media
businesses been operated as stand-alone operations. Eliminations of $86,817 in
2002 and $50,762 in 2001 represent intersegment sales ($4,197 and $3,466 for the
years ended December 31, 2002 and 2001, respectively) and intrasegment sales
($82,620 and $47,296 for the years ended December 31, 2002 and 2001,
respectively) which are eliminated in consolidation. Total Consumer Segment
sales, including Continuing and Non-Core Businesses, for the year ended
December 31, 2001 reflect reclassifications related to the adoption of EITF
00-25 and 01-9. The adoption of these pronouncements resulted in a reduction of
sales, net of $20,614, and a corresponding reduction of distribution,
circulation and fulfillment expense on the statements of consolidated operations
for the year ended December 31, 2001. Revenue recognized in connection with
assets-for-equity transactions was approximately $3,500 and $36,800 for the
years ended December 31, 2002 and 2001, respectively. For the years ended
December 31, 2002 and 2001, revenue from barter transactions was approximately
$11,000 and $27,600, respectively, with equal related expense amounts in each
year.

SEGMENT EBITDA

Segment EBITDA from Continuing Businesses increased 56.6% to $237,961 in
2002 from $151,930 in 2001 primarily due to the acquisition of EMAP (183.2%)
whose results were included for periods subsequent to its acquisition date, and
cost-cutting measures taken across the segment in 2002 and 2001. Cost cutting
actions included significant headcount reductions, the shut-down of unprofitable
magazine titles and the rationalization of costs at the Company's Internet
operations. The Segment EBITDA margin increased to 17.9% in 2002 compared to
13.2% in 2001.

OPERATING INCOME (LOSS)

Operating income (loss) from Continuing Businesses was $34,613 in 2002
compared to ($500,269) in 2001. The increase in operating income was
attributable to lower amortization expense ($445,836) as a result of higher
impairment charges in 2001 ($271,940) as well as the elimination of goodwill and
trademark amortization upon the adoption of SFAS 142 ($171,703). In addition, an
increase in Segment EBITDA ($86,031) and a decrease in non-cash compensation
expense contributed to the higher operating income.

BUSINESS-TO-BUSINESS SEGMENT (INCLUDING BUSINESS MAGAZINES AND MEDIA GROUP,
WORKPLACE LEARNING AND PRIMEDIA INFORMATION):

SALES, NET

Sales from Continuing Businesses decreased 15.5% to $357,752 in 2002 from
$423,204 in 2001 before eliminations. The decline in revenue was attributable to
industry-wide softness in business-to-business advertising. The majority of the
drop occurred in the Company's Business Magazines and Media Group, with the
steepest declines in advertising revenue at the telecommunications,
entertainment technology, agribusiness and trucking divisions. PRIMEDIA
Workplace Learning also saw a revenue decline, in part because of a cyclical
pull-back in business demand for corporate training.

These sales include new media sales from Continuing Businesses which
increased 12.2% to $14,025 in 2002 from $12,502 in 2001. The new media sales
include various intracompany and intercompany transactions, which are eliminated
in consolidation. As a result, the new media sales from Continuing Businesses
are not necessarily indicative of the results had the new media businesses been
operated as stand-alone operations. Eliminations of $23,560 in 2002 and $14,689
in 2001 represent intersegment sales ($1,909 and $364 for the years ended
December 31, 2002 and 2001, respectively) and intrasegment sales ($21,651 and
$14,325 for the years ended December 31, 2002 and 2001, respectively) which are
eliminated in consolidation. Revenue recognized in connection with
assets-for-equity transactions was approximately $4,100 and $10,100 for the
years ended December 31, 2002 and 2001, respectively. For the years ended
December 31, 2002 and 2001, revenue from barter transactions was approximately
$7,200 and $9,000, respectively, with equal related expense amounts in each
year.

