ZIFF DAVIS INC, S-1/A, 1999-02-11

ZIFF DAVIS INC
S-1/A, 1999-02-11
PERIODICALS: PUBLISHING OR PUBLISHING & PRINTING

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<PAGE>

As filed with the Securities and Exchange Commission on February 11, 1999

Registration No. 333-69447
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

AMENDMENT NO. 1

To
FORM S-1
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
--------------
ZIFF-DAVIS INC.
(Exact name of Registrant as Specified in Its Charter)

Delaware 2721 13-3987754
(State or Other (Primary Standard (I.R.S. Employer
Jurisdiction of Industrial Identification Number)
Incorporation or Classification Code
Organization) Number)
--------------
One Park Avenue
New York, New York 10016
(212) 503-3500
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices)
Copies to:
Stephen A. Grant
Alan J. Sinsheimer Mark G. Borden

Sullivan & Cromwell James R. Burke
Hale and Dorr LLP
125 Broad Street 60 State Street
New York, New York 10004 Boston, Massachusetts 02109

Timothy C. O'Brien
Ziff-Davis Inc.
One Park Avenue
New York, New York 10016
(212) 503-3500
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent For Service)

--------------
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this Registration Statement.

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

If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 of the Securities Act of 1933,
check the following box. [_]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [_]

CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
Proposed Maximum
Title of Each Class Aggregate Offering Amount of
Of Securities To Be Registered Price(1)(2) Registration Fee(3)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Ziff-Davis Inc.--ZDNet Group Common Stock,
par value $0.01 per share......................... $130,000,000 $36,140
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

(1) A portion of the shares to be registered represents shares that are to be
offered outside of the United States but that may be resold from time to
time in the United States. Such shares are not being registered for the
purpose of sales outside the United States.

(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o) under the Securities Act of 1933.

(3) $31,970 of the registration fee was paid on December 22, 1998 and $4,170 is
paid with this filing.
--------------
We will amend this registration statement on such date or dates as may be
necessary to delay its effective date until we file a further amendment which
specifically states that this registration statement shall become effective in
accordance with Section 8(a) of the Securities Act of 1933, or until the
registration statement shall become effective on such date as the Securities
and Exchange Commission, acting pursuant to Section 8(a), may determine.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We may +
+not sell these securities until the registration statement filed with the +
+Securities and Exchange Commission is effective. This prospectus is not an +
+offer to sell these securities and is not soliciting an offer to buy these +
+securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

Subject to Completion. Dated February 11, 1999.

10,000,000 Shares

Ziff-Davis Inc.--ZDNet
Common Stock

----------

This is an initial public offering of shares of a new series of common stock
of Ziff-Davis Inc. We intend these shares to reflect the performance of ZDNet,
our online business division. ZDNet Stock will have voting rights that will
fluctuate depending on its market value from time to time as compared to the
market value of ZD Stock, our other series of common stock.

This prospectus relates to an offering of shares in the United States. In
addition, shares are being offered outside the United States in an
international offering. We anticipate that the initial public offering price
will be between $11.00 and $13.00 per share.

We intend to list ZDNet Stock on the New York Stock Exchange under the symbol
"ZDZ".

Read the risk factors beginning on page 17 of this prospectus to learn about
certain factors you should consider before buying shares of ZDNet Stock.

----------

Neither the Securities and Exchange Commission nor any other regulatory body
has approved or disapproved of these securities or passed upon the accuracy or
adequacy of this prospectus. Any representation to the contrary is a criminal
offense.

----------

<TABLE>
<CAPTION>
Per Share Total
--------- -----
<S> <C> <C>
Initial public offering price................................... $ $
Underwriting discount........................................... $ $
Proceeds, before expenses, to Ziff-Davis Inc.................... $ $
</TABLE>

The U.S. underwriters may, under certain circumstances, purchase up to an
additional shares from us at the initial public offering price less the
underwriting discount.

----------

The Underwriters expect to deliver the shares against payment in New York,
New York on , 1999.

Joint Global Coordinators and Joint Book-Running Managers
Goldman, Sachs & Co.
Donaldson, Lufkin & Jenrette
----------

Hambrecht & Quist

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Prospectus dated , 1999.
<PAGE>

Description of photographs will be provided

2
<PAGE>

SUMMARY

This summary highlights key aspects of the offering of ZDNet Stock contained
elsewhere in this prospectus. This summary is not a substitute for the more
detailed information contained in the rest of this prospectus. For a more
comprehensive description of the offering of ZDNet Stock, you should read the
entire prospectus.

ZIFF-DAVIS INC. AND ZDNET

Ziff-Davis Inc.

Ziff-Davis Inc. is a leading media and marketing company that provides
information on computing and technology, including the Internet. We provide
technology companies worldwide with marketing strategies for reaching key
decision-makers. From an accounting standpoint, we have separated our online
business division, which we call ZDNet, from the rest of our businesses, which
we call ZD. We have allocated all of our consolidated assets, liabilities,
revenue, expenses and cash flow between ZDNet and ZD.

We intend our ZDNet Stock to track the performance of ZDNet and we intend our
ZD Stock to track the performance of ZD. We are offering you shares of ZDNet
Stock but we are not offering you any shares of ZD Stock. We briefly describe
ZD below and we briefly describe ZDNet in the next section of this summary.

ZD includes:

. The following Ziff-Davis Inc. businesses: print publishing, trade shows
and conferences, market research, education, including our Internet-based
educational service, and television, including an online component.

. A retained interest in ZDNet. This retained interest is currently 100%,
but will decline to reflect the initial issuance of ZDNet Stock as well
as any future issuances.

Our principal executive offices are located at One Park Avenue, New York, New
York 10016. Our telephone number is (212) 503-3500.

ZDNet

We are offering you ZDNet Stock, which we intend to track the performance of
ZDNet, our online business division.

ZDNet provides technology-related information to Internet users worldwide.
ZDNet focuses on content, community and commerce. ZDNet creates up-to-date,
reliable and comprehensive content divided broadly into "channels" that focus
on specific topics or audience groups. ZDNet's network of over 60
interconnected Internet sites offers over 800

3
<PAGE>

news stories per month, 39,000 product listings, 30,000 product reviews and
34,000 downloadable programs. The community of ZDNet users interacts through
various online message systems, including bulletin boards, chat rooms,
moderated forums and e-mail. ZDNet facilitates commerce by providing users of
its sites with the ability to evaluate, compare and purchase products and
services and by providing advertisers and merchants with access to a highly
targeted user group with attractive demographics.

According to Media Metrix, in October 1998 zdnet.com ranked first among all
Web sites in the category of news, information and entertainment, ahead of such
sites as cnet.com, cnn.com, msnbc.com, Disney Online and espn.com. ZDNet
estimates that its Web sites served more than 185 million page views during
October 1998, up from 105 million in October 1997. ZDNet delivered
approximately 386 million ad-bearing pages during the third quarter of 1998, up
from 182 million during the same period of 1997. In addition, ZDNet had
localized foreign language editions in more than 16 countries as of September
30, 1998.

As the Internet gains acceptance as an advertising and commerce medium and as
Internet use continues to grow, technology will play an increasing role in
everyday life. According to Dataquest, worldwide end user spending for
information technology products and related services is expected to be
approximately $2 trillion in 1998 and grow 10% to 15% annually over the next
four years. The prevalence of technology and the growing number of
technological choices heighten the demand for up-to-date, comprehensive
information about technology-related products and services.

ZDNet's objective is to be the leading online content site focused on
technology products and services and the preferred online platform for
advertisers and merchants. ZDNet's strategy is to:

. continue to offer differentiated technology-related content,

. grow ZDNet's user community,

. build ZDNet's brand strength,

. increase advertising and commerce revenue,

. strengthen and expand strategic alliances and

. extend ZDNet's international presence.

ZDNet derives many benefits from its relationship with ZD, including consumer
and business recognition of the ZD brand name, use of magazine articles,
product reviews and other information created by ZD, and the ability to market
and promote ZDNet across all of ZD's businesses and publications. ZDNet's
revenue has grown from $13.6 million in 1995 to $32.2 million in 1997 and was
$36.5 million in the first nine months of 1998.

4
<PAGE>

The Offering

<TABLE>
<C> <S>
Shares of ZDNet Stock offered by Ziff-Davis Inc.:
U.S. Offering.................................... . shares
International Offering........................... . shares
Total Offered.................................... 10,000,000 shares, assuming
the underwriters do not
exercise their option to
purchase up to 1,500,000
additional shares.
Total Offered for Account of ZD in Respect of
its Retained Interest in ZDNet................. 8,500,000 shares, assuming
the underwriters do not
exercise their option to
purchase up to 1,500,000
additional shares.
Total Offered for Account of ZDNet.............. 1,500,000 shares
Total Number of Notional ZDNet Shares Deemed
Outstanding After the Offering.................. 71,500,000 shares, which
includes offered shares and
notional shares representing
ZD's retained interest in
ZDNet. Does not include
approximately 10,200,000
shares that may be purchased
for $4.29 per share upon
exercise of outstanding
stock options.
Use of Proceeds: We will attribute the net
proceeds from 1,500,000
shares to ZDNet, in a manner
analogous to a primary
offering of common stock. We
will attribute the net
proceeds from the remaining
shares to ZD, in a manner
analogous to a secondary
offering of common stock of
a subsidiary owned by a
parent. ZDNet will advance
to ZD the net proceeds
attributed to ZDNet, and ZD
will use those net proceeds,
together with the net
proceeds attributed to ZD,
to reduce our outstanding
indebtedness.
New York Stock Exchange Symbol: "ZDZ".
</TABLE>

5
<PAGE>

ZDNet Stock

Basic Investment ZDNet Stock is what is sometimes referred to as
Characteristics: "tracking stock". Tracking stock is a type of
common stock that is intended to reflect or
"track" the performance of a particular business.
In this case, ZDNet Stock is intended to track
the performance of ZDNet.

From an accounting standpoint, we have separated
ZDNet, our online business division, from ZD,
which includes the rest of our businesses, and we
have allocated all of our consolidated assets,
liabilities, revenue, expenses and cash flow
between ZDNet and ZD.

Although we intend ZDNet Stock to reflect the
performance of ZDNet, holders of ZDNet Stock will
be common stockholders of Ziff-Davis Inc. For
this reason, holders of ZDNet Stock will be
subject to all of the risks associated with an
investment in Ziff-Davis Inc. and all of its
businesses, assets and liabilities.

Dividends: We currently intend to retain all of our earnings
to finance our operations, repay our indebtedness
and fund future growth. We do not expect to pay
any dividends on ZDNet Stock for the foreseeable
future.

Mandatory Dividend,
Redemption or Exchange on If we dispose of all or substantially all of the
Disposition of Assets: assets of ZDNet and the disposition is not an
exempt disposition under the terms of our
charter, we would be required to choose one of
the following three alternatives:

. pay a dividend to holders of ZDNet Stock in an
amount equal to a proportionate interest in the
net proceeds of such disposition,

. redeem from holders of ZDNet Stock, for an
amount equal to a proportionate interest in the
net proceeds of such disposition, outstanding
shares of ZDNet Stock or

. issue ZD Stock in exchange for outstanding
ZDNet Stock at a 10% premium.

At any time within one year after completing a
special dividend or partial redemption referred
to above, we will have the right to issue ZD
Stock in exchange for outstanding ZDNet Stock at
a 10% premium.

6
<PAGE>

For purposes of determining the exchange rate
that will result in an exchange at a 10% premium,
we will value ZD Stock and ZDNet Stock based on
their average market values over a specified 20-
trading day period before the exchange.

Exchange for ZD Stock at At any time before the total market value of
Ziff-Davis Inc.'s Option: ZDNet Stock exceeds 65% of the total market value
of all of our common stock for 30 trading days
during any 60 consecutive trading day period, we
will have the right to issue ZD Stock in exchange
for outstanding ZDNet Stock at a premium. The
premium will be 25% for exchanges occurring in
the first quarter after issuance and will decline
quarterly over a period of 3 years to 15%.

At any time after the total market value of ZDNet
Stock exceeds 65% of the total market value of
all of our common stock for 30 trading days
during any 60 consecutive trading day period, we
will have the right to issue ZDNet Stock in
exchange for outstanding ZD Stock at a 15%
premium.

In addition, if the total market value of ZDNet
Stock exceeds 65% of the total market value of
all of our common stock for 30 trading days
during any 60 consecutive trading day period and
then drops to below 50% of the total market value
of all of our common stock for 30 trading days
during any 60 consecutive trading day period, we
will have the right to issue shares of one series
in exchange for shares of the other series on a
value for value basis. Once this right arises, we
will not lose it, regardless of the subsequent
market values of ZDNet Stock and ZD Stock.

For purposes of determining the exchange rate
that will result in an exchange at a specified
premium or on a value for value basis, we will
value ZD Stock and ZDNet Stock based on their
average market values over a specified 20-trading
day period before the exchange.

7
<PAGE>

Exchange for Stock of a We will have the right, at any time, to transfer
Subsidiary at Ziff-Davis all of the assets and liabilities of ZDNet to a
Inc.'s Option: subsidiary and deliver all of the stock of that
subsidiary in exchange for all of the outstanding
ZDNet Stock.

Voting Rights:
Each share of ZDNet Stock will have a number of
votes equal to the average market value of a
share of ZDNet Stock divided by the average
market value of a share of ZD Stock over a
specified 20-trading day period prior to the date
of that vote.

Holders of ZD Stock and ZDNet Stock will vote
together as a single class, except in certain
limited circumstances.

Liquidation:
Upon liquidation of Ziff-Davis Inc., holders of
ZD Stock and ZDNet Stock will be entitled to
receive the net assets of Ziff-Davis Inc., if
any, remaining for distribution to stockholders
after payment or provision for all liabilities of
Ziff-Davis Inc. and payment of the liquidation
preference payable to any holders of preferred
stock. Amounts due upon liquidation in respect of
shares of ZD Stock and shares of ZDNet Stock will
be distributed pro rata in accordance with the
average market value of ZD Stock and the average
market value of ZDNet Stock over a specified
20-trading day period prior to the liquidation.

8
<PAGE>

ZDNET

Summary Historical and Pro Forma Combined Financial and Other Data

The following table presents summary historical data for ZDNet as of
September 30, 1998, for the ten month period ended December 31, 1996, for the
year ended December 31, 1997 and for the nine month periods ended September 30,
1997 and 1998. In addition, the table presents unaudited summary pro forma data
as of and for the year ended December 31, 1998. This data was derived from the
Combined Financial Statements of ZDNet included in this prospectus. An
affiliate of Ziff-Davis Inc. acquired ZDNet on February 29, 1996; therefore, no
results of ZDNet are shown for periods before that date. Data as of and for the
periods ended September 30, 1997 and 1998 is derived from ZDNet's unaudited
financial statements. No historical earnings per share or share data is
presented as Ziff-Davis Inc. does not consider such data to be meaningful.
After the issuance of ZDNet Stock, Ziff-Davis Inc. will report earnings per
share data for ZD and ZDNet but not for Ziff-Davis Inc.

The pro forma data presented in the table below assumes that:

. the following transactions had occurred as of January 1, 1998 in the case
of statement of operations data and other data and as of December 31, 1998
in the case of balance sheet data:

(a) the sale of 10,000,000 shares of ZDNet Stock in the offering at an
assumed public offering price of $12.00 per share, the midpoint of the
range of initial public offering prices set forth on the cover page of
this prospectus, less underwriting discounts and expenses of the
offering assumed to be $0.90 per share,

(b) the attribution to ZDNet of the assumed net proceeds from 1,500,000
shares and the attribution to ZD of the remaining assumed net proceeds
from the offering and

(c) the transfer by ZDNet to ZD, as an inter-group revolving credit
advance, of the assumed net proceeds attributed to ZDNet and

. the policies described under "Certain Cash Management and Accounting
Policies" included in this prospectus had been adhered to for the year
ended December 31, 1998, and each cash transfer from ZD to ZDNet or from
ZDNet to ZD had been accounted for as a decrease or increase in the inter-
group revolving credit advance referred to in (c) above as contemplated by
those policies.

In addition, the pro forma statement of operations data excludes the effect of
non-recurring expenses directly attributable to the offering. For each $1
change in the assumed net proceeds per share, (a) pro forma interest income and
pro forma loss before income taxes would each change by $ , (b) pro forma net
loss would change by $ , (c) pro forma net loss per notional share would
change by $ and (d) pro forma division equity would change by $1,500,000. The
pro forma data is not necessarily indicative of the actual financial position
or results of operations of ZDNet as of or for the year ended December 31, 1998
or the financial position or results of operations that ZDNet would have
experienced if the transactions for which the data gives pro forma effect had
in fact occurred at the times assumed. Also, the pro forma data does not
purport to represent ZDNet's future financial position or results of
operations.

9
<PAGE>

This table should be read in conjunction with the Selected Historical
Combined Financial and Other Data, Management's Discussion and Analysis of
Financial Condition and Results of Operations and Combined Financial Statements
for each of Ziff-Davis Inc., ZD and ZDNet beginning on F-101, F-45 and F-6 of
this prospectus, respectively.