19

SEGMENT EBITDA

Segment EBITDA from Continuing Businesses decreased 34.9% to $44,834 in 2002
from $68,897 in 2001 primarily due to weakness at the Business Magazines and
Media Group ($22,311). The Segment EBITDA margin decreased to 12.5% in 2002
compared to 16.3% in 2001 primarily due to softness in business-to-business
advertising partially offset by cost cutting measures, including significant
staff reductions in the Business Magazines and Media Group. The segment also
recorded one-time credits of $1,842 in 2002 and $4,000 in 2001 related to
reversals of sales tax accruals in both years and an insurance refund of $521 in
2002.

OPERATING INCOME (LOSS)

Operating loss from Continuing Businesses was $99,239 in 2002 compared to
$22,938 in 2001. The increase was attributable to lower EBITDA ($24,063) and an
increase in amortization expense ($62,380) primarily due to higher impairment
charges during 2002 ($79,261), partially offset by the elimination of goodwill
and trademark amortization upon the adoption of SFAS 142 ($9,680) and a decrease
in amortization expense in 2002 for definite lived intangible assets.

CORPORATE:

Corporate EBITDA losses reflect corporate overhead and other expenses not
allocated to one of the Company's segments. EBITDA losses increased by 1.2% to
$32,710 in 2002 from $32,308 in 2001. This increase was due to higher
professional fees and certain incremental technology and consulting costs
partially offset by headcount reductions. The Company is committed to continuing
its investment in better systems and technology.

Operating loss decreased to $50,139 in 2002 from $63,486 in 2001. Operating
loss includes $11,624 and $30,199 of non-cash compensation and non-recurring
charges during the years ended December 31, 2002 and 2001, respectively,
representing executive compensation in the form of stock and option grants and
the extension of certain stock option expiration periods. In addition, the
operating loss includes a provision for severance, closures and restructuring
related costs of $3,570 and $7,298 during the years ended December 31, 2002 and
2001, respectively. This provision is comprised of employee related termination
costs and real estate lease commitments for space that the Company no longer
occupies.

NON-CORE BUSINESSES:

During 2001, the Company shut down or divested approximately 40 properties.
Segment EBITDA losses from these properties approximated $36,800 for the year
ended December 31, 2001. These Segment EBITDA losses were partially offset by
positive Segment EBITDA at Bacon's, which was divested during 2001, resulting in
a net Segment EBITDA loss for the Non-Core Businesses of $28,340.

Corporate administrative costs of approximately $1,900 and $9,900 were
allocated to the Non-Core Businesses during the years ended December 31, 2002
and 2001, respectively. The Company believes that these costs, many of which are
transaction driven, such as the processing of payables and payroll, will be
permanently reduced or eliminated due to the shutdown or divestiture of the
Non-Core Businesses.

Effective June 30, 2002, the Company has not classified any additional
businesses as Non-Core Businesses nor will any additional costs be allocated to
the Non-Core Businesses subsequent to this date.

DISCONTINUED OPERATIONS:

In 2002, the Company completed the sale of the MBG, which included Modern
Bride plus 16 regional bridal magazines, ExitInfo, Chicago, Horticulture, Doll
Reader, IN New York and the American Baby Group. In accordance with SFAS 144,
the operating results of these divested entities have been reclassified to
discontinued operations on the statements of consolidated operations for
the years ended December 31, 2002 and 2001. Sales from Continuing Businesses
excludes sales from discontinued operations of $82,476 and $143,322 for the
years ended December 31, 2002 and 2001, respectively. Segment EBITDA from
Continuing Businesses excludes Segment EBITDA from discontinued operations of
$8,502 and $11,587 for the years ended December 31, 2002 and 2001, respectively.
The discontinued operations include expenses related to certain

20

centralized functions that are shared by multiple titles, such as production,
circulation, advertising, human resource and information technology costs but
exclude general overhead costs. These costs were allocated to the discontinued
entities based upon relative revenues for the related periods. The allocation
methodology is consistent with that used across the Company. Management has
allocated direct incremental costs of $3,357 and $5,112 to the discontinued
operations for the years ended December 31, 2002 and 2001, respectively.