<TABLE>
<CAPTION>
Ten months Nine month period
ended Year ended ended Pro forma
December 31, December 31, September 30, year ended
------------ ------------ ------------------- December 31,
1996 1997 1997 1998 1998
------------ ------------ --------- -------- --------
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Statement of Operations
Data:
Revenue, net............ $ 16,215 $ 32,218 $ 21,277 $ 36,466 $
Cost of operations:
Production and
content............... 14,863 23,543 17,638 18,970
Selling, general and
administrative
expenses.............. 13,280 23,475 17,757 22,049
Depreciation and
amortization.......... 5,485 7,681 5,524 4,780
Loss from operations.... (17,413) (22,481) (19,642) (9,333)
Interest income......... -- -- -- --
Minority interest....... -- 400 436 330
Loss before income
taxes.................. (17,413) (22,081) (19,206) (9,003)
Net loss................ (16,925) (21,238) (18,463) (8,691)
Net loss per notional
share (1)..............
Weighted average
notional shares
outstanding (2)........ 71,500
Balance Sheet Data (at
period end):
Total current assets.... $ 7,852 $ 11,521 $ 15,744 $
Total assets............ 82,507 87,326 95,093
Total liabilities....... 3,932 4,034 7,358
Division equity......... 78,575 83,292 87,735
Other Data:
Net cash used in
operating activities
(3).................... $(12,620) $(15,264) $(11,386) $ (4,664) $
EBITDA (4).............. (11,928) (14,400) (13,682) (4,223)
Capital expenditures.... 1,010 2,374 1,345 3,181
Investments and
acquisitions, net of
cash acquired.......... -- 2,998 2,998 5,000
</TABLE>

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(1) Pro forma net loss per notional share equals ZDNet's net loss for the year
ended December 31, 1998 divided by the weighted average notional shares
outstanding.

(2) Notional shares are outstanding shares plus shares attributable to ZD's
retained interest in ZDNet. This number assumes the offering had been
completed on January 1, 1998 and gives no effect to outstanding employee
stock options.

(3) This information should be read in conjunction with the more detailed
information concerning cash flows from operating, investing and financing
activities in the Combined Statements of Cash Flows set forth in ZDNet's
Combined Financial Statements.

(4) "EBITDA" is defined as income before provision for income taxes, interest
expense, depreciation and amortization. EBITDA is not intended to represent
cash flows from operations and should not be considered as an alternative
to net income as an indicator of ZDNet's operating performance or to cash
flows as a measure of liquidity. Although Ziff-Davis Inc. believes that
EBITDA is a standard measure commonly reported and widely used by analysts,
investors and other interested parties in the media industry, the EBITDA
presented for ZDNet may not be comparable to similarly titled measures
reported by other companies.

10
<PAGE>

Summary Historical and Pro Forma Combined Financial and Other Data

The following table presents summary historical data for ZD as of September
30, 1998, for the years ended December 31, 1995, 1996 and 1997 and for the nine
month periods ended September 30, 1997 and 1998. In addition, the table
presents unaudited summary pro forma data as of and for the year ended December
31, 1998. This data was derived from the Combined Financial Statements of ZD
included in this prospectus. An affiliate of Ziff-Davis Inc. acquired an events
business (COMDEX) on April 1, 1995 and a print publishing business (ZD
Publishing) on February 29, 1996; the data does not include results from the
acquired businesses for periods before the respective dates of acquisition.
Data as of and for the periods ended September 30, 1997 and 1998 is derived
from ZD's unaudited financial statements. On May 4, 1998, Ziff-Davis Inc.
completed a reorganization described in Note 2 to the Combined Financial
Statements of ZD. Results for periods before the reorganization are not
directly comparable to results for periods after the reorganization. No
historical earnings per share or share data is presented as Ziff-Davis Inc.
does not consider such data meaningful. After the issuance of ZDNet Stock,
Ziff-Davis Inc. will report earnings per share data for ZD and ZDNet but not
for Ziff-Davis Inc.

The pro forma data presented in the table below gives effect to the pro forma
adjustments described in Note 2 to the Combined Financial Statements of ZD and
assumes that:

. the following transactions had occurred as of January 1, 1998 in the case
of statement of operations data and other data and as of December 31,
1998 in the case of balance sheet data:

(a)the re-classification of each outstanding share of common stock into a
share of ZD Stock,

(b) the sale of 10,000,000 shares of ZDNet Stock in the offering at an
assumed public offering price of $12.00 per share, the midpoint of
the range of initial public offering prices set forth on the cover
page of this prospectus, less underwriting discounts and expenses of
the offering assumed to be $0.90 per share.

(c) the attribution to ZDNet of the assumed net proceeds from 1,500,000
shares and the attribution to ZD of the remaining assumed net
proceeds from the offering,

(d) the transfer by ZDNet to ZD, as an inter-group revolving credit
advance, of the assumed net proceeds attributed to ZDNet and

(e) the application of the aggregate assumed net proceeds from the
offering to reduce indebtedness under Ziff-Davis Inc.'s revolving
credit facility and

. the policies described under "Certain Cash Management and Accounting
Policies" included in this prospectus had been adhered to for the year
ended December 31, 1998, and each cash transfer from ZD to ZDNet or from
ZDNet to ZD had been accounted for as a decrease or increase in the
inter-group revolving credit advance referred to in (c) above as
contemplated by those policies.

11
<PAGE>

In addition, the pro forma statement of operations data excludes the effect
of non-recurring expenses directly attributable to the offering. For each $1
change in the assumed net proceeds per share, (a) pro forma interest expense,
net and pro forma loss before income taxes would each change by $ , (b) pro
forma net loss would change by $ , (c) pro forma net loss per share would
change by $ and (d) pro forma division equity would change by $8,500,000.
The pro forma data is not necessarily indicative of the actual financial
position or results of operations of ZD as of or for the year ended December
31, 1998 or the financial position or results of operations that ZD would have
experienced if the transactions for which the data gives pro forma effect had
in fact occurred at the times assumed. Also, the pro forma data does not
purport to represent ZD's future financial position or results of operations.

<TABLE>
<CAPTION>
Nine month period
ended Pro forma
Year ended December 31, September 30, year ended
--------------------------------- -------------------- December 31,
1995 1996 1997 1997 1998 1998
---------- ---------- ---------- -------- ---------- ------------
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Statement of Operations
Data:
Revenue, net............ $ 202,729 $ 938,924 $1,121,543 $728,910 $ 694,081 $
Depreciation and
amortization........... 24,305 134,251 147,259 112,173 109,814
Income (loss) from
operations............. 62,675 104,594 131,713 8,548 (8,062)
Interest expense, net... 44,005 120,646 190,445 141,333 111,185
Income (loss) before
income taxes........... 22,869 (26,636) (71,648) (144,051) (119,456)
Net income (loss)....... 10,945 (52,081) (71,179) (143,810) (86,179)
Net loss per share......
Weighted average shares
outstanding............ 100,000
Balance Sheet Data (at period end):
Cash and cash
equivalents............ $ 27,908 $ 29,915 $ 30,273 $ 26,728 $
Total assets............ 1,090,981 3,584,963 3,548,108 3,410,982
Total long-term debt.... 575,450 2,522,252 2,408,240 1,526,047
Division equity......... 397,881 447,756 126,130 1,344,048
Other Data:
Net cash provided (used)
by operating
activities(1).......... $ 26,168 $ 74,164 $ 11,900 $ (9,624) $ 87,455 $
EBITDA(2)............... 91,179 228,261 272,894 114,236 106,011
Capital expenditures.... 3,367 21,355 27,822 17,291 24,218
Capital contributions to
ZDNet.................. -- 13,630 20,664 15,799 13,242
Investments and
acquisitions, net of
cash acquired.......... 814,520 2,124,283 11,002 60 8,192
</TABLE>

(Footnotes on following page)

12
<PAGE>

- --------

(1) This information should be read in conjunction with the more detailed
information concerning cash flows from operating, investing and financing
activities in the Combined Statements of Cash Flows set forth in ZD's
Combined Financial Statements.

(2) "EBITDA" is defined as income before provision for income taxes, interest
expense, depreciation and amortization. ZD's EBITDA is calculated by adding
(a) ZD's EBITDA before losses related to its retained interest in ZDNet and
(b) ZD's proportionate interest in ZDNet's EBITDA, which is currently 100%.
EBITDA is not intended to represent cash flows from operations and should
not be considered as an alternative to net income as an indicator of ZD's
operating performance or to cash flows as a measure of liquidity. Although
Ziff-Davis Inc. believes that EBITDA is a standard measure commonly
reported and widely used by analysts, investors and other interested
parties in the publishing and media industries, the EBITDA presented for ZD
may not be comparable to similarly titled measures reported by other
companies.

13
<PAGE>

ZIFF-DAVIS INC.

Summary Historical and Pro Forma Combined Financial and Other Data

The following table presents summary historical data for Ziff-Davis Inc. as
of September 30, 1998, for the years ended December 31, 1995, 1996 and 1997 and
for the nine month periods ended September 30, 1997 and 1998. In addition, the
table presents unaudited summary pro forma data as of and for the year ended
December 31, 1998. This data was derived from the Combined Financial Statements
of Ziff-Davis Inc. included in this prospectus. An affiliate of Ziff-Davis Inc.
acquired an events business (COMDEX) on April 1, 1995 and a print publishing
business (ZDI) on February 29, 1996; the data does not include results from the
acquired businesses for periods before the respective dates of acquisition.
Data as of and for the periods ended September 30, 1997 and 1998 is derived
from Ziff-Davis Inc.'s unaudited financial statements. On May 4, 1998, Ziff-
Davis Inc. completed a reorganization described in Note 2 to the Combined
Financial Statements of Ziff-Davis Inc. Results for periods before the
reorganization are not directly comparable to results for periods after the
reorganization. No historical or pro forma earnings per share or share data is
presented as Ziff-Davis Inc. does not consider such data meaningful.

The pro forma data presented gives effect to the pro forma adjustments
described in Note 2 to the Combined Financial Statements of Ziff-Davis Inc. and
assumes that the following transactions had occurred as of January 1, 1998 in
the case of statement of operations data and other data and as of December 31,
1998 in the case of balance sheet data:

(b) the application of the aggregate assumed net proceeds from the offering
to reduce indebtedness under Ziff-Davis Inc.'s revolving credit facility.

In addition, the pro forma statement of operations data excludes the effect
of non-recurring expenses directly attributable to the offering. For each $1
change in the assumed net proceeds per share, (a) pro forma interest expense,
net and pro forma loss before income taxes would each change by $ , (b) pro
forma net loss would change by $ and (c) pro forma stockholders' equity would
change by $10,000,000. The pro forma data is not necessarily indicative of the
actual financial position or results of operations of Ziff-Davis Inc. as of or
for the year ended December 31, 1998 or the financial position or results of
operations that Ziff-Davis Inc. would have experienced if the transactions for
which the data gives pro forma effect had in fact occurred at the times
assumed. Also, the pro forma data does not purport to represent Ziff-Davis
Inc.'s future financial position or results of operations.

14
<PAGE>

<TABLE>
<CAPTION>
Nine month period ended Pro forma,
Year ended December 31, September 30, year ended
--------------------------------- ------------------------- December 31,
1995 1996 1997 1997 1998 1998
---------- ---------- ---------- ----------- ------------ ------------
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Statement of Operations
Data:
Revenue, net............ $ 202,729 $ 955,139 $1,153,761 $ 750,187 $ 730,547 $
Depreciation and amorti-
zation................. 24,305 139,736 154,940 117,697 114,594
Income (loss) from oper-
ations................. 62,675 87,181 109,232 (11,094) (17,395)
Interest expense, net... 44,005 120,646 190,445 141,333 111,185
Income (loss) before
income taxes........... 22,869 (27,124) (72,491) (144,794) (119,768)
Net income (loss)....... 10,945 (52,081) (71,179) (143,810) (86,179)
Balance Sheet Data (at
period end):
Cash and cash equiva-
lents.................. $ 27,908 $ 29,915 $ 30,301 $ 27,153 $
Total assets............ 1,090,981 3,584,173 3,546,646 3,412,701
Total long-term debt.... 575,450 2,522,252 2,408,240 1,526,047
Stockholders' equity.... 397,881 447,756 126,130 1,344,048
Other Data:
Net cash provided (used)
by operating
activities(1).......... $ 26,168 $ 61,543 $ (3,364) $ 20,650 $ 82,791 $
EBITDA(2)............... 91,179 233,258 272,894 114,236 106,011
Capital expenditures.... 3,367 22,365 30,196 18,636 27,399
Investments and
acquisitions, net of
cash acquired.......... 814,520 2,124,823 14,000 3,058 13,192
</TABLE>
- -------

(2) "EBITDA" is defined as income before provision for income taxes, interest
expense, depreciation and amortization. EBITDA is not intended to represent
cash flows from operations and should not be considered as an alternative
to net income as an indicator of Ziff-Davis Inc.'s operating performance or
to cash flows as a measure of liquidity. Although Ziff-Davis Inc. believes
that EBITDA is a standard measure commonly reported and widely used by
analysts, investors and other interested parties in the publishing and
media industries, the EBITDA presented for Ziff-Davis Inc. may not be
comparable to similarly titled measures reported by other companies.

15
<PAGE>

The following table presents the relative contribution of ZDNet and ZD to the
revenue and operating income (loss) of Ziff-Davis Inc. for the year ended
December 1997 and nine month period ended September 30, 1998.

<TABLE>
<CAPTION>
Year ended Nine month
December 31, period ended
1997 September 30, 1998
------------ ------------------
(in thousands)
<S> <C> <C>
ZDNet revenue.................................. $ 32,218 $ 36,466
ZD revenue..................................... 1,121,543 694,081
---------- --------
Ziff-Davis Inc. total revenue................ $1,153,761 $730,547
========== ========
ZDNet loss from operations..................... $ (22,481) $ (9,333)
ZD income (loss) from operations............... 131,713 (8,062)
---------- --------
Ziff-Davis Inc. income (loss) from
operations.................................. $ 109,232 $(17,395)
========== ========
</TABLE>

16
<PAGE>

RISK FACTORS

You should carefully consider the risk factors described below, as well as
the other information included in this prospectus, before buying shares of
ZDNet Stock.

Risk Factors Relating to ZDNet Stock

Holders Of ZDNet Stock Will Be Common Stockholders Of Ziff-Davis Inc. And Will
Be Subject To Risks Associated With An Investment In Ziff-Davis Inc. As A Whole

We cannot assure you that the market value of ZDNet Stock will in fact
reflect the performance of ZDNet as we intend.

Even though we have allocated all of our consolidated assets, liabilities,
revenue, expenses and cash flow between ZDNet and ZD in order to prepare their
respective financial statements, that allocation will not change the legal
title to any assets or responsibility for any liabilities and will not affect
the rights of any of our creditors. Further, holders of ZDNet Stock will not
have any legal rights related to specific assets of ZDNet and, in any
liquidation, will receive a share of the net assets of Ziff-Davis Inc. based on
the relative trading prices of ZDNet Stock and ZD Stock rather than on any
assessment of the actual value of ZDNet or ZD. Holders of ZDNet Stock will
continue to be common stockholders of Ziff-Davis Inc. and, as such, will be
subject to all risks associated with an investment in Ziff-Davis Inc. and all
of our businesses, assets and liabilities. For example, if the cash flow of ZD
is insufficient to satisfy inter-group loans or other debt owed by ZD, ZDNet
would be adversely affected. For more information on the negative effects our
debt obligations could have on holders of Ziff-Davis Inc. common stock,
including holders of ZDNet Stock, see "--Other Ziff-Davis Inc. Risks--We Have
Significant Debt Obligations".

Financial Results Of ZD Could Affect ZDNet

Financial results of ZD will affect our consolidated results of operations,
financial position and borrowing costs. This could affect the results of
operations, financial position or borrowing costs of ZDNet or the market price
of ZDNet Stock. In addition, net losses of ZD, and any dividends or
distributions on, or repurchases of, ZD Stock, will reduce the assets of Ziff-
Davis Inc. legally available for dividends on ZDNet Stock. Accordingly, you
should read financial information for ZDNet together with financial information
for ZD and financial information for Ziff-Davis Inc.

Having Two Series Of Common Stock Could Create Potential Conflicts Of Interest

Having two series of common stock could give rise to occasions when the
interests of holders of one series might diverge or appear to diverge from the
interests of holders of the other series. Examples include:

. our decisions as to whether to allocate the proceeds of issuances, or the
costs of repurchases, of ZDNet Stock to ZD in respect of its retained
interest in ZDNet or to the equity of ZDNet,

17
<PAGE>

. our decisions as to how to allocate consideration received in connection
with a merger involving Ziff-Davis Inc. between holders of ZD Stock and
ZDNet Stock,

. our decisions as to whether and when to exchange one series of common
stock for the other series of common stock,

. our decisions as to whether and when to approve dispositions of assets of
either ZD or ZDNet,

. our decisions as to whether to pay dividends on ZD Stock and ZDNet Stock
and

. our decisions as to whether and how to make transfers of funds between ZD
and ZDNet and, more generally, our decisions as to other operational and
financial matters that could be considered detrimental to ZDNet.