RESULTS OF OPERATIONS

2001 COMPARED TO 2000

CONSOLIDATED RESULTS:

SALES, NET

Consolidated sales from Continuing Businesses increased 6.4% to $1,504,822
in 2001 from $1,413,758 in 2000. The growth in the consumer segment of $160,588
was partially offset by a decline in the business-to-business segment of $50,385
before intercompany and intracompany eliminations, further detailed below. Total
sales, including Continuing and Non-Core Businesses, increased 2.0% to
$1,578,357 in 2001 from $1,547,491 in 2000. On January 1, 2002, the Company
adopted EITF No. 00-25 and 01-9 which resulted in a net reclassification of
product placement costs previously classified as distribution, circulation and
fulfillment expense on the statements of consolidated operations to reductions
of sales from such activities. The reclassification resulted in a net decrease
in sales and a corresponding decrease in operating expenses of $20,614 and
$15,298 for the years ended December 31, 2001 and 2000, respectively.

During 2001 and 2000, the Company entered various assets-for-equity
transactions, some of which also included cash consideration. The non-cash
consideration was comprised of advertising, content licensing and other services
to be rendered by the Company in exchange for equity in these entities. The
Company recognizes these amounts as revenue in accordance with the Company's
revenue recognition policies. Revenue recognized in connection with these
assets-for-equity transactions was approximately $46,900 and $43,400 during the
years ended December 31, 2001 and 2000, respectively. In addition, for the years
ended December 31, 2001 and 2000, revenue from barter transactions was
approximately $36,600 and $7,900, respectively, with equal related expense
amounts in each year.

SEGMENT EBITDA

Segment EBITDA from Continuing Businesses decreased 26.5% to $188,519 in
2001 from $256,358 in 2000 due to decreases of $24,326 and $45,179 related to
the Consumer and Business-to-Business segments, respectively, further detailed
below. Total Segment EBITDA, including Continuing and Non-Core Businesses,
decreased 31.3% to $160,179 in 2001 from $233,187 in 2000 due to declines in
both segments.

OPERATING INCOME (LOSS)

Operating income (loss) from Continuing Businesses was ($586,693) in 2001
compared to $64,037 in 2000. This decrease was primarily due to an increase in
amortization expense of $497,062 of which approximately $154,400 related to
acquisitions and approximately $345,000 related to the impairment of long-lived
assets of our Continuing Businesses, primarily goodwill. These impairments,
further detailed below, were the result of certain product discontinuances as
well as the Company's determination that the estimated future undiscounted cash
flows were not sufficient to cover the carrying value of these assets. Total
operating income (loss), including Continuing and Non-Core Businesses, was
($680,702) in 2001 compared to $20,401 in 2000.

NET LOSS

Interest expense increased by $1,972 or 1.4% in 2001 compared to 2000 due to
increased borrowings under the Company's bank credit facilities to finance the
2001 EMAP acquisition.

21

During 2001 and 2000, the net deferred income tax asset was reduced by
$135,000 and $41,200, respectively, as the Company increased its valuation
allowance and recorded a related provision for income taxes due to continued
historical operating losses and the impairment of long-lived assets, primarily
goodwill and investments.

CONSUMER SEGMENT (INCLUDING CONSUMER MAGAZINE AND MEDIA GROUP, CONSUMER GUIDES,
PRIMEDIA TELEVISION AND ABOUT):

SALES, NET

Sales from Continuing Businesses increased 16.3% to $1,147,069 in 2001 from
$986,481 in 2000 before eliminations primarily due to growth at the Company's
Consumer Guides ($26,582) and the acquisitions of About and EMAP whose combined
results (approximately $139,100) are included in the Consumer segment for the
periods subsequent to their respective acquisition dates.

Sales includes new media sales from Continuing Businesses which increased
230.6% to $82,868 in 2001 from $25,068 in 2000, primarily due to acquisitions
and organic growth at apartmentguide.com (approximately $52,800) of which
approximately $10,200 represents organic growth. These new media sales include
the allocation of bundled revenues (print and online billed together) and
various intracompany and intercompany transactions, which are eliminated in
consolidation. As a result, the new media sales from Continuing Businesses are
not necessarily indicative of the results had the new media businesses been
operated as stand-alone operations. Eliminations of $50,762 in 2001 and $33,114
in 2000 represent intersegment sales ($3,466 and $1,616 for the years ended
December 31, 2001 and 2000, respectively) and intrasegment sales ($47,296 and
$31,498 for the years ended December 31, 2001 and 2000, respectively) which are
eliminated in consolidation. Total Consumer segment sales, including Continuing
and Non-Core Businesses, reflect reclassifications related to the adoption of
EITF 00-25 and 01-9. The adoption of these pronouncements resulted in a
reduction of sales, net of $20,614 and $15,298 and a corresponding reduction of
distribution, circulation and fulfillment expense on the statements of
consolidated operations for the years ended December 31, 2001 and 2000,
respectively. Revenue recognized in connection with assets-for-equity
transactions, which was generally in the traditional businesses, was
approximately $36,800 and $30,000 for the years ended December 31, 2001 and
2000, respectively. For the years ended December 31, 2001 and 2000, revenue from
barter transactions was approximately $27,600 and $1,900, respectively, with
equal related expense amounts in each year.

SEGMENT EBITDA

Segment EBITDA from Continuing Businesses decreased 13.8% to $151,930 in
2001 from $176,256 in 2000 primarily due to Segment EBITDA declines at certain
consumer magazines ($35,707 in the aggregate) resulting from advertising
softness, partially offset by growth at Consumer Guides ($19,050) and a Segment
EBITDA increase from the acquisitions of EMAP and About (approximately $2,800
net) whose results are included for periods subsequent to their respective
acquisition dates. The Segment EBITDA margin decreased to 13.2% in 2001 compared
to 17.9% in 2000 primarily due to increased industry-wide advertising softness
as well as increased Internet spending as a result of the About acquisition.

OPERATING INCOME (LOSS)

Operating income (loss) from Continuing Businesses was ($500,269) in 2001
compared to $77,466 in 2000. The decrease in operating income was attributable
to an increase in goodwill and intangibles amortization expense as a result of
the About and EMAP acquisitions (approximately $154,400) and the write-off of
goodwill approximating $326,300 relating to About. This write-off was the result
of the Company's determination that the estimated future undiscounted cash flows
were not sufficient to cover the carrying value of the goodwill. This
determination did not reflect other benefits realized or expected to be
realized, across PRIMEDIA, as a result of the integration of About. In addition,
the decrease in Segment EBITDA and increase in provision for severance, closures
and restructuring related costs also contributed to the increased operating loss
in 2001.

22

BUSINESS-TO-BUSINESS SEGMENT (INCLUDING BUSINESS MAGAZINES AND MEDIA GROUP,
WORKPLACE LEARNING AND PRIMEDIA INFORMATION):

SALES, NET

Sales from Continuing Businesses decreased 10.6% to $423,204 in 2001 from
$473,589 in 2000 before eliminations primarily due to industry advertising
softness at certain business-to-business magazines and trade shows
(approximately $49,500).

Sales includes new media sales from Continuing Businesses which decreased
2.8% to $12,502 in 2001 from $12,860 in 2000. The new media sales include
various intracompany and intercompany transactions which are eliminated in
consolidation. As a result, the new media sales from Continuing Businesses are
not necessarily indicative of the results had the new media businesses been
operated as stand-alone operations. Eliminations of $14,689 in 2001 and $13,198
in 2000 represent intersegment sales ($364 and $0 for the years ended
December 31, 2001 and 2000, respectively) and intrasegment sales ($14,325 and
$13,198 for the years ended December 31, 2001 and 2000, respectively) which are
eliminated in consolidation. Revenue recognized in connection with
assets-for-equity transactions was approximately $10,100 and $13,400 for the
years ended December 31, 2001 and 2000, respectively. For the years ended
December 31, 2001 and 2000, revenue from barter transactions was approximately
$9,000 and $6,000, respectively, with equal related expense amounts in each
year.