If directors own disproportionate interests, in percentage or value terms, in
ZD Stock and ZDNet Stock, that disparity could create or appear to create
potential conflicts of interest when they are faced with decisions that could
have different implications for the different series.

Principles Of Delaware Law May Protect Decisions Of The Board Of Directors That
Have A Disparate Impact Upon Holders Of ZD Stock And ZDNet Stock

Principles of Delaware law established in cases involving differing treatment
of two classes of common stock provide that a board of directors owes an equal
duty to all common stockholders regardless of class or series and does not have
separate or additional duties to either group of stockholders. We are not aware
of any legislative or judicial precedent involving the fiduciary duties of
directors of a Delaware corporation with two classes of common stock with
separate rights related to specified operations of the corporation. However,
under the principles of Delaware law referred to above and the related
principle known as the "business judgment rule", you may not be able to
challenge decisions that have a disparate impact upon holders of ZD Stock and
ZDNet Stock if the board of directors:

. is disinterested and adequately informed with respect to such decisions
and

. acts in good faith and in the belief that it is acting in the best
interests of Ziff-Davis Inc.'s stockholders.

The Board Of Directors Has Sole Discretion To Allocate Proceeds Upon Issuances
(Or Costs Of Repurchases) Of ZDNet Stock To ZDNet Or ZD

Proceeds from the issuance of ZDNet Stock may not necessarily be allocated to
the equity of ZDNet. The board of directors will determine in its sole
discretion whether to allocate the proceeds of issuances or the costs of
repurchases of ZDNet Stock to ZD in respect of its retained interest in ZDNet
or to the equity of ZDNet. For a more complete description of how the board of
directors will allocate cash between ZD and ZDNet, see "Certain Cash Management
and Allocation Policies".

18
<PAGE>

Stockholders Will Not Vote On How To Allocate Consideration Received In
Connection With A Merger Among Holders Of ZD Stock And Holders Of ZDNet Stock

Our charter does not contain any provisions governing how consideration
received in connection with a merger or consolidation involving Ziff-Davis Inc.
is to be allocated between holders of ZD Stock and holders of ZDNet Stock.
Neither holders of ZD Stock nor holders of ZDNet Stock will have a separate
class vote in any merger or consolidation so long as we divide the type and
amount of consideration between holders of ZD Stock and holders of ZDNet Stock
in a manner we determine, in our sole discretion, to be fair. In any such
merger or consolidation, the different ways we may divide the consideration
might have materially different results. As a result, the consideration to be
received by holders of ZDNet Stock in any such merger or consolidation may be
materially less valuable than the consideration they would have received if
they had a separate class vote on such merger or consolidation.

We Have The Option To Exchange One Series Of Common Stock For The Other Series
And This May Be Disadvantageous To Holders Of ZDNet Stock

As described in the summary under the caption "ZDNet Stock", we will have the
right to issue shares of one series of common stock in exchange for outstanding
shares of the other series of common stock. Because certain exchanges would be
at a premium, and since we could determine to effect an exchange at a time when
either or both of ZD Stock and ZDNet Stock may be considered to be overvalued
or undervalued, any such exchange may be disadvantageous to holders of ZDNet
Stock. In addition, any such exchange would preclude holders of the exchanged
series of common stock from retaining their investment in a security that is
intended to reflect separately the performance of the related group.

We May Dispose Of Assets Of Either ZD Or ZDNet Without Your Approval

Delaware law requires stockholder approval only for a sale or other
disposition of all or substantially all of the assets of Ziff-Davis Inc. As
long as the assets attributed to ZD or ZDNet represent less than substantially
all of Ziff-Davis Inc.'s assets, we may approve sales and other dispositions of
any amount of the assets of either ZD or ZDNet without any stockholder
approval. If we dispose of all or substantially all of the assets of either ZD
or ZDNet, we would be required, if the disposition is not an exempt disposition
under the terms of our charter, to choose to either:

. declare and pay a dividend,

. redeem shares of the relevant series of stock or

. exchange shares of one series for outstanding shares of the other series
at a 10% premium.

Consequently, holders of either series of common stock may receive less value
for their shares than the value that a third-party buyer might pay for all or
substantially all of the assets of such group. In addition, if we elect to
complete an exchange in connection with the disposition, we could do so as one
of the three alternatives required in connection with

19
<PAGE>

the disposition or as an optional exchange that may in some cases be at no
premium, and any such exchange could be completed at a time when ZDNet Stock or
ZD Stock may be considered to be overvalued or undervalued.

The board of directors will decide, in its sole discretion, how to proceed
and is not required to select the option that would result in the highest value
to holders of ZDNet Stock. This decision, however, will be subject to the board
of directors' general fiduciary duties as described above.

We Do Not Expect To Pay Dividends For The Foreseeable Future

Our various debt instruments currently prohibit the payment of dividends, and
in any event, we do not expect to pay any dividends for the foreseeable future.

We May Not Pay Dividends Equally On ZD Stock And ZDNet Stock

We have the right to pay dividends on ZD Stock or ZDNet Stock, or both, in
equal or unequal amounts, notwithstanding:

. the performance of either ZD or ZDNet,

. the amount of assets available for dividends on either series,

. the amount of prior dividends declared on either series or

. any other factor.

In addition, net losses of ZD, and any dividends or distributions on, or
repurchases of, ZD Stock, will reduce the assets of Ziff-Davis Inc. legally
available for dividends on ZDNet Stock.

The Board Of Directors May Make Operational And Financial Decisions Affecting
ZD And ZDNet Differently

The board of directors, in its sole discretion, will make operational and
financial decisions and implement policies that affect the businesses of ZD and
ZDNet differently. Examples include:

. transfers of funds between ZD and ZDNet,

. the manner of accounting for transfers of funds between ZD and ZDNet,

. allocation of funds for capital expenditures,

. other transactions between ZD and ZDNet,

. the allocation of financing opportunities in public markets and

. the allocation of business opportunities, resources and personnel.

Decisions of the board of directors may favor either ZD or ZDNet at the expense
of the other. For example, the decision to provide funds for ZD may adversely
affect the ability of ZDNet to obtain funds sufficient to implement its growth
strategies.

20
<PAGE>

The Board Of Directors Has Sole Discretion To Change Certain Cash Management
And Allocation Policies

The board of directors has adopted certain policies relating to cash
management and allocations between ZD and ZDNet. Although it has no present
intention to do so, the board of directors may, in its sole discretion, modify,
rescind or add to any of these policies. The board of directors' discretion to
change these policies makes an investment in ZDNet Stock riskier than an
investment in ordinary common stock. For a more comprehensive description of
these policies, see "Certain Cash Management and Allocation Policies".

Under Its Current Policies, The Board Of Directors Has Sole Discretion
Concerning Various Cash Management Matters

The discretion of the board of directors in the area of cash management makes
an investment in ZDNet Stock riskier than an investment in ordinary common
stock.

The board of directors will determine, in its sole discretion, whether to
transfer any cash to or from ZDNet. Moreover, the board of directors has sole
discretion to determine

. whether a transfer of cash from ZDNet to ZD will be treated as a
revolving credit advance, a long-term loan or a return of capital and

. whether a transfer of cash from ZD to ZDNet will be treated as a
revolving credit advance, a long-term loan or a contribution to capital.

The board of directors' determination as to how to account for a cash
transfer will affect the amount of interest expense and interest income,
stockholders' equity and number of notional shares of ZDNet Stock outstanding
as reflected in the financial statements of ZD and ZDNet.

If ZD is unable to repay advances or loans owed to ZDNet, ZDNet would be
adversely affected. Also, if ZDNet extends an advance or loan to ZD at an
interest rate below ZDNet's cost of funds or opportunity cost, ZDNet's results
would be adversely affected to the extent of the difference.

Any cash transfers we determine to account for as capital contributions or
returns of capital will increase or decrease ZD's retained interest in ZDNet.
Although we would calculate any change in the retained interest by reference to
the then current market value of ZDNet Stock, the change could come at a time
when ZDNet Stock is considered to be overvalued or undervalued. Also, any
increase in ZD's retained interest in ZDNet will reduce the percentage of ZDNet
intended to be represented by outstanding ZDNet Stock.

The Board Of Directors Has Broad Discretion About A Variety Of Allocation
Matters

The board of directors will determine, in its sole discretion, how to
allocate issuances of Ziff-Davis Inc. debt or preferred stock between ZD and
ZDNet. Moreover, the board of directors will have broad discretion as to how to
allocate Ziff-Davis Inc.'s consolidated assets, liabilities, revenue, expenses
and cash flow between ZD and ZDNet. The discretion of the board of directors in
these areas makes an investment in ZDNet Stock riskier than an investment in
ordinary common stock.

21
<PAGE>

Holders Of ZDNet Stock Will Vote Together With Holders Of ZD Stock And Will
Have Limited Separate Voting Rights

Holders of ZD Stock and ZDNet Stock will vote together as a single class,
except in certain limited circumstances provided under the Delaware general
corporation law. When holders of ZD Stock and ZDNet Stock vote together as a
single class, holders of the series of common stock having a majority of the
votes will be in a position to control the outcome of the vote even if the
matter involves a conflict of interest between holders of ZD Stock and holders
of ZDNet Stock.

The Voting Power Of ZDNet Stock Will Fluctuate Based On Its Market Value

Each share of ZD Stock will have one vote and each share of ZDNet Stock will
have a variable number of votes based on the market value of a share of ZDNet
Stock as compared to the market value of a share of ZD Stock over a specified
20-trading day period prior to the date of the vote. Accordingly, the relative
voting power of ZD Stock and ZDNet Stock will fluctuate from time to time based
on the respective market values of ZD Stock and ZDNet Stock.

We Cannot Assure You That A Market Will Develop For ZDNet Stock Or What Its
Market Price Will Be

There is currently no public trading market for ZDNet Stock and we cannot
assure you that one will develop or be sustained after the offering. We cannot
predict the prices at which ZDNet Stock will trade after the offering. The
initial public offering price for ZDNet Stock will be determined through our
negotiations with the underwriters and may not bear any relationship to the
market price at which ZDNet Stock will trade after the offering or to any other
established criteria for value.

Certain terms of ZD Stock and ZDNet Stock may adversely affect the trading
price of ZDNet Stock. These terms include:

. the right of the board of directors to exchange shares of one series of
common stock for shares of the other series,

. the discretion of the board of directors in making determinations
relating to a variety of cash management and allocation matters and

. the variable voting power of ZDNet Stock as compared to ZD Stock.

Such terms may limit the market price of ZDNet Stock.

The Market Price Of ZDNet Stock Will Fluctuate And Could Fluctuate
Significantly

The stock market has experienced extreme price and volume fluctuations. The
market prices of securities of Internet-related companies, in particular, have
been especially volatile. In the past, companies that have experienced such
volatility have sometimes been the object of securities class action
litigation. Securities class action litigation may result in substantial costs
and a diversion of management's attention and resources. For a

22
<PAGE>

description of certain class action and derivative litigation to which Ziff-
Davis Inc. is a party, see "ZDNet Description of Business--Legal Proceedings".

The Market Price Of ZDNet Stock May Not Reflect The Performance Of ZDNet

We cannot assure you that the market price of ZDNet Stock will in fact
reflect the performance of ZDNet as we intend. Holders of ZDNet Stock will
continue to be common stockholders of Ziff-Davis Inc. and, as such, will be
subject to all risks associated with an investment in Ziff-Davis Inc. and all
of its businesses, assets and liabilities.

We Are Subject To Certain Takeover Constraints

SOFTBANK Corp. and its non-Ziff-Davis Inc. affiliates currently own
approximately 72% of Ziff-Davis Inc.'s outstanding common stock. As long as
SOFTBANK Corp. and its non-Ziff-Davis Inc. affiliates continue to own a
majority of the voting power of our common stock, no person interested in
acquiring Ziff-Davis Inc. or ZDNet will be able to do so without obtaining the
consent of SOFTBANK Corp. and its non-Ziff-Davis Inc. affiliates.

If ZD and ZDNet were separate companies, any person interested in acquiring
either ZD or ZDNet without negotiating with management could seek control of
that entity by obtaining control of its outstanding voting stock by means of a
tender offer or proxy contest. Although we intend ZD Stock and ZDNet Stock to
reflect the separate performance of ZD and ZDNet, a person interested in
acquiring only ZD or ZDNet without negotiation with Ziff-Davis Inc.'s
management could obtain control of ZD or ZDNet only by obtaining control of the
outstanding voting stock of Ziff-Davis Inc.

The existence of two series of common stock could present complexities and
could in certain circumstances pose obstacles, financial and otherwise, to an
acquiring person. The existence of two series of common stock could, under
certain circumstances, prevent stockholders from profiting from an increase in
the market value of their shares as a result of a change in control of Ziff-
Davis Inc. by delaying or preventing such a change in control.

After giving effect to the offering and assuming the underwriters do not
exercise their option to purchase additional shares, there will be
approximately 90 million shares of common stock available for future issuance
without further stockholder approval. One of the effects of the existence of
authorized and unissued common stock and preferred stock could be to enable the
board of directors to issue shares to persons friendly to current management,
which could render more difficult or discourage an attempt to obtain control of
Ziff-Davis Inc. by means of a merger, tender offer, proxy contest or otherwise,
and thereby protect the continuity of our management. Such additional shares
also could be used to dilute the stock ownership of persons seeking to obtain
control of Ziff-Davis Inc.

In addition, certain provisions of our charter and by-laws, and certain
provisions of Delaware law, may inhibit changes of control not approved by the
board of directors. For additional takeover constraints, see "Description of
Capital Stock--Certain other Provisions of the Restated Certificate of
Incorporation and By-laws" and "--Certain Provisions of Delaware Law".

23
<PAGE>

The Value Of ZDNet Stock May Decline Due To Future Issuances Of ZDNet Stock

Our charter allows the board of directors, in its sole discretion, to issue
authorized but unissued shares of common stock. This could dilute the value of
shares of ZDNet Stock. The board of directors may issue ZD Stock or ZDNet Stock
to, among other things:

. raise capital,

. provide compensation or benefits to employees,

. pay stock dividends or

. acquire companies or businesses.

Under the Delaware general corporation law, the board of directors would not
need your approval for these issuances. We do not intend to seek your approval
for any such issuances unless:

. stock exchange regulations or other applicable law require approval or

. the board of directors deems it advisable.

The Market Price Of ZDNet Stock May Decline Due To Shares Of ZDNet Stock
Eligible For Future Sale

Upon completion of the offering, we expect to have 10.0 million shares of
ZDNet Stock outstanding, or 11.5 million shares if the underwriters fully
exercise their option to purchase additional shares. These shares will be
freely tradeable without restriction by persons other than "affiliates" of
Ziff-Davis Inc. We expect . shares will be owned by certain "affiliates" and
will therefore be deemed "restricted" securities within the meaning of the
Securities Act. In addition, members of management will have the right to
purchase approximately 10.2 million additional shares of ZDNet Stock under
employee stock options, subject to vesting requirements. Also, upon completion
of the offering and assuming the underwriters do not exercise their option to
purchase additional shares, we will be entitled to issue up to approximately
90.0 million additional shares of ZDNet Stock, of which, up to 61.5 million
shares could be for the account of ZD in respect of its retained interest in
ZDNet.

We cannot predict the effect, if any, that sales of ZDNet Stock, or the
availability of shares for sale, will have on the market price prevailing from
time to time. Nevertheless, sales of significant amounts of ZDNet Stock in the
public market, or the perception that such sales may occur, could adversely
affect prevailing market prices. For a more detailed description of the effect
of future sales of ZDNet Stock, see "Shares Eligible for Future Sale".

Risk Factors Relating To ZDNet

ZDNet Has An Extremely Limited Operating History And A History Of Net Losses

ZDNet has an extremely limited operating history and an investor must
consider the risks, expenses and difficulties frequently encountered by such
companies, particularly in the new and rapidly evolving market for Internet
products, content and services. We cannot

24
<PAGE>

assure you that ZDNet will be successful in addressing such risks. Although
ZDNet has experienced revenue growth in recent periods, we cannot assure you
that ZDNet's revenue will continue to grow or continue at its current level.

ZDNet has incurred significant net losses in the past ($21.2 million in 1997
and $8.7 million in the first nine months of 1998). For more information
regarding these net losses, see "ZDNet Selected Historical Combined Financial
and Other Data" and ZDNet's Combined Financial Statements appearing elsewhere
in this prospectus. We cannot assure you that ZDNet will report net income in
the future.

We Cannot Accurately Predict ZDNet's Future Revenue

As a result of the evolving nature of the Internet and ZDNet's limited
operating history, we cannot accurately forecast its revenue. Current and
future expense levels are based principally on estimated future revenue and are
to a large extent fixed. Accordingly, ZDNet may be unable to adjust spending to
compensate for any unexpected revenue shortfall. If ZDNet's actual revenue is
less than its estimated revenue, this could have an immediate material adverse
effect on ZDNet's profits and liquidity.

ZDNets' Quarterly Operating Results May Fluctuate Significantly

ZDNet's quarterly operating results may fluctuate significantly because of a
variety of factors, many of which are outside our control, including:

. overall usage levels of the Internet and of ZDNet's sites in particular,

. demand for Internet advertising and the loss of advertisers,

. seasonal trends in Internet use and advertising,

. the amount and timing of ZDNet's capital expenditures,

. costs relating to the expansion of ZDNet's operations and the
introduction of new sites and services,

. price competition or pricing changes in Internet advertising and

. costs relating to technical difficulties or system downtime.