SEGMENT EBITDA

Segment EBITDA from Continuing Businesses decreased 39.6% to $68,897 in 2001
from $114,076 in 2000 primarily due to weakness at the Business Magazines and
Media Group (approximately $42,800). The Segment EBITDA margin decreased to
16.3% in 2001 compared to 24.1% in 2000 primarily due to softness in
business-to-business advertising.

OPERATING INCOME (LOSS)

Operating income (loss) from Continuing Businesses, was ($22,938) in 2001
compared to $50,750 in 2000. The decrease in operating income was attributable
to lower EBITDA levels and an increase in amortization expense related to the
write-off of goodwill and intangible assets at certain Business-to-Business
segment products (approximately $17,700). This write-off was the result of the
Company's determination that the estimated future undiscounted cash flows were
not sufficient to cover the carrying value of certain long-lived assets,
primarily goodwill.

CORPORATE:

Segment EBITDA losses decreased to $32,308 in 2001 from $33,974 in 2000.

Operating loss decreased to $63,486 in 2001 from $64,179 in 2000. Operating
loss includes $30,199 and $27,810 of non-cash compensation and non-recurring
charges during the years ended December 31, 2001 and 2000, respectively,
representing executive compensation in the form of stock and option grants and
the extension of certain stock option expiration periods. In addition, the
operating loss includes a provision for severance, closures and restructuring
related costs of $7,298 and $14,371 during the years ended December 31, 2001 and
2000, respectively.

NON-CORE BUSINESSES:

Sales from Non-Core Businesses decreased to $73,535 in 2001 from $133,733 in
2000 due to the completion of certain divestitures.

Segment EBITDA from the Non-Core Businesses was $(28,340) in 2001 compared
to $(23,171) in 2000. Corporate administrative costs of approximately $9,900 and
$9,600 were allocated to the Non-Core Businesses during the years ended
December 31, 2001 and 2000, respectively. The Company believes that

23

these costs, many of which are transaction driven, such as the processing of
payables and payroll, will be permanently reduced or eliminated due to the
shutdown or divestiture of the Non-Core Businesses.

During 2001, the Company shut down or divested approximately 40 properties.
Segment EBITDA losses from these properties approximated $36,800 for the year
ended December 31, 2001 and were partially offset by positive Segment EBITDA at
Bacon's, which was divested during 2001, resulting in a net Segment EBITDA loss
for the Non-Core businesses of $28,340.

Operating loss from Non-Core Businesses increased to $94,009 in 2001 from
$43,636 in 2000 due to the decline in Segment EBITDA. Operating loss includes an
increase in depreciation and amortization primarily due to impairments of
long-lived assets, primarily goodwill (approximately $111,000), resulting from
the Company's decision to shutdown certain operations which was offset by the
gain on the sale of Bacon's of approximately $54,600. In November 2001, the
Company completed the sale of Bacon's to Observer AB for $90,000, $15,000 of
which represented a note receivable as of December 31, 2001 which was collected
in 2002. The proceeds from the sale were used primarily to pay down borrowings
under the Company's credit facilities.