We believe Internet advertising typically slows in the first quarter of the
year. Historically, ZDNet has experienced lower advertising and lower revenue
in the first quarter of each year as compared to the fourth quarter of the
prior year. Seasonality and cyclicality in the level of Internet advertising
expenditures generally could become more pronounced in the future as the
Internet becomes more accepted as an advertising vehicle. Quarterly comparisons
of ZDNet's results of operations are not reliable as an indication of its
future performance. For additional information about the seasonality of ZDNet's
revenue, see "ZDNet Management's Discussion and Analysis of Financial Condition
and Results of Operations".

25
<PAGE>

ZDNet's Future Revenue Is Dependent On The Growth Of Internet Use And The
Acceptance Of The Internet As An Advertising And Commerce Medium

ZDNet's future revenue will depend largely on the widespread acceptance and
use of the Internet as an information source and as an advertising and commerce
vehicle. Rapid growth in Internet use is a recent trend and market acceptance
of the Internet as an advertising and commercial medium is highly uncertain.

The Internet may not be accepted as a viable advertising and commerce medium
for distribution of information and engaging in commerce for a number of
reasons, including:

.inadequate development of the network infrastructure,

.inadequate development of enabling technologies,

.insufficient commercial support for Internet advertising,

.concerns about privacy and security among users and

.lack of widely accepted standards for measuring the effectiveness of
advertising on the Internet.

ZDNet Depends On Advertising As A Principal Source Of Its Revenue

ZDNet derived 83% of its revenue for the first nine months of 1998 from the
sale of advertising on its Internet sites and we expect that advertising
revenue will continue to be the principal source of its revenue in the
foreseeable future. Most of ZDNet's advertising contracts are either short-term
contracts and/or can be terminated by the advertiser at any time with little
notice. We cannot assure you that ZDNet will be able to retain current
advertisers or obtain new advertising contracts.

ZDNet's ability to generate advertising revenue will depend on several
factors, including:

.the continued development of the Internet as an advertising medium,

.the pricing of advertising on other Internet sites,

.the amount of traffic on ZDNet's network of sites,

.pricing pressures, delays and new product launches,

.ZDNet's ability to achieve, demonstrate and maintain attractive user
demographics and

.ZDNet's ability to develop and retain a skilled advertising sales force.

ZDNet Is Increasingly Dependent On, And Receives A Significant Percentage Of
Its Revenue From, A Limited Number of Advertisers

A relatively small number of advertisers contribute a significant percentage
of ZDNet's advertising revenue. In the first nine months of 1998, ZDNet's top
20 advertising customers accounted for approximately 36% of its advertising
revenue. These advertising clients, and its other advertising clients, may not
continue to use ZDNet's services to the same extent, or at all, in the future.
A significant reduction in advertising by one or more of ZDNet's largest
advertisers would have a material adverse effect on ZDNet's profits and
liquidity.

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ZDNet Depends On Third Parties For Internet Traffic To Its Sites

ZDNet's ability to advertise on and maintain links from other Internet sites
is an important element to its success. Traffic originating from links existing
on other Internet sites, particularly search engines, directories and other
navigational tools managed by Internet service providers and Web browser
companies, is an important segment of the overall traffic on ZDNet's Internet
sites. ZDNet has special linking arrangements to generate additional traffic
with Yahoo!, Excite and MSNBC which are either short-term contracts and/or can
be terminated with little notice. There is intense competition for these types
of linking arrangements. We cannot assure you that these arrangements will be
maintained or that advertising or links will continue to be available on
reasonable commercial terms or at all.

ZDNet Depends On Licensed Technology From Third Parties

ZDNet relies on certain technology licensed from third parties such as
Vignette's Storyserver, Thunderstone's Texis Search Engine and Netscape's Web
Server Software for use in operating and managing its Internet sites and
providing related services to users and advertisers. ZDNet's ability to
generate revenue from Internet commerce may also depend on data encryption and
authentication technologies that it may be required to license from third
parties. We cannot assure you that such technology licenses will be available
at all, that they will be available on reasonable commercial terms or that they
will operate as intended.

ZDNet's Competitive Position Depends On Its Ability To Attract And Retain Key
Personnel

ZDNet's failure to attract and retain qualified personnel could diminish its
competitive position. ZDNet's performance is substantially dependent on the
continued services and performance of its senior executive officers and other
key personnel. ZDNet does not have long-term employment agreements with any of
its key personnel and maintains no "key person" life insurance policies.
ZDNet's future success also depends on its ability to identify, attract, retain
and motivate highly skilled editorial, technical, managerial, sales, marketing
and customer service personnel. Competition for such persons is intense. We
cannot assure you that ZDNet will be able to attract or retain such personnel.

ZDNet May Not Be Able To Adequately Respond To Technological Change

The market for Internet products and services is characterized by rapid
technological developments, frequent new product introductions and evolving
industry standards. ZDNet will be required to continually improve the
performance, features and reliability of its network infrastructure and
Internet sites, particularly in response to competition and changing customer
demands. We cannot assure you that ZDNet will be successful in responding
rapidly, cost-effectively or adequately to such developments.

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<PAGE>

ZDNet's Competition Is Intense And Is Expected To Increase Significantly

We cannot assure you that ZDNet will be able to maintain its competitive
position. Competition among Internet content providers is intense and is
expected to increase significantly in the future. The market for Internet
content sites is rapidly evolving and barriers to entry are low, enabling
newcomers to launch competitive sites at relatively low cost. Moreover,
increased competition could result in price reductions, reduced margins or loss
of market share, any of which could have an effect on our future revenue and
profits.

We believe ZDNet competes most directly with Web sites specializing in broad-
based technology information. These include c|net, CMP, Internet.com and IDG.
ZDNet also generally competes for users and advertisers with:

. Internet portals and search sites that help users access information
rather than create original content and are not specifically focused on
technology related information, such as Excite, Infoseek, Lycos and
Yahoo!,

. general news sites, such as CNN and ABC,

. general purpose online service providers, such as America Online and MSN,

. browser/software companies offering information services, such as
Microsoft and Netscape, and

. large general-interest sites, such as Time-Warner's pathfinder.com.

In addition, ZDNet competes with traditional media content businesses such as
newspapers, magazines, radio and television. In order to compete successfully
and attract users, advertisers and strategic partners, ZDNet must continue to
provide high quality, engaging content in a timely and cost-effective manner.

To Remain Competitive, ZDNet Must Constantly Expand And Develop New Content
Areas And Services. This Is Inherently Risky And Expensive

ZDNet's future success may depend in part on its ability to continue
expanding its Internet sites to include new subject matters and services. Costs
related to developing new content areas and services are expensed as they are
incurred while revenue related to these new content areas and services
typically builds over time. Accordingly, ZDNet's profitability from year to
year may be adversely affected by the number and timing of new launches. In
addition, we cannot assure you that any new areas or services will be developed
in a timely or cost-effective manner or that they will be successful.

We Cannot Assure You That ZDNet Will Continue To Develop The ZDNet Brand

We cannot assure you that ZDNet will be able to continue to develop its
brand. ZDNet believes brand identity is important to attracting and expanding
its user base, Internet traffic and advertising and commerce relationships.
ZDNet believes the significance of brand recognition will intensify as the
number of Internet sites increases.

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Any Capacity Constraints Or System Disruptions Could Have A Material Adverse
Effect On ZDNet

The performance and reliability of ZDNet's Internet sites and network
infrastructure are critical to its reputation and ability to attract and retain
users, advertisers, merchants and strategic partners. Any system error or
failure, or a sudden and significant increase in traffic, may result in the
unavailability of sites and significantly delay response times. Individual,
sustained or repeated occurrences could result in a loss of potential or
existing users, advertisers or strategic partners. In addition, because ZDNet's
advertising revenue is directly related to the number of advertisements it
delivers to users, system interruptions or delays would reduce the number of
impressions delivered and thereby reduce its revenue.

ZDNet's systems and operations are vulnerable to interruption or malfunction
due to certain events beyond its control, including natural disasters,
telecommunications failures and computer hacking. ZDNet also relies on Web
browsers and online service providers to provide Internet access to its sites.
We cannot assure you that ZDNet will be able to expand its network
infrastructure, either itself or through use of third-party hosting systems or
service providers, on a timely basis sufficient to meet demand. ZDNet presently
has only a limited amount of redundant facilities or systems, no formal
disaster recovery plan and no sufficient business interruption insurance to
compensate for losses that may occur. Any interruption to its systems or
operations could have a material adverse effect on ZDNet's business and its
ability to retain users, advertisers, merchants and strategic partners.

ZDNet's Networks May Be Vulnerable To Security Risks

ZDNet's networks may be vulnerable to unauthorized access, computer viruses
and other security problems. A user who circumvents security measures could
misappropriate proprietary information or cause interruptions or malfunctions
in ZDNet's operations. ZDNet may be required to expend significant resources to
protect against the threat of such security breaches or to alleviate problems
caused by such breaches. Although ZDNet intends to continue to implement
industry-standard security measures, such measures may be inadequate.

Increased Government Regulation Of The Internet Could Have A Material Adverse
Effect On ZDNet

Increased government regulation, or the application of existing laws to
online activities, could inhibit Internet growth, expose ZDNet and other online
content providers to additional liabilities and increase the cost of doing
business. This could have a material adverse effect on ZDNet's profits and
liquidity. The increasing popularity and use of the Internet and other online
services may lead to the adoption of new laws and regulations in the U.S. or
elsewhere covering issues such as online privacy, copyright and trademark,
sales taxes and fair business practices or which require qualification to do
business as a foreign corporation in certain jurisdictions. For instance, the
European Union's recently adopted privacy regulations may limit the collection
and use of certain user information.

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<PAGE>

ZDNet Relies On Intellectual Property Rights Which May Not Be Adequately
Protected Under Current Laws

To establish and protect its trademark, service mark and other proprietary
rights in its products and services, ZDNet relies on a combination of:

. copyright, unfair competition, trademark, service mark and trade secret
laws and

. confidentiality agreements with its licensees and other third parties and
confidentiality agreements and policies covering its employees.

We cannot assure you that these measures will be adequate, that ZDNet will be
able to secure registrations for all of its marks in the U.S. or
internationally or that third parties will not infringe upon or misappropriate
its proprietary rights. Any infringement or misappropriation, or litigation
relating to intellectual property rights, may divert management's attention and
ZDNet's funds to litigate such claims.

Legal standards relating to the validity, enforceability and scope of
protection of certain proprietary rights in Internet-related business are
uncertain and evolving. In particular, new domain name registration and
ownership priority procedures may be adopted which may make it more difficult
for ZDNet to retain or obtain desirable domain names.

ZDNet May Incur Liability For Its Internet Content And User Data

As a content provider, ZDNet may face potential liability for intellectual
property infringement, defamation, indecency and other claims. In addition,
ZDNet may incur liability for unauthorized duplication or distribution of
third-party content or materials or for information collected from and about
its users. We cannot assure you that third parties or users will not bring
claims against ZDNet relating to proprietary rights or use of personal
information. Although ZDNet seeks to obtain indemnification from strategic
partners for any liability resulting from licensed content or linked sites, we
cannot assure you that such indemnities will always be obtainable or adequate.
ZDNet's general liability insurance may not cover or be adequate for potential
claims of this type.

ZDNet May Not Be Able To Adequately Manage Its Growth

ZDNet will need to effectively plan and manage its business to succeed in the
rapidly evolving Internet industry. ZDNet continues to increase the scope of
its operations and has grown its workforce substantially. As of December 31,
1997, ZDNet had a total of 252 employees and, as of September 30, 1998, ZDNet
had a total of 304 employees--a growth of 20.6% in the nine month period. This
growth has placed, and future growth may place, a significant strain on ZDNet's
resources. For example, we expect that the variety of advertising products
available on ZDNet sites will expand, increasing demands on its billing and
collection systems and requiring additional resources to properly determine
pricing and discounting structures. ZDNet expects that it will need to continue
to improve its financial and management controls and reporting systems and
procedures, and will need to continue to expand, train and manage its
workforce.

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<PAGE>

ZDNet's Acquisition And Investment Strategy Exposes It To Risks

ZDNet may acquire or make investments in new or complementary businesses,
products, services or technologies. We cannot assure you that ZDNet will be
able to identify suitable acquisition or investment candidates. Even if ZDNet
does identify suitable candidates, we cannot assure you that ZDNet will be able
to make such acquisitions or investments on reasonable commercial terms or
successfully assimilate personnel, operations, products, services or
technologies into its operations. This could disrupt ZDNet's ongoing business,
distract ZDNet's management and employees, increase ZDNet's expenses, including
amortization of goodwill, and materially and adversely affect ZDNet's profits
and liquidity. Furthermore, the incurrence or issuance of debt or equity
securities may be attributed to ZDNet to fund any future ZDNet acquisitions.

ZDNet's Computer Systems, And Those Of Others On Whom It Relies, May Not
Achieve Year 2000 Readiness

Programming codes in existing computer systems and software may not reliably
recognize date-sensitive information when the calendar year changes to 2000.
Systems or software that do not properly recognize such information could
generate erroneous data or fail. We are in the process of identifying and
testing our computer systems and software for Year 2000 readiness. In addition,
we are in the process of working with third parties on whom we rely for system
and database management to ensure Year 2000 readiness. We have not verified
that such third parties are Year 2000 compliant. We cannot assure you that our
systems or software, or third-party systems or software on which we rely, will
be Year 2000 compliant. Significant uncertainty exists concerning the potential
costs and effects associated with Year 2000 compliance. If Ziff-Davis Inc. or
any subscribers, advertisers, licensors, vendors or other third parties on whom
it relies experiences a Year 2000 compliance problem, this could have a
material adverse effect on ZDNet's profits and liquidity.

ZDNet's International Expansion Strategy Exposes It To Risk

One component of ZDNet's growth strategy is to further expand into
international markets. ZDNet's international operations are at an early stage
of development and have an extremely limited operating history. In addition,
the markets in which ZDNet has undertaken international expansion have
technology and online industries that are less well developed than in the U.S.

There are certain risks inherent in doing business in international markets,
such as the following:

. uncertainty of product acceptance by different cultures,

. unforeseen changes in regulatory requirements,

. difficulties in staffing and managing multinational operations,

. state-imposed restrictions on the repatriation of funds,

. currency fluctuations,

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. difficulties in finding appropriate foreign licensees or joint venture
partners and

. potentially adverse tax consequences.

There is a risk that such factors will have an adverse effect on ZDNet's
ability to successfully operate internationally and on its profits and
liquidity.

Other Ziff-Davis Inc. Risks

Ziff-Davis Inc. Has Only Operated As A Stand-Alone Company For Less Than A Year

We have only operated as a stand-alone company since May 1998. Until October
1997, our publishing business and our trade show and conference businesses were
managed as separate SOFTBANK Corp. subsidiaries. Our success depends in part on
our continued ability to manage the combined enterprise.

Ziff-Davis Inc.'s Historical Financial Information Is Not Particularly Relevant
To Its Actual Results

Our financial information included in this prospectus does not reflect what
the actual results of operations, financial position and cash flows would have
been had Ziff-Davis Inc. existed prior to the periods presented. In addition,
the financial information is not necessarily indicative of our future results
of operations, financial position and cash flows. For more information
regarding our operating results, see "Ziff-Davis Inc. Management's Discussion
and Analysis of Financial Condition and Results of Operations--Presentation of
Financial Information".

Ziff-Davis Inc. Is Controlled By Its Principal Stockholders. This Creates
Potential Conflicts Of Interest

SOFTBANK Corp. and its non-Ziff-Davis Inc. affiliates own approximately 72%
of Ziff-Davis Inc.'s outstanding shares. As a result, SOFTBANK Corp. and its
non-Ziff-Davis Inc. affiliates could elect all the members of the board of
directors. SOFTBANK Corp. and its non-Ziff-Davis Inc. affiliates could also
control those actions requiring the approval of the holders of a majority of
the voting stock, including amendments to our charter and any business
combinations. This concentration of ownership could prevent a change in control
of Ziff-Davis Inc. that might otherwise be beneficial to stockholders.

We have entered into certain agreements with SOFTBANK Corp. and its non-Ziff-
Davis Inc. affiliates governing ongoing relationships. These agreements include
certain licensing and management agreements relating to publications, events,
ZDNet and ZDTV, a 24-hour cable television channel and integrated Web site
focused exclusively on computers, technology and the Internet. In addition,
SOFTBANK Corp. has given us an undertaking that, as long as it owns 40% of the
voting power in our stock and can elect a majority of the board of directors,
it will not expand its operations outside Japan involving:

. publishing information on computing and Internet-related technology
through print media, CD-ROM/DVD, Internet and television or

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<PAGE>

. producing trade shows, conferences, exhibitions and similar events
primarily related to computing and Internet-related technology

that compete with us without the prior approval of our employee directors after
consulting with our independent directors.

This undertaking does not preclude investments by venture capital funds
managed by SOFTBANK Corp. and its non-Ziff-Davis Inc. affiliates which invest
in, among other things, computer and Internet-related companies. These funds
may be able to co-invest with or compete with us with respect to new
investments. In addition, SOFTBANK Corp. and its non-Ziff-Davis Inc. affiliates
may also develop new funds which may compete with us for investment
opportunities. We have agreed not to compete with SOFTBANK Corp. in Japan
without the prior approval of SOFTBANK Corp.'s board of directors and have
given SOFTBANK Corp. and its non-Ziff-Davis Inc. affiliates the continuing
right to license all of our products and services in Japan. These arrangements
and undertakings might be less favorable than arrangements negotiated at arm's
length between unrelated parties.

Ziff-Davis Inc. Has Significant Debt Obligations

At September 30, 1998:

. ZD's total debt (and Ziff-Davis Inc.'s total debt) was approximately $1.5
billion.

. ZD's total division equity (and Ziff-Davis Inc.'s stockholders' equity)
was approximately $1.3 billion.

. ZD's total debt (and Ziff-Davis Inc.'s total debt) was 53% of total
capitalization.

Our indebtedness is substantial in relation to stockholders' equity. The
degree to which we are leveraged is important because:

. It may impair our ability to obtain additional financing for working
capital, capital expenditures, acquisitions or general corporate
purposes.

. It may reduce the funds available to us for our operations if a
substantial portion of our cash flow from operations is dedicated to the
payment of principal and interest on our indebtedness.

. It may impair our ability to incur additional debt because of financial
and other restrictive covenants, including those relating to the
incurrence of additional indebtedness, the creation of liens, the payment
of dividends and sales of assets.

. It may increase our vulnerability to adverse general economic conditions,
including increases in interest rates.

Our indebtedness requires us to use a substantial portion of our cash flow to
pay down principal and interest on our outstanding debt. This reduces the funds
available for capital expenditures and future business opportunities.

Our credit facility is secured, in part, by a first priority security
interest in the capital stock of certain of our subsidiaries and is guaranteed
by certain of our wholly owned domestic subsidiaries, including ZD Inc. and ZD
Events Inc.

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<PAGE>

On December 11, 1998, Standard & Poors lowered its corporate credit and bank
loan ratings for Ziff-Davis Inc. to BB- from BB and Ziff-Davis Inc.'s
subordinated debt rating to B from B+. This downgrade had no impact on the
terms of our current borrowings. While the downgrade may make future
borrowings more expensive, we do not believe this will have a negative impact
on our liquidity or our access to credit markets.

On December 16, 1998, the lenders on our $1.35 billion credit facility
agreed to amend certain provisions of that facility. The amended provisions
include an increase to our allowed leverage ratios. In return, we have agreed
to pay a one-time fee of $3.375 million, and increase our interest rates on
amounts borrowed under the facility to rates ranging from LIBOR plus 1.5% to
LIBOR plus 3.375%, depending on the type of loan.

Ziff-Davis Inc.'s Revenue Is Dependent On Demand For Advertising

Ziff-Davis Inc. derived 51% of its total revenue for the first nine months
of 1998 from advertising sales and we expect that advertising revenue will
continue to be a principal source of our revenue in the foreseeable future.
Most of Ziff-Davis Inc.'s advertising contracts are either short-term
contracts and/or can be terminated by the advertiser at any time with little
notice. We cannot assure you that we will be able to retain current
advertisers or obtain new advertising contracts.

If a general economic downturn or a U.S. recession occurs in the future, our
advertisers may reduce their advertising budgets. In addition, factors such as
pricing pressures, delays and new product launches may affect technology
product advertisers. We cannot assure you that technology product advertisers
will maintain current levels of advertising in special interest magazines and
events instead of advertising in more general interest media. Any material
decline in the demand for advertising by technology product advertisers could
have an adverse effect on our profits and liquidity.

Reduced Demand For Advertising And The Resulting Restructuring

Margin pressure on computer equipment manufacturers, industry and product
delays, lower demand in Asia and a focus on the Year 2000 transition are
contributing to a reduced demand for advertising in our magazines (principally
PC Magazine, PC/Computing, Computer Shopper and PC Week). We believe these
factors will continue. In part as a result of these factors, earnings before
interest, taxes, depreciation and amortization for the fourth quarter of 1998
were significantly lower than they were for the fourth quarter of 1997.

As a result of this reduced demand, we announced on October 8, 1998 a
company-wide restructuring in which we discontinued three publications
(Internet Business, Equip and Windows Pro) and reduced our workforce by
approximately 10%. In the fourth quarter of 1998, we took a pre-tax charge of
$52.2 million as part of this restructuring.

Ziff-Davis Inc. Is Increasingly Dependent On, And Receives A Significant
Percentage Of Its Revenue From, A Limited Number Of Advertisers

A relatively small number of advertisers contribute a significant percentage
of Ziff-Davis Inc.'s advertising revenue. In the first six months of 1998,
Ziff-Davis Inc.'s top 20 advertising

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<PAGE>

customers accounted for approximately 37.8% of its advertising revenue. These
advertising clients, and our other advertising clients, may not continue to use
our services to the same extent, or at all, in the future. A significant
reduction in advertising by one or more of Ziff-Davis Inc.'s largest clients
would have a material adverse effect on our profits and liquidity.

Our Revenue Is Dependent On Certain Publications And Trade Shows

Certain of our publications have represented a significant portion of our
historic revenue. We expect that such publications will continue to do so in
the future. Three of our business publications, PC Magazine, Computer Shopper
and PC Week, accounted for approximately 46% of our publishing revenue in the
first nine months of 1998. Although we believe we have a diversified portfolio
of special interest publications and are not dependent on any single
publication, a significant decline in the performance of any of these
publications could have a material adverse effect on our profits and liquidity.

Certain of our trade shows and conferences have represented a significant
portion of our historic revenue. We expect that such trade shows and
conferences will continue to do so in the future. COMDEX/Fall accounted for 34%
of our trade show and conference revenue in 1997. Although we believe we have a
diversified portfolio of trade shows worldwide, a significant decline in the
performance of COMDEX/Fall could have an adverse effect on our profits and
liquidity.

Our Revenue Is Seasonal

Our business is seasonal. Revenue typically reaches its highest level during
the fourth quarter of each calendar year. This is largely due to the timing of
our single largest trade show event, COMDEX/Fall, and the general increase in
publishing revenue in the fourth quarter due to increased consumer buying
activity during the holiday season. We cannot assure you that COMDEX/Fall will
continue to be successful or that our fourth quarter revenue will continue to
be higher than revenue for our other quarters.

We Have Historical Net Losses

We and our predecessor have incurred significant net losses in the past and
we cannot assure you that we will report net income in the future. For more
information on our net losses, see Ziff-Davis Inc.'s. Selected Historical
Combined Financial and Other Data and Combined Financial Statements appearing
elsewhere in this prospectus.

To Remain Competitive We Must Constantly Expand And Develop New Products And
Services. This Is Inherently Risky And Expensive

Our success depends in part on our ability to monitor rapidly changing
technologies and market trends and offer new publications, trade shows and
services, including online services, that address the needs of specific target
audiences. The process of internally researching and developing new products
and services and whether they will achieve market acceptance and profitability
can be risky and costly. We cannot assure you that our efforts to introduce
new, or assimilate acquired, publications, trade shows or services will be

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<PAGE>

successful or profitable. Costs to develop new products are expensed as
incurred. Accordingly, our profitability from year to year may be adversely
affected by the number and timing of new product launches.

In February 1999, we purchased ZDTV from an affiliate at a purchase price of
$81.4 million plus the costs of funding its operations for January 1999. We
cannot assure you that ZDTV will ultimately obtain sufficient cable carriage
and commercial acceptance to be profitable.

We May Be Adversely Affected By Fluctuations In Paper And Postage Costs

ZD's principal raw material is paper. Paper costs constitute a significant
expense, accounting for 15.2% of our total U.S. print publishing operating
expenses in 1997 and 18.1% in the first nine months of 1998. Paper prices have
been volatile over the past several years, rising from 1994 through 1996,
declining in 1997 and remaining relatively flat in 1998. Management anticipates
that paper prices will remain relatively stable in 1999. We do not use forward
contracts and most of our paper supply contracts, which are generally for a
two-to-three year renewable term, provide for price adjustments to reflect
changing market prices. Accordingly, significant increases in paper prices
could adversely affect ZD's future results of operations.

Postage for magazine distribution is also one of ZD's significant expenses,
accounting for 11.3% of our total U.S. print publishing operating expenses in
1997 and 8.3% in the first nine months of 1998. Postage costs increase
periodically and can be expected to increase in the future. Management
estimates postage costs will increase approximately 3.5% in 1999. We may not be
able to recover, in whole or in part, paper or postage cost increases.
Accordingly, significant cost increases could have a material adverse effect on
our profits and liquidity.

Our Competition Is Significant And Is Expected To Continue

We face significant competition with respect to our print publications, trade
shows and conferences and other technology information services. If we are
unable to compete effectively for advertisers, readers, exhibitors and/or
attendees, our profits and liquidity could be materially and adversely
affected.

In our publishing business, we principally compete for advertising and
circulation revenue with publishers of other computer technology publications.
We also face broad competition from media companies that produce general
interest magazines and newspapers. Competition for advertising dollars is
primarily based on advertising rates, the nature and scope of readership,
reader response to advertisers' products and services and the effectiveness of
sales teams. Overall competitive factors in publishing include product
positioning, editorial quality, circulation, price and customer service. In our
trade show and conference business, we compete with other producers of trade
shows and conferences for exhibition space, exhibitors and attendees, primarily
on the basis of the quality of the conference, its content and organizational
efficiency.

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<PAGE>

Our Principal Vendors Are Consolidating And This May Adversely Affect Our
Operations

Our principal vendors include paper suppliers, printers, subscription
fulfillment houses and national newsstand distributors. Each of these
industries is currently experiencing consolidation among their principal
participants. Such consolidation may result in:

. decreased competition, which may lead to increased prices,

. interruptions and delays in services provided by such vendors and

. greater dependence on certain vendors.

Such factors could adversely affect our results of operations. One printing
company accounted for approximately 50% of our U.S.-based publications'
manufacturing expenditures in both 1997 and the first nine months of 1998.
While we believe there are adequate alternatives available, an interruption or
delay in service from, or the loss of, this printer could have a material
adverse effect.

We Are Exposed To Risks From Expanding Into International Markets

One component of our growth strategy is to further expand into international
markets. There are certain risks inherent in doing business in international
markets. For example:

. the uncertainty of product acceptance by different cultures,

. the risks of divergent business expectations,

. difficulties in finding appropriate foreign licensees or establishing
joint ventures with foreign partners,

. difficulties in staffing and managing multinational operations,

. currency fluctuations,

. state-imposed restrictions on the repatriation of funds and

. potentially adverse tax consequences.

There can be no assurance that one or more of such factors will not have an
adverse effect on our future international operations and, consequently, on our
profits and liquidity.

We Are A Defendant In Several Lawsuits, Which Could Have A Material Adverse
Effect On Us

In connection with the initial public offering of our existing common stock,
the repricing of certain stock options and a former joint venture between
SOFTBANK Corp. and its non-Ziff-Davis Inc. affiliates and certain third
parties, we have been named as a defendant in several lawsuits. While we
believe there are substantial defenses to all of the claims, we cannot assure
you that we will prevail. Defense costs and/or settlement costs relating to
these actions could be substantial, and the defense of these actions may divert
management's attention and resources. If the plaintiffs prevail in these
actions, any judgments awarded by the courts could have a material adverse
effect on our liquidity. For

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<PAGE>

more information regarding these lawsuits, see "ZDNet Description of Business--
Legal Proceedings".

Our Computer Systems, And Those Of Others On Whom We Rely, May Not Achieve Year
2000 Readiness

Programming codes in existing computer systems and software may not reliably
recognize date-sensitive information when the calendar year changes to 2000.
Systems or software that do not properly recognize such information could
generate erroneous data or fail. We are in the process of identifying and
testing our computer systems and software for Year 2000 readiness. In addition,
we are in the process of working with third parties on whom we rely for system
and database management to ensure Year 2000 readiness. We have not verified
that such third parties are Year 2000 compliant. We cannot assure you that our
systems or software, or third-party systems or software on which we rely, will
be Year 2000 compliant. Significant uncertainty exists concerning the potential
costs and effects associated with Year 2000 compliance. If Ziff-Davis Inc. or
any subscribers, advertisers, licensors, vendors or other third parties on whom
we rely experiences a Year 2000 compliance problem, this could have a material
adverse effect on our profits and liquidity.

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

Our logo and certain titles of our Internet sites, publications, products and
services referenced in this prospectus are our trademarks. Each trade name,
trademark or service mark of any other company appearing in this prospectus is
the property of its owner.

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CAUTIONARY STATEMENT REGARDING

FORWARD-LOOKING STATEMENTS

Some of the information in this prospectus may constitute forward-looking
statements which are subject to various risks and uncertainties. Such
statements can be identified by the use of forward-looking terminology such as
"may", "will", "expect", "anticipate", "estimate", "continue", "plan" or other
similar words. These statements discuss future expectations, contain
projections of results of operations or of financial condition or state other
"forward-looking" information. When considering such forward-looking
statements, you should keep in mind the factors described in "Risk Factors" and
other cautionary statements appearing in Management's Discussion and Analysis
of Financial Condition and Results of Operations for each of Ziff-Davis Inc.,
ZD and ZDNet appearing elsewhere in this prospectus. Such risk factors and
statements describe circumstances which could cause actual results to differ
materially from those contained in any forward-looking statement.

This prospectus also includes statistical data regarding the publishing,
trade show and Internet industries. This data was obtained from industry
publications and reports which we believe to be reliable sources. We have not
independently verified such data nor sought the consent of any organizations to
refer to their reports herein.

39
<PAGE>

TRADING PRICES OF AND DIVIDENDS ON EXISTING COMMON STOCK

There currently is no trading market for ZDNet Stock.

Our existing common stock, which we are not now offering, is traded on the
NYSE under the trading symbol "ZD". On February 9, 1999, the closing price per
share of existing common stock as reported on the NYSE Composite Tape was $16
7/8. As of February 9, 1999, there were 100,076,628 shares of existing common
stock outstanding held by holders of record.

The high and low sales prices of our existing common stock, as reported on
the NYSE Composite Tape, for that portion of the second quarter of 1998 since
our existing common stock began trading, for the third and fourth quarters of
1998 and the first quarter of 1999 are shown below.

<TABLE>
<CAPTION>
1998 High Low
---- ------ ------
<S> <C> <C>
Second Quarter (April 29, 1998-June 30, 1998).................. $19.00 $12.81
Third Quarter ................................................. 16.38 5.38
Fourth Quarter................................................. 23.94 3.63
<CAPTION>
1999
----
<S> <C> <C>
First Quarter (through February 9, 1999)....................... 15.81 22.44
</TABLE>

We have never declared or paid dividends on our existing common stock. For a
description of our intended dividend policy following the offering, see
"Dividend Policy" and "Description of Capital Stock--Dividends".

40
<PAGE>

USE OF PROCEEDS

Based upon an initial public offering price of $12.00 per share of ZDNet
Stock, the midpoint of the range of initial public offering prices set forth on
the cover page of this prospectus, we estimate that, after deducting
underwriting discounts and expenses, we will receive net proceeds from the
initial public offering of ZDNet Stock, of $111.0 million, or $127.7 million if
the underwriters fully exercise their option to purchase additional shares. We
will attribute the net proceeds from 1.5 million shares to ZDNet, in a manner
analogous to a primary offering of common stock. We will attribute the net
proceeds from the remaining shares to ZD, in a manner analogous to a secondary
offering of common stock of a subsidiary owned by a parent. ZDNet will advance
to ZD the net proceeds attributed to ZDNet, and ZD will use those net proceeds,
together with the net proceeds attributed to ZD, to reduce outstanding
indebtedness under our revolving credit facility. The indebtedness owed under
our revolving credit facility was, on February 9, 1998, bearing interest at a
weighted average interest rate of approximately . based on various LIBOR rates
and matures on March 31, 2005. The advance of cash by ZDNet to ZD will be
treated as an inter-group revolving credit advance and will bear interest at
the rate at which we could borrow such funds on a revolving credit basis.

41
<PAGE>

DIVIDEND POLICY

We currently intend to retain all of our earnings to finance our operations,
repay indebtedness and fund future growth. We do not expect to pay any
dividends on ZDNet Stock for the foreseeable future.

Although certain of our debt instruments currently prohibit the payment of
dividends, and in any event, as stated above, we do not expect to pay any
dividends for the foreseeable future on either series of common stock, we will
otherwise be permitted to pay dividends on:

. ZD Stock out of the assets of Ziff-Davis Inc. legally available for the
payment of dividends under Delaware law, but the total amounts paid as
dividends on ZD Stock cannot exceed the Available Dividend Amount for ZD
and

. ZDNet Stock, out of the assets of Ziff-Davis Inc. legally available for
the payment of dividends under Delaware law (and transfer corresponding
amounts to ZD in respect of its Retained Interest in ZDNet), but the
total of the amounts paid as dividends on ZDNet Stock and the
corresponding amounts transferred to ZD in respect of its Retained
Interest in ZDNet cannot exceed the Available Dividend Amount for ZDNet.