DISCONTINUED OPERATIONS

In 2002, the Company completed the sale of the MBG, which includes Modern
Bride plus 16 regional bridal magazines, ExitInfo, Chicago, Horticulture, Doll
Reader, IN New York and the American Baby Group. Upon adoption of SFAS 144 on
January 1, 2002, the operating results of these divested entities have been
reclassified to discontinued operations on the statements of consolidated
operations for the years ended December 31, 2001 and 2000, respectively. Sales
from Continuing Businesses excludes sales from discontinued operations of
$143,322 and $128,163 for the years ended December 31, 2001 and 2000,
respectively. Segment EBITDA from Continuing Businesses excludes Segment EBITDA
from discontinued operations of $11,587 and $23,492 for the years ended
December 31, 2001 and 2000, respectively. The discontinued operations include
expenses related to certain centralized functions that are shared by multiple
titles, such as production, circulation, advertising, human resource and
information technology costs but exclude general overhead costs. These costs
were allocated to the discontinued entities based upon relative revenues for the
related periods. The allocation methodology is consistent with that used across
the Company. Management has allocated direct incremental costs of $5,112 and
$4,020 to the discontinued operations for the years ended December 31, 2001 and
2000, respectively.

RISK FACTORS

Set forth below are risks and uncertainties that could cause actual results
to differ materially from the results contemplated by the forward-looking
statements contained in this Annual Report.

GENERAL ECONOMIC TRENDS MAY REDUCE OUR ADVERTISING REVENUES.

Our advertising revenues are subject to the risks arising from adverse
changes in domestic and global economic conditions. A decline in the level of
business activity of our advertisers has had an adverse effect on our revenues
and profit margins. Because of the recent economic slowdown in the United
States, many advertisers, particularly business-to-business advertisers, are
reducing advertising expenditures. The further impact of this slowdown on us is
difficult to predict, but it may result in further reductions in advertising
revenue. If the current economic slowdown continues or worsens, or if the
current geopolitical risk materializes, our results of operations may be
adversely affected.

WE HAVE SUBSTANTIAL INDEBTEDNESS AND OTHER MONETARY OBLIGATIONS, WHICH CONSUME A
SUBSTANTIAL PORTION OF THE CASH FLOW THAT WE GENERATE.

A substantial portion of our cash flow is dedicated to the payment of
interest on indebtedness and to the payment of dividends on our preferred stock,
which reduces funds available for capital expenditures

24

and business opportunities and may limit our ability to respond to adverse
developments in our business or in the economy.

OUR DEBT INSTRUMENTS LIMIT OUR BUSINESS FLEXIBILITY BY IMPOSING OPERATING AND
FINANCIAL RESTRICTIONS ON OUR OPERATIONS.

The agreements and indentures governing our indebtedness impose specific
operating and financial restrictions on us. These restrictions impose
limitations on our ability to, among other things:

- change the nature of our business;

- incur additional indebtedness;

- create liens on our assets;

- sell assets;

- issue stock;

- engage in mergers, consolidations or transactions with our affiliates;

- make investments in or loans to specific subsidiaries;

- make guarantees or specific restricted payments; and

- declare or make dividend payments on our common or preferred stock.

INCREASES IN PAPER AND POSTAGE COSTS MAY HAVE AN ADVERSE IMPACT ON OUR FUTURE
FINANCIAL RESULTS.

The price of paper is a significant expense relating to our print products
and direct mail solicitations. Paper price increases may have an adverse effect
on our future results. Postage for product distribution and direct mail
solicitations is also a significant expense. We use the U.S. Postal Service for
distribution of many of our products and marketing materials. Postage costs
increased in July 2002 and can be expected to increase in the future. We may not
be able to pass these cost increases through to our customers.

INCOMPATIBLE FINANCIAL SYSTEMS LIMIT THE COMPANY'S ABILITY TO OPERATE
EFFICIENTLY.

PRIMEDIA is the result of numerous acquisitions since its inception in 1989.
Many of the companies acquired had financial systems which are incompatible.
Incompatible financial systems across PRIMEDIA have negatively impacted the
Company's ability to efficiently analyze data and respond to business
opportunities on a timely basis. Significant capital expenditures are necessary
to upgrade and standardize financial systems across the Company. Despite the
economic slowdown, the Company is engaged in upgrading its key financial
systems, which are designed to make the financial reporting and analysis
functions more efficient. To address management's concerns regarding the current
lack of compatible financial systems across the Company a