The "Available Dividend Amount" for ZD or ZDNet, as the case may be, is based
on the amount that would be legally available for the payment of dividends
under Delaware law if ZD and ZDNet were each a separate Delaware corporation.
For more information on the "Available Dividend Amount" for ZD and ZDNet, see
"Description of Capital Stock--Dividends". We expect that determinations to pay
dividends on ZDNet Stock would be based primarily upon the financial condition,
results of operations, capital requirements, any restrictions contained in
financing or other agreements binding upon us and such other factors as the
board of directors deems relevant.

42
<PAGE>

CAPITALIZATION

The tables below set forth the capitalization of ZDNet and Ziff-Davis Inc. as
of September 30, 1998 and as adjusted to give effect to:

. the offering at an assumed initial public offering price of $12.00 per
share, the mid-point of the range of initial public offering prices set
forth on the cover page of this prospectus, after deducting estimated
underwriting discounts and expenses and assuming the underwriters do
not exercise their option to purchase additional shares,

. the application of the net proceeds as described under "Use of
Proceeds" and

. the re-classification of existing common stock into ZD Stock.

These tables should be read in conjunction with the Combined Financial
Statements and the notes thereto appearing elsewhere in this prospectus.

ZDNet

<TABLE>
<CAPTION>
As of September 30, 1998
---------------------------
Actual Pro forma
------------ -------------
(in thousands)
<S> <C> <C>
Long-term debt..................................... $ -- $ --
Division equity:
Total division equity............................ 87,735 104,385
------------ ------------
Total capitalization........................... $ 87,735 $ 104,385
============ ============

Ziff-Davis Inc.

<CAPTION>
As of September 30, 1998
---------------------------
Actual Pro forma
------------ -------------
(in thousands)
<S> <C> <C>
Long-term debt, excluding current installments..... $1,526,047 $1,415,047
------------ ------------
Stockholders' equity:
Preferred stock.................................. -- --
ZDNet stock...................................... -- 100
ZD stock......................................... -- 1,000
Existing common stock............................ 1,000 --
Additional paid in capital....................... 1,550,239 1,661,139
Retained earnings (deficit)...................... (205,608) (205,608)
Deferred compensation............................ (807) (807)
Cumulative translation adjustment................ (776) (776)
------------ ------------
Total stockholders' equity....................... 1,344,048 1,455,048
------------ ------------
Total capitalization........................... $2,870,095 $ 2,870,095
============ ============
</TABLE>

43
<PAGE>

DILUTION

At September 30, 1998, ZDNet had a net tangible book value of approximately
$23,989,000 or $0.34 per share equivalent. Net tangible book value per share
equivalent at any date represents the amount of ZDNet's total tangible assets
minus total liabilities divided by the Total Number of Notional ZDNet Shares
Deemed Outstanding. After giving effect to the sale of 10,000,000 shares of
ZDNet Stock offered hereby at an assumed initial offering price of $12.00 per
share and the application of the estimated net proceeds allocated to ZDNet, the
pro forma net tangible book value of ZDNet would have been approximately
$40,639,000 or $0.58 per share equivalent. Thus, under these assumptions,
purchasers of ZDNet Stock offered by this prospectus will pay $12.00 per share
and will receive shares with a net tangible book value per share equivalent of
$0.58, which represents an immediate dilution of $11.42 per share.

The following table illustrates this per share dilution:

<TABLE>
<S> <C>
Assumed initial public offering price per share.................. $12.00
------
Net tangible book value per share equivalent at September 30,
1998............................................................ 0.34
Increase in pro forma net tangible book value per share
equivalent attributable to new investors........................ 0.24
------
Pro forma net tangible book value per share equivalent after the
offering........................................................ 0.58
------
Dilution per share to new investors.............................. $11.42
======
</TABLE>

The foregoing computation of dilution excludes an aggregate of approximately
10,200,000 shares of ZDNet Stock purchasable at $4.29 per share upon the
exercise of outstanding employee stock options.

44
<PAGE>

ZDNET
SELECTED HISTORICAL COMBINED FINANCIAL AND OTHER DATA

The following table presents Selected Historical Combined Financial and Other
Data for ZDNet and its predecessor as of and for the years ended December 31,
1993, 1994 and 1995, as of and for the two month period ended February 28,
1996, as of and for the ten month period ended December 31, 1996, as of and for
the year ended December 31, 1997, for the nine month period ended September 30,
1997 and as of and for the nine month period ended September 30, 1998. This
data was derived from the Combined Financial Statements of ZDNet included
elsewhere in this prospectus. Data as of and for the years ended December 31,
1993 and 1994, for the periods ended September 30, 1997 and 1998 and as of
September 30, 1998 has been derived from ZDNet's unaudited financial
statements. This table should be read in conjunction with the Selected
Historical Combined Financial and Other Data and Management's Discussion and
Analysis of Financial Condition and Results of Operations for each of ZDNet, ZD
and Ziff-Davis Inc. as well as the Combined Financial Statements for each of
ZDNet, ZD and Ziff-Davis Inc. beginning on pages F-6, F-45 and F-101 of this
prospectus, respectively.

<TABLE>
<CAPTION>
Predecessor(1) ZDNet
--------------------------------------- -------------------------------------------
Nine month
Year ended Two month Ten month period ended
December 31, period ended period ended Year ended September 30,
------------------------- February 28, December 31, December 31, -----------------
1993 1994 1995 1996 1996 1997 1997 1998
------- ------- ------- ------------ ------------ ------------ -------- -------
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Statement of Operations
Data:
Revenue, net............ $10,208 $13,349 $13,576 $ 2,903 $16,215 $ 32,218 $ 21,277 $36,466
Cost of operations:
Production and content.. 11,512 9,321 10,709 1,802 14,863 23,543 17,638 18,970
Selling, general and
administrative
expenses............... 8,987 7,276 8,360 1,774 13,280 23,475 17,757 22,049
Depreciation and
amortization........... 1,578 1,163 4,040 597 5,485 7,681 5,524 4,780
Loss from operations.... (11,869) (4,411) (9,533) (1,270) (17,413) (22,481) (19,642) (9,333)
Minority interest....... -- -- -- -- -- (400) (436) (330)
Loss before income
taxes.................. (11,869) (4,411) (9,533) (1,270) (17,413) (22,081) (19,206) (9,003)
Net loss (2)............ (11,869) (4,526) (5,755) (814) (16,925) (21,238) (18,463) (8,691)
Balance Sheet Data (at period
end):
Total current assets.... $ 1,929 $ 2,432 $ 3,992 $ 4,951 $ 7,852 $ 11,521 $15,744
Total assets............ 4,944 3,557 91,772 92,717 82,507 87,326 95,093
Total liabilities....... 2,451 8,083 2,090 1,492 3,932 4,034 7,358
Division equity
(deficit).............. 2,493 (4,526) 89,682 91,225 78,575 83,292 87,735
Other Data:
Capital expenditures.... $ 2,538 $ 513 $ 1,590 $ 168 $ 1,010 $ 2,374 $ 1,345 $ 3,181
Investments and
acquisitions, net of
cash acquired.......... -- -- -- -- -- 2,998 2,998 5,000
</TABLE>
- --------

(1) A third party acquired ZDNet's predecessor as of January 1, 1995. An
affiliate of Ziff-Davis Inc. acquired ZDNet's predecessor on February 29,
1996. Data for ZDNet's predecessor has been presented for periods before
these dates.

(2) No historical earnings per share or share data are presented as Ziff-Davis
Inc. does not consider such data meaningful. After issuance of ZDNet Stock,
Ziff-Davis Inc. will report earnings per share data for ZD and ZDNet but
not for Ziff-Davis Inc.

45
<PAGE>

ZDNET
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Revenue

ZDNet's revenue consists of advertising revenue and revenue from subscription
based fees and services. Advertising revenue consists primarily of revenue
derived from the sale of advertisements on pages delivered to users of ZDNet's
Internet sites. ZDNet recognizes the delivery of a single view of an
advertisement as an "impression". Advertising revenue is derived principally
from arrangements with ZDNet's advertising customers that provide for a
guaranteed number of impressions. Advertising rates vary depending primarily on
the total number of guaranteed impressions purchased, the length of the
advertiser's commitment, the location in which the advertisements are displayed
and the type of advertising. Advertising revenue is recognized in the period in
which the advertisements are delivered. For contracts/campaigns that are longer
than one accounting period, the revenue from the contract/campaign is
recognized ratably over the term of the contract/campaign.

Revenue from barter transactions is recognized during the period in which
advertisements are displayed. Barter transactions are recorded at the lower of
estimated fair value of goods or services received or the estimated fair value
of advertising given. To date, barter transactions have been immaterial to
results.

During 1995 and part of 1996, ZDNet was focused on generating revenue from
subscription based fees and services. This revenue is generated primarily by
charging monthly membership fees to provide access to product reviews, software
reviews and shareware. During 1996, ZDNet shifted the focus of the business
model from the generation of subscription based fees and services to the
generation of advertising revenue.

As a result of this shift, ZDNet's advertising revenue increased from 6% of
total revenue for the year ended December 31, 1995 to 83% of total revenue for
the nine months ended September 30, 1998. Over this period subscription based
fees and services decreased correspondingly as a percentage of revenue.

No single advertiser accounted for more than 5.0% of ZDNet's total revenue
for the year ended December 31, 1997 or the nine months ended September 30,
1998. ZDNet's top 20 advertisers accounted for 29.3% and 36.2% of total revenue
for the year ended December 31, 1997 and for the nine months ended September
30, 1998, respectively.

Cost of Operations

Costs of production and content include costs to produce and edit content on
ZDNet's Internet sites as well as technical costs incurred to maintain ZDNet's
Internet sites. ZD provides certain editorial content and brand-marketing
services to ZDNet for which ZDNet pays a royalty to ZD based on revenue. This
charge is also included in costs of production and content. See Note 4 to
ZDNet's Combined Financial Statements included in this prospectus.

46
<PAGE>

The principal selling, general and administrative expenses of ZDNet are
payroll, sales commissions and related expenses, marketing and promotion. Ziff-
Davis Inc. provides certain selling, general and administrative services and
shared services on a centralized basis (the "Central Services"), and the costs
of these services are allocated between ZD and ZDNet. See Note 4 to ZDNet's
Combined Financial Statements included in this prospectus.

ZDNet also incurs a substantial amount of amortization expense related to
intangible assets created as a result of the December 21, 1994 and February 29,
1996 acquisitions of Ziff-Davis Inc.'s predecessors by Forstmann Little and Co.
and SOFTBANK Corp., respectively. The February 1996 acquisition created
$72.7 million of intangible assets for ZDNet. In addition, $5.5 million of
intangible assets were created by ZDNet's January 1997 acquisition of a 70%
equity interest in GameSpot, Inc., formerly SpotMedia Communications, Inc.

Factors Affecting Future Periods

ZDNet's revenue and profitability are influenced by a number of external
factors, including:

.the volume of new technology product introductions,

.the amount and allocation of marketing expenditure by ZDNet's advertisers,

.the extent to which merchants elect to advertise using online media and

.competition among other technology marketers.

Accordingly, ZDNet may experience fluctuations in revenue from period to
period. Marketing expenditures by technology companies can also be affected by
factors affecting the technology industry generally, including pricing
pressures and temporary surpluses of inventory. Revenue and profitability are
also influenced by:

.product mix,

. the timing and frequency of ZDNet's new product launches in new markets
and

. acquisitions.

ZDNet has an extremely limited operating history upon which to base an
evaluation of ZDNet's prospects. ZDNet's prospects must be considered in light
of the risks, expenses and difficulties frequently encountered by start-up
companies in the new and rapidly evolving market for Internet products, content
and services. ZDNet's revenue and cost of operations have grown substantially
and ZDNet has incurred cumulative net losses since inception. These losses
reflect substantial expenditures to develop, launch and acquire ZDNet's
Internet sites and services. ZDNet believes that newly launched sites and
services require a certain period of growth before they begin to achieve
adequate revenue to support their operation.

ZDNet must, among other things, effectively develop new relationships and
maintain existing relationships with its advertisers, their advertising
agencies and other third parties,

47
<PAGE>

provide original and compelling content to Internet users, develop and upgrade
its technology, respond to competitive developments and attract, retain and
motivate qualified personnel. There can be no assurance that ZDNet will succeed
in addressing such risks and the failure to do so could have a material adverse
effect on ZDNet's business, financial condition or results of operations.
Additionally, ZDNet's limited operating history makes the prediction of future
operating results difficult or impossible, and there can be no assurance that
ZDNet's revenue will increase or even continue at its current level, or that
ZDNet will achieve or maintain profitability or generate cash from operations
in future periods. Since inception, ZDNet has incurred significant losses and,
for the period from February 29, 1996 to September 30, 1998, had accumulated a
deficit of $46.9 million. ZDNet may continue to incur losses in the future.

For a discussion of other factors that may affect results, see "Risk
Factors--Risk Factors Relating to ZDNet".

Presentation of Financial Information

ZDNet is comprised of certain operations which were acquired at various times
and completed a reorganization in May 1998. See Note 1 to ZDNet's Combined
Financial Statements.

48
<PAGE>

Results of Operations

The table below presents the results of ZDNet as if the assets and operations
acquired by affiliates of Ziff-Davis Inc. on February 29, 1996 (as described in
Note 1 to the ZDNet Combined Financial Statements) had been acquired on January
1, 1995. Purchase accounting adjustments relating to that acquisition have been
reflected through pro forma amortization and interest and income tax
adjustments, as described in note (1) to the table. Although the table presents
numbers that are not in accordance with generally accepted accounting
principles, management believes they present the most meaningful basis of
comparison. The financial information presented below may not necessarily
reflect the results of operations which would have occurred had the February
29, 1996 acquisition been completed on January 1, 1995.

<TABLE>
<CAPTION>
Nine months
Year ended December 31, ended
Pro forma Actual September 30,
------------------ -------- -----------------
1995(1) 1996(1) 1997 1997 1998
-------- -------- -------- -------- -------
(in thousands)
<S> <C> <C> <C> <C> <C>
Revenue, net................. $ 13,576 $ 19,118 $ 32,218 $ 21,277 $36,466
Cost of operations:
Production and content..... 10,709 16,665 23,543 17,638 18,970
Selling, general and
administrative expenses... 8,360 15,054 23,475 17,757 22,049
Depreciation and
amortization.............. 678 693 1,495 896 1,362
Amortization of intangible
assets.................... 5,712 5,712 6,186 4,628 3,418
-------- -------- -------- -------- -------
Total operating
expenses................ 25,459 38,124 54,699 40,919 45,799
-------- -------- -------- -------- -------
Loss from operations......... (11,883) (19,006) (22,481) (19,642) (9,333)
Minority interest............ -- -- 400 436 330
-------- -------- -------- -------- -------
Loss before income taxes..... (11,883) (19,006) (22,081) (19,206) (9,003)
Income tax benefit........... (4,706) (1,073) (843) (743) (312)
-------- -------- -------- -------- -------
Net loss..................... $ (7,177) $(17,933) $(21,238) $(18,463) $(8,691)
======== ======== ======== ======== =======
Other data:
EBITDA(2).................... $ (5,493) $(12,601) $(14,400) $(13,682) $(4,223)
Capital expenditures......... 1,590 1,178 2,374 1,345 3,181
Investments and acquisitions,
net of cash acquired........ -- -- 2,998 2,998 5,000
</TABLE>
- --------

(1) The February 29, 1996 acquisition gave rise to different bases of
accounting for the period after versus the period prior to the acquisition.
This is primarily due to a shorter amortization period of 20 years being
used by ZDNet, versus 40 years being used by the previous owners. The above
numbers assume that the acquisition took place on January 1, 1995. This
resulted in an increase to the "Amortization of intangible assets" and "Net
Loss" by $2,350 and $1,422, respectively, for the year ended December 31,
1995 and an increase by $323 and $194, respectively, for the year ended
December 31, 1996.

(2) "EBITDA" is defined as income before provision for income taxes, interest
expense, depreciation and amortization. EBITDA is not intended to represent
cash flows from operations and should not be considered as an alternative
to net income as an indicator of ZDNet's operating performance or to cash
flows as a measure of liquidity. Although Ziff-Davis Inc. believes that
EBITDA is a standard measure commonly reported and widely used by analysts,
investors and other interested parties in the media industry, the EBITDA
presented for ZDNet may not be comparable to similarly titled measures
reported by other companies.

49
<PAGE>

The following table presents the foregoing amounts as a percentage of
revenue:

<TABLE>
<CAPTION>
Year ended December 31, Nine months ended
Pro Forma Actual September 30,
----------------------------- -------------------
1995 1996 1997 1997 1998
------- ------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
Revenue, net............... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of operations:
Production and content... 78.9 87.2 73.1 82.9 52.0
Selling, general and
administrative
expenses................ 61.6 78.7 72.9 83.5 60.5
Depreciation and
amortization............ 5.0 3.6 4.6 4.2 3.7
Amortization of
intangible assets....... 42.0 29.9 19.2 21.7 9.4
------- ------- ------- -------- --------
Total operating
expenses.............. 187.5 199.4 169.8 192.3 125.6
------- ------- ------- -------- --------
Loss from operations....... (87.5) (99.4) (69.8) (92.3) (25.6)
Minority interest.......... -- -- 1.2 2.0 0.9
------- ------- ------- -------- --------
Loss before income taxes... (87.5) (99.4) (68.6) (90.3) (24.7)
Income tax benefit......... 34.6 5.6 2.7 3.5 0.8
------- ------- ------- -------- --------
Net loss................... (52.9)% (93.8)% (65.9)% (86.8)% (23.9)%
======= ======= ======= ======== ========
EBITDA..................... (40.4)% (65.9)% (44.7)% (64.3)% (11.6)%
</TABLE>

Nine months ended September 30, 1998 compared with nine months ended September
30, 1997

Revenue, net

Net revenue increased 71% to $36.5 million for the nine months ended
September 30, 1998 from $21.3 million for the nine months ended September 30,
1997. Revenue from advertising was 83% of net revenue for the nine months ended
September 30, 1998, compared to 71% for the same period in 1997.

Revenue from advertising increased 100% to $30.3 million for the nine months
ended September 30, 1998 from $15.1 million for the nine months ended September
30, 1997. The increase in advertising revenue was attributable to an increase
in the number of advertisers and the average monthly revenue per advertiser.
Subscription based fees and services decreased by 1% to $6.1 million for the
nine months ended September 30, 1998 from $6.2 million for the nine months
ended September 30, 1997.

Cost of Operations

Production and content. Production and content expenses were $18.9 million or
52% of net revenue for the nine months ended September 30, 1998, compared to
$17.6 million or 83% of net revenue for the nine months ended September 30,
1997. The absolute dollar increase in production and content charges was due to
an increase in ZD's revenue-based royalty charge to ZDNet, as well as an
increase in production costs to support higher user traffic levels and
increased editorial costs associated with the launch of new content areas. The
cost of production and content decreased as a percentage of revenue primarily
due to economies of scale. ZDNet expects this trend to continue. Royalty
payments to ZD were $1.8 million and $1.1 million for the nine month periods
ending September 30, 1998 and 1997, respectively.

50
<PAGE>

Selling, general and administrative expenses. Selling, general and
administrative expenses were $22.0 million or 61% of net revenue for the nine
months ended September 30, 1998, compared to $17.8 million or 83% of net
revenue for the nine months ended September 30, 1997. The absolute dollar
increase in the selling, general and administrative expenses was primarily due
to increased personnel and services required to support the growth of ZDNet,
offset to some extent by cessation of payments to SOFTBANK Interactive
Marketing Inc. ("SIM"), as ZDNet sales and marketing teams replaced SIM in
these functions. Sales and marketing costs were $15.1 million or 41% of net
revenue for the nine months ended September 30, 1998, compared to $12.3 million
or 58% of net revenue for the nine months ended September 30, 1997. ZDNet
intends to continue to increase the number of dollars spent on sales and
marketing and intends to launch a print ad campaign in the future. Sales and
marketing expenses are incurred both to drive traffic to ZDNet's Web site and
to increase the number of advertisers and advertising sales. Included in sales
and marketing costs was an allocation from Ziff-Davis Inc.'s Central Services
amounting to $0.2 million and $0.4 million for the nine months ended September
30, 1998 and 1997, respectively.

Administrative and overhead costs were $6.9 million or 19% of net revenue for
the nine months ended September 30, 1998, compared to $5.5 million or 26% of
net revenue for the nine months ended September 30, 1997. Included in
administrative and overhead costs was an allocation from Ziff-Davis Inc.'s
Central Services amounting to $3.1 million and $2.5 million for the nine months
ended September 30, 1998 and 1997, respectively. The selling, general and
administrative costs decreased as a percentage of revenue primarily due to
economies of scale. ZDNet expects this trend to continue.

Depreciation. Depreciation expense was $1.4 million for the nine months ended
September 30, 1998, compared to $0.9 million for the nine months ended
September 30, 1997. The increase in depreciation expense related primarily to
the increased capital expenditures made by ZDNet for equipment necessary to
expand its network and infrastructure in order to support its continued growth.

Amortization of intangible assets. Amortization of intangible assets was $3.4
million for the nine months ended September 30, 1998, compared to $4.6 million
for the nine months ended September 30, 1997. The decrease in amortization
related to the advertising and subscription lists becoming fully amortized as
of March 1, 1998. This resulted in only two months of the related amortization
being included in the period ending September 30, 1998 versus nine months
amortization in the period ending September 30, 1997. Annual amortization
expense related to the remaining goodwill balance will be approximately $4.1
million before giving effect to any future increase in goodwill.

Minority interest

The minority interest of $0.3 million in 1998 and $0.4 million in 1997
represented losses attributed to the holders of the minority interest in
GameSpot.

51
<PAGE>

Income taxes

The income tax benefit decreased to $0.3 million for the nine months ended
September 30, 1998 from $0.7 million for the nine months ended September 30,
1997. The benefit represented an effective tax rate of approximately 3.5%,
which is substantially less than the federal statutory tax rate of 35.0%. ZDNet
has a substantial level of non-deductible expenses as losses which were
incurred while ZDNet was under MAC Inc. ownership are non-deductible to Ziff-
Davis Inc. As such, ZDNet does not reflect any income tax benefit associated
with those losses. In addition, Ziff-Davis Inc. does not record any tax
benefits associated with the losses of GameSpot.

Net loss

As a result of the items described above, ZDNet's net loss decreased to $8.7
million from $18.5 million for the nine months ended September 30, 1998 and
1997, respectively.

EBITDA

EBITDA for the nine months ended September 30, 1998 was $(4.2) million
compared to $(13.7) million for the same period in 1997. The improvement was
primarily due to substantially increased revenue, offset to some extent by
higher production and content costs and selling, general and administrative
expenses.

Year ended December 31, 1997 compared with Pro Forma Year ended December 31,
1996

Revenue, net

Net revenue increased 69% to $32.2 million for the year ended December 31,
1997 from $19.1 million for the pro forma year ended December 31, 1996. An
increasing percentage of ZDNet's net revenue was derived from advertising for
the year ended December 31, 1997, accounting for 73% of net revenue, compared
to 37% for the same period in 1996. The increased percentage of net revenue
derived from advertising in the later period reflect a continuation of ZDNet's
strategic shift from a business model based on subscription-based fees and
services to one based on advertising.

Revenue from advertising increased 228% to $23.6 million for year ended
December 31, 1997 from $7.2 million for the pro forma year ended December 31,
1996. The increase in advertising revenue was attributable to increases in the
number of advertisers, the average expenditures per advertiser and increasing
advertising rates. Subscription-based fees and services decreased by 28% to
$8.6 million from $11.9 million from the same period in 1996.

Cost of Operations

Production and content. Production and content expenses were $23.5 million or
73% of net revenue for year ended December 31, 1997, compared to $16.7 million
or 87%

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<PAGE>

of net revenue for the pro forma year ended December 31, 1996. The absolute
dollar increase in production and content charges was due to an increase in
Ziff-Davis Inc.'s revenue based royalty charge to ZDNet, as well as an increase
in production costs to support higher user traffic levels, and increased
editorial costs associated with the launch of new content areas. The cost of
production and content decreased as a percentage of revenue primarily due to
economies of scale. Royalty charges from ZD were $1.6 million and $1.0 million
for the year ended December 31, 1997 and the pro forma year ended December 31,
1996, respectively.

Selling, general and administrative expenses. Selling, general and
administrative expenses were $23.5 million or 73% of net revenue for the year
ended December 31, 1997, compared to $15.1 million or 79% of net revenue for
the pro forma year ended December 31, 1996. The absolute dollar increase in
selling, general and administrative expenses was due to higher sales commission
costs paid to SIM and to the initial hiring of the existing ZDNet sales and
marketing teams. SIM was the exclusive sales team for ZDNet prior to 1997.
Sales and marketing costs were $15.9 million or 49% of net revenue for the year
ended December 31, 1997 compared to $11.0 million or 57% of net revenue for the
pro forma year ended December 31, 1996. Included in sales and marketing costs
was an allocation from Ziff-Davis Inc.'s Central Services amounting to $0.5
million for the year ended December 31, 1997. There was no such charge for the
pro forma year ended December 31, 1996.

Administrative and overhead costs were $7.6 million or 23% of net revenue for
the year ended December 31, 1997 from $4.1 million or 21% of net revenue for
the pro forma year ended December 31, 1996. Included in administrative and
overhead costs was an allocation from Ziff-Davis Inc.'s Central Services
amounting to $3.4 million and $2.7 million for the year ended December 31, 1997
and the pro forma year ended December 31, 1996, respectively. Selling, general
and administrative expenses decreased as a percentage of revenue primarily due
to economies of scale.

Depreciation. Depreciation expense was $1.5 million for the year ended
December 31, 1997, compared to $0.7 million for the pro forma year ended
December 31, 1996. The increase in depreciation primarily related to the
increased capital expenditures made by ZDNet for equipment necessary to expand
its network and infrastructure in order to support its continued growth.

Amortization of intangible assets. Amortization of intangible assets was $6.2
million for the year ended December 31, 1997 compared to $5.7 million for the
pro forma year ended December 31, 1996. In February 1997, ZDNet purchased a 70%
interest in GameSpot, which created intangible assets of approximately $5.5
million. The 1997 period included approximately $0.5 million of amortization
related to this acquisition.

Minority interest

The minority interest of $0.4 million for the year ended December 31, 1997,
represents losses attributed to the holders of the minority interest in
GameSpot (acquired in January 1997).

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<PAGE>

Income taxes

The income tax benefit decreased to $0.8 million for the year ended December
31, 1997 from $1.1 million for the pro forma year ended December 31, 1996. The
benefit represents an effective tax rate of approximately 3.8% and 5.6%,
respectively, which is significantly less than the federal statutory rate of
35.0% because ZDNet has a substantial level of non-deductible expenses, as
losses which were incurred while ZDNet was under MAC ownership are non-
deductible to Ziff-Davis Inc. As such, ZDNet does not reflect any tax benefits
associated with those losses.

Net loss

As a result of the items described above, ZDNet's net loss increased to $21.2
million for the year ended December 31, 1997 from $17.9 million for the pro
forma year ended December 31, 1996.

EBITDA

EBITDA for the year ended December 31, 1997 was $(14.4) million compared to
$(12.6) million for the pro forma year ended December 31, 1996. The decrease
was primarily due to higher production and content costs as well as higher
selling, general and administrative costs, offset to some extent by higher
revenue.

Pro Forma Year ended December 31, 1996 compared with the Pro Forma Year ended
December 31, 1995

Revenue, net

Net revenue increased 40% to $19.1 million for the pro forma year ended
December 31, 1996 from $13.6 million for the pro forma year ended December 31,
1995. An increasing percentage of ZDNet's net revenue was derived from
advertising for the pro forma year ended December 31, 1996, accounting for 38%
of net revenue compared to 6% for the same period in 1995.

Revenue from advertising increased to $7.2 million for the pro forma year
ended December 31, 1996 from $0.8 million for the pro forma year ended December
31, 1995. During 1996, ZDNet committed to a strategic shift in its business
model, transitioning from a business model based on membership and subscription
based fees and services to one supported primarily from the sale of
advertising. As a result, ZDNet substantially increased the number of
advertisers and the average expenditures per advertiser while subscription
based fees and services decreased by 7.0% to $11.9 million from $12.8 million
for the same period in 1995.

Cost of Operations

Production and content. Production and content expenses increased to $16.7
million or 87% of net revenue for the pro forma year ended December 31, 1996,
from $10.7

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<PAGE>

million or 79% of net revenue for the pro forma year ended December 31, 1995.
The absolute dollar increase in production and content charges was due to an
increase in Ziff-Davis Inc.'s revenue based royalty charge to ZDNet as well as
increased production costs to support higher user traffic levels, and increased
editorial costs associated with the launch of new content areas. The cost of
production and content decreased as a percentage of revenue primarily due to
economies of scale. Royalty payments to ZD were $1.0 million and $0.7 million
for the pro forma years ended December 31, 1996 and 1995, respectively.

Selling, general and administrative expenses. Selling, general and
administrative expenses increased to $15.1 million or 79% or net revenue for
pro forma year ended December 31, 1996, from $8.4 million or 62% of net revenue
for the pro forma year ended December 31, 1995. The absolute dollar increase in
the selling, general and administrative expenses were due to increased sales
commissions paid to SIM. Sales and marketing costs were $11.0 million or 57% of
net revenue for the pro forma year ended December 31, 1996 from $4.7 million or
35% of revenue for the pro forma year ended December 31, 1995.

Administrative and overhead costs were $4.1 million or 21% of net revenue for
the pro forma year ended December 31, 1996 from $3.7 million or 27% of revenue
for the pro forma year ended December 31, 1995. Included in administrative and
overhead expenses is an allocation from Ziff-Davis Inc.'s Central Services
amounting to $2.7 million and $2.0 million for the pro forma years ended
December 31, 1996 and 1995, respectively. The selling, general and
administrative costs decreased as a percentage of net revenue primarily due to
economies of scale.

Depreciation. Depreciation expense was $0.7 million for the pro forma years
ended December 31, 1996 and 1995.

Amortization of intangible assets. Amortization of intangible assets was $5.7
million for each of the pro forma years ended December 31, 1996 and 1995.

Income taxes

The income tax benefit decreased to $1.1 million for the pro forma year ended
December 31, 1996 from $4.7 million for the pro forma year ended December 31,
1995. The benefit represents an effective tax rate of approximately 5.6% and
39.6% respectively. The lower income tax benefit resulted from the acquisition
of ZDNet by MAC in February 1996. Since losses incurred under the ownership of
MAC are non-deductible to Ziff-Davis Inc., no income tax benefit has been
recorded for such losses for the pro forma year ended December 31, 1996.

Net loss

As a result of the items described, ZDNet's net loss increased to $17.9
million from $7.2 million for the pro forma years ended December 31, 1996 and
1995, respectively.

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<PAGE>

EBITDA

EBITDA for the pro forma year ended December 31, 1996 was $(12.6) million
compared to $(5.5) million for the pro forma year ended December 31, 1995. The
decrease was primarily due to higher production and content costs, as well as
higher selling, general and administrative costs, offset to some extent by
higher revenue.

Liquidity and Capital Resources

Funding from ZD

In the financial statements of ZD and ZDNet, whenever ZDNet had a cash need,
other than cash needs of ZDNet's foreign operations or cash needs of ZDNet's
operations that are not wholly owned, that cash need was funded by ZD and
accounted for as a capital contribution (i.e., as an increase in ZDNet's
division equity and ZD's Retained Interest in ZDNet). Accordingly, no interest
expense has been reflected in the financial statements of ZDNet. After the date
on which ZDNet Stock is first issued, Ziff-Davis Inc. will account for all cash
transfers from ZD or ZDNet to or for the account of the other, other than
transfers in return for assets or services rendered or transfers in respect of
ZD's Retained Interest that correspond to dividends paid on ZDNet Stock, as
inter-group revolving credit advances (bearing interest at the rate at which
Ziff-Davis Inc. could borrow such funds on a revolving credit basis as the
board of directors determines in its sole discretion) unless the board of
directors determines that a given transfer or type of transfer should be
accounted for as a long-term loan, a capital contribution increasing ZD's
Retained Interest in ZDNet or a return of capital reducing ZD's Retained
Interest in ZDNet. For a discussion about the terms on which Ziff-Davis Inc.
can now borrow on a short-term basis, see "Ziff-Davis Inc. Management's
Discussion and Analysis of Financial Condition and Results of Operations--
Liquidity and Capital Resources--Credit Facility". There is no assurance,
however, that ZDNet will continue to be able to obtain sufficient funding from
ZD. For a discussion of the discretion of the board of directors regarding
transfers of cash between ZD and ZDNet, see "Risk Factors--Risk Factors
Relating to ZDNet Stock--Under Its Current Policies, The Board of Directors Has
Sole Discretion To Change Certain Cash Management And Allocation Policies".

Sources and uses of cash

Cash and cash equivalents were $0.4 million at September 30, 1998 and $0.0
million at December 31, 1997. The balance increased due to the factors
discussed below:

Cash used by operations was $4.7 million for the nine months ended September
30, 1998 and $11.4 million for the nine months ended September 30, 1997,
respectively. The improvement in the 1998 period was due primarily to a
reduction in net loss. The loss for the nine months ended September 30, 1998
was $8.7 million compared to $18.5 million for the same period in 1997.

Cash used by investing activities was $8.2 million for the nine months ended
September 30, 1998 and $4.3 million for the nine months ended September 30,
1997. Cash used for capital expenditures for the nine months ended September
30, 1998 increased by $1.9 million to $3.2 million from $1.3 million for the
nine months ended September 30, 1997. ZDNet intends to continue to invest in
equipment as necessary to support the increasing user traffic. Capital
expenditures on equipment is expected to be approximately

56
<PAGE>

$4 million in 1999. In addition, in July 1998, ZDNet invested $5.0 million in
preferred stock of Deja News, Inc., an Internet discussion group. During the
nine months ended September 30, 1997, ZDNet spent approximately $3.0 million to
acquire a 70% interest in GameSpot.

Cash provided by financing activities decreased to $13.2 million for the nine
months ended September 30, 1998 from $15.8 million for the nine months ended
September 30, 1997, reflecting the improved operating performance of ZDNet. As
discussed under "--Funding from ZD" above, all funding from ZD was accounted
for as a capital contribution.

Seasonality

The following table sets forth certain unaudited quarterly combined statement
of operations data for each of the eight quarters in the period ended September
30, 1998. In the opinion of Ziff-Davis Inc.'s management, this unaudited
information has been prepared on a basis consistent with the audited Combined
Financial Statements of ZDNet appearing elsewhere in this prospectus and
includes all adjustments, consisting only of normal recurring adjustments,
necessary to present fairly the information set forth therein when read in
conjunction with the Combined Financial Statements and related notes thereto.
The operating results for any quarter are not necessarily indicative of results
for any future period.

<TABLE>
<CAPTION>
Quarter ended
(in thousands)
-------------------------------------------------------------------------------------------
December 31 March 31 June 30 September 30 December 31 March 31 June 30 September 30
1996 1997 1997 1997 1997 1998 1998 1998
----------- -------- ------- ------------ ----------- -------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue, net............ $ 6,374 $ 5,283 $ 7,862 $ 8,132 $10,941 $ 9,688 $12,274 $14,504
Cost of operations...... 12,360 11,597 14,921 14,401 13,780 16,050 15,405 14,344
------- ------- ------- ------- ------- ------- ------- -------
Income (loss) from
operations............. (5,986) (6,314) (7,059) (6,269) (2,839) (6,362) (3,131) 160
Minority interest....... -- (46) (201) (189) 36 (125) (145) (60)
------- ------- ------- ------- ------- ------- ------- -------
Income (loss) before
taxes.................. (5,986) (6,268) (6,858) (6,080) (2,875) (6,237) (2,986) 220
Provision (benefit) for
taxes.................. (195) (244) (267) (232) (100) (228) (92) 8
------- ------- ------- ------- ------- ------- ------- -------
Net income (loss)....... $(5,791) $(6,024) $(6,591) $(5,848) $(2,775) $(6,009) $(2,894) $ 212
======= ======= ======= ======= ======= ======= ======= =======
EBITDA(1)............... (4,295) (4,498) (4,999) (4,185) (718) (4,511) (1,569) 1,858
<CAPTION>
Quarter ended
-------------------------------------------------------------------------------------------
December 31 March 31 June 30 September 30 December 31 March 31 June 30 September 30
1996 1997 1997 1997 1997 1998 1998 1998
----------- -------- ------- ------------ ----------- -------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue, net............ 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of operations...... 193.9 219.5 189.8 177.1 125.9 165.7 125.5 98.9
------- ------- ------- ------- ------- ------- ------- -------
Income (loss) from
operations............. (93.9) (119.5) (89.8) (77.1) (25.9) (65.7) (25.5) 1.1
Minority interest....... -- 0.9 2.6 2.3 0.3 1.3 1.2 0.4
------- ------- ------- ------- ------- ------- ------- -------
Income (loss) before
taxes.................. (93.9) (118.6) (87.2) (74.8) (25.6) (64.4) (24.3) 1.5
Provision (benefit) for
taxes.................. (3.1) (4.6) (3.4) (2.9) (0.9) (2.4) (0.7) 0.1
------- ------- ------- ------- ------- ------- ------- -------
Net income (loss)....... (90.8)% (114.0)% (83.8)% (71.9)% (24.7)% (62.0)% (23.6)% 1.4%
======= ======= ======= ======= ======= ======= ======= =======
EBITDA(1)............... (67.4)% (85.1)% (63.6)% (51.5)% (6.6)% (46.6)% (12.8)% 12.8%
</TABLE>
- --------

(1) "EBITDA" is defined as income before provision for income taxes, interest
expense, depreciation and amortization. EBITDA is not intended to represent
cash flows from operations and should not be considered as an alternative
to net income as an indicator of ZDNet's operating performance or to cash
flows as a measure of liquidity. Although Ziff-Davis Inc. believes that
EBITDA is a standard measure commonly reported and widely used by analysts,
investors and other interested parties in the media industry, the EBITDA
presented for ZDNet may not be comparable to similarly titled measures
reported by other companies.

57
<PAGE>

On a historical basis, ZDNet has experienced lower revenue in the first
quarter when compared to the revenue in the preceding fourth quarter. This
fluctuation is a result of seasonal changes common to the media industry.

Year 2000 Readiness Disclosure

During 1997, Ziff-Davis Inc. began a review of its computer systems and
software, including those utilized in the operation of ZDNet's business, to
identify systems and software which might malfunction due to a
misidentification of the Year 2000. Ziff-Davis Inc. is using both internal and
external resources to identify, correct or reprogram and test systems and
software for Year 2000 readiness. Some of Ziff-Davis Inc.'s computer systems
and databases, including its subscription fulfillment payroll systems, are
managed by third parties under contractual arrangements. Ziff-Davis Inc. has
requested those third parties to advise Ziff-Davis Inc. as to whether they
anticipate difficulties in addressing Year 2000 problems and, if so, the nature
of such difficulties. After evaluating its internal compliance efforts as well
as the compliance of third parties as described above, Ziff-Davis Inc. will
develop during the first half of 1999 appropriate contingency plans to address
situations in which various systems or software of Ziff-Davis Inc., or of third
parties with which Ziff-Davis Inc. does business, are not Year 2000 compliant.
We do not yet have an estimate of the cost of these contingency plans.

Management of Ziff-Davis Inc. has not finally determined the cost associated
with Year 2000 readiness efforts and the related potential impact on ZDNet's
results of operations. Amounts expended to date have not been material. There
can be no assurances that Ziff-Davis Inc.'s systems or software, or those of
third parties on which Ziff-Davis Inc. relies, will be converted in time. If
Ziff-Davis Inc. or any subscribers, advertisers, licensors, vendors or other
third parties on whom it relies experiences a Year 2000 compliance problem,
this could have a material adverse effect on ZDNet's profits and liquidity. At
this point in time, based on Ziff-Davis Inc.'s progress to date and the
information it has received from third parties, Ziff-Davis Inc. is unable to
determine ZDNet's likely "worst case scenario".

Recently Issued Accounting Pronouncements

SFAS No. 130, "Reporting Comprehensive Income", issued in June 1997, will
require Ziff-Davis Inc. to disclose, in financial statement format, all non-
owner changes in equity. Such changes include, for example, cumulative foreign
currency translation adjustments, certain minimum pension liabilities and
unrealized gains and losses on securities available for sale. This statement is
effective for fiscal years beginning after December 15, 1997 and requires
presentation of prior period financial statements for comparability purposes.
Such transactions historically have not been material.

SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information", issued in June 1997, establishes standards for reporting
information about operating segments in annual financial statements and interim
financial reports. It also establishes standards for related disclosures about
products and services, geographic areas and major customers. Generally,
financial information is required to be reported on the

58
<PAGE>

basis that is used internally for evaluating segment performance and deciding
how to allocate resources to segments.

SFAS No. 132, "Employer's Disclosure about Pensions and Other Postretirement
Benefits", is effective for the year ended December 31, 1998. This statement
revises the disclosure requirements for employers' pension and other retiree
benefits.

ZDNet expects to adopt the above statements beginning with its 1998 financial
statements.

In June 1998, the Financial Accounting Standards Board issued SFAS 133
"Accounting for Derivative Instruments and Hedging Activities". SFAS 133
establishes accounting and reporting standards for derivative instruments and
for hedging activities and is effective for all fiscal quarters of fiscal years
beginning after June 15, 1999. Ziff-Davis Inc. does not expect the adoption of
SFAS 133 to have a material impact on the ZDNet's results of operations.

59
<PAGE>

ZDNET
DESCRIPTION OF BUSINESS

Industry Background

Growth of the Internet and Demand for Technology-Related Content

The Internet has emerged as a global mass medium, enabling millions of people
to access and share information and conduct business electronically. Forrester
Research, Inc. estimates that the number of adult Web users will reach 51
million in the U.S. by the end of 1998 and will grow to 99 million by the end
of 2001. Major factors driving this growth include the increasing familiarity
and acceptance of the Internet by businesses and consumers, the increasing
number of personal computers in homes and offices, the ease, speed and lower
cost of Internet access and improvements in network infrastructure.

As the Internet gains acceptance as an advertising and commerce medium and
Internet use continues to grow, technology will play an increasing role in
everyday life. According to Dataquest, worldwide end user spending for
information technology products and related services is expected to be
approximately $2 trillion in 1998 and grow 10% to 15% annually over the next
four years. With the growth of the Internet and the widespread use of personal
computers, cellular phones, pagers and personal digital assistants, technology
has become an area of broad general interest. Users of technology products and
services confront an increasingly complex marketplace due to the rapid pace of
technological change and the frequent introduction of new products and
services. The prevalence of technology and the growing number of technological
choices heighten the demand for up-to-date, comprehensive information about
technology-related products and services.

Advertising and Commerce on the Internet

As the Internet and the technology industry continue to grow, the value of
the Internet to advertisers and merchants can be expected to increase as a
result of:

. the growth in the number of Web users,

. the Internet's global reach,

. the attractive demographic profile of Web users,

. the interactive nature of the medium,

. the increased willingness of users to conduct transactions online and

. the ability to effectively target user groups, customize promotions and
measure Web usage and viewer demographics.

ZDNet believes these characteristics allow Internet advertisers to build
valuable customer relationships through targeted advertising and sales
campaigns. The overall market for advertising on the Internet was approximately
$900 million in 1997 and $775 million in the first six months of 1998, as
measured by the Internet Advertising Bureau. According to Forrester Research,
Inc., advertising spending on the Internet will exceed $4 billion in the year
2000 and double to more than $8 billion by 2002.

60
<PAGE>

The Internet also provides an efficient means for merchants to sell their
products and services directly to consumers. Forrester Research, Inc. forecasts
that worldwide commerce revenue on the Internet will increase from
approximately $35 billion in 1998 to $1.4 trillion in 2003. Internet
transactions are expected to increase as merchants improve Web-based
transaction-processing technology and as consumers become more accustomed to
purchasing online.

ZDNet believes Internet sites focused on technology are particularly well-
suited to promote advertising and commerce because they offer a large user base
with attractive demographics for technology and general consumer product
companies. Historically, technology-focused sites have attracted primarily
technology advertisers, which, according to the Internet Advertising Bureau,
accounted for 39% of all U.S. online advertising dollars during the second
quarter of 1998. Recently, many of the largest advertisers on traditional
media, including consumer product companies, automobile manufacturers and
travel-related companies, have expanded their use of Internet advertising. Such
consumer-related advertising accounted for 24% of all U.S. online advertising
in the second quarter of 1998 according to the Internet Advertising Bureau, and
ZDNet believes Internet advertising will become an increasing percentage of
consumer product companies' overall advertising budgets in the future. Internet
sites with well-recognized brand names that focus on technology should be well-
positioned to capitalize on emerging Internet advertising and commerce
opportunities.

The ZDNet Solution

ZDNet's Web sites are designed to capitalize on the market opportunities
created by the increasing importance of technology, the emergence of the
Internet as a mass medium and the appealing demographics of technology-oriented
Web users. ZDNet focuses on content, community and commerce, enabling users to
research topics of interest, interact with other users, download software and
evaluate and purchase a wide range of products and services at a single
destination. Ziff-Davis Inc. was among the first content providers to focus its
efforts on the Internet, launching its zdnet.com service in the fall of 1994.
The ZDNet solution is based on the following distinguishing attributes:

Broad-Based Comprehensive Technology and Internet-Related Content

ZDNet's interconnected and easily navigable sites offer depth and breadth of
coverage on the technology industry as well as topics of general interest,
including financial information and general news. ZDNet divides its content
broadly into "channels" that focus on specific topics or audience groups. Over
60 channels can be reached through the zdnet.com home page or through their own
distinct domains, and channels are generally organized with similar navigation
and layout to ensure consistency throughout the network. ZDNet's online
editorial and technical staff of industry experts develops high-quality
original content specifically for online interactive use. ZDNet offers over 800
news stories per month, 39,000 product listings, 30,000 product reviews and
34,000 downloadable programs. In addition, through ZDNet's relationship with
ZD, ZDNet has use of the content of all of

61
<PAGE>

ZD's computer and technology publications, including PC Magazine, PC/Computing,
PC Week and Yahoo! Internet Life.

Strong Community Affinity

ZDNet has developed an extensive user community and encourages active
participation by enabling users to personalize their content and join user
groups based on common interests. ZDNet provides forums, chat groups and other
interactive online environments that allow users to express views and share
information. In addition, its industry personalities host interactive forums
that encourage user comments and feedback. To promote its community, ZDNet has
instituted a common registration system for chat, discussion and e-mail
capabilities. Registered users are able to access member-only software
downloads and are eligible for special offers such as discounted trial
enrollment in ZDU, which is part of ZD's education business. ZDNet makes a
variety of e-mail newsletters and alerts available to its users, allowing
subscribers to select those of interest. As of October 1998, ZDNet had over two
million registered e-mail newsletter subscribers and distributed over 48
million e-mail newsletters and alerts to its users in that month.

Attractive Environment for Advertising and Commerce

ZDNet facilitates commerce on its sites by providing users with the ability
to evaluate, compare and purchase products and services and by providing
advertisers and merchants with access to a highly targeted user group with
attractive demographics. According to the Fall 1998 @Plan study, among users of
ZDNet's Internet sites:

. 61% have college degrees,

. 75% have an annual household income of at least $45,000 (and 22% in
excess of $100,000),

. 49% use the Internet every day and

. 58% purchased a product in the prior six months after gathering
information on the Internet.

In addition, ZDNet has developed an array of sales and marketing options
(banners, sponsorship wraps, buttons, text and graphical links, e-mail
sponsorships and custom microsites) designed to assist advertisers in crafting
unique and distinctive programs to
target and reach their audiences. ZDNet is also the first non-ad agency to win
a prestigious "Creative Excellence in Business Advertising" (CEBA) award,
presented by the American Business Press.

Relationship with ZD

ZDNet derives many benefits from its relationship with ZD, including the
ability to leverage the ZD brand, use content from ZD publications and cross-
market across all of ZD's platforms. ZD publishes leading technology print
publications, such as PC Magazine, PC/Computing, PC Week and Yahoo! Internet
Life, produces leading trade shows and conferences, such as COMDEX,
NetWorld+Interop and Seybold Seminars, and maintains

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<PAGE>

well-recognized market research and education platforms, such as ZDU. For over
a decade, the "Ziff-Davis" name has been a leading brand associated with
technology content.

The ZDNet Strategy

ZDNet's objective is to be the leading online content site focused on
technology products and services for users and the preferred online platform
for advertisers and merchants. The key elements of ZDNet's strategy are:

Continue to Offer Differentiated Technology and Internet-Related Content

ZDNet will continue to provide comprehensive and authoritative coverage of
the technology field in order to attract users and increase the value of its
sites to advertisers and merchants. Based on market research and user traffic
and feedback, ZDNet will continue to identify technology trends and develop
innovative sites that appeal to specific market segments and user interests. In
the past 12 months, ZDNet has introduced 16 new sites, or new areas within
existing sites, including special areas addressing Year 2000 issues, small
businesses, electronic commerce and technology-related careers.

Grow the ZDNet Community

ZDNet seeks to further grow its membership base by continuing to provide
interesting forums, chat groups and user groups, developing additional
interactive capabilities, promoting new online personalities and offering
insights from a broad range of experts. In response to these efforts, ZDNet's
registered user community has increased from 956,490 on December 31, 1997 to
1,844,571 on December 31, 1998, an increase of 93%. ZDNet also recently
launched ZDRewards, an online membership service which entitles subscribers to
receive a bundle of ZD products and services, such as a subscription to a ZD
magazine or a semester of online classes, all for one discounted price.

Build ZDNet Brand Strength

ZDNet seeks to reinforce its brand recognition and extend its reputation as a
leading site among users of technology information by continuing to leverage
the Ziff-Davis and ZDNet names. ZDNet's brand-building initiatives include
displaying the ZDNet brand on all ZDNet site pages, including those accessed
through the portals of its strategic partners,

providing consistent formats for easy navigation on all its sites and promoting
a common registration program for users. ZDNet plans to continue to promote the
ZDNet brand in ZD publications and events and to otherwise coordinate marketing
efforts with ZD.

Increase Advertising and Commerce Revenue

ZDNet seeks to increase revenue generated from advertising and commerce by
continuing to develop innovative content, growing its user community, expanding
its base of technology advertisers, attracting consumer and other advertisers
and facilitating commerce

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<PAGE>

opportunities. ZDNet continually refines its online tracking reports to better
enable advertisers and merchants to demonstrate their advertising
effectiveness, evaluate their marketing initiatives and increase the rate of
return on their advertising investments. ZDNet plans to increase the number of
its revenue-sharing commerce relationships with leading technology and consumer
product providers. ZDNet also plans to increase the number of product listings
on its ComputerShopper.com channel and expand its ability to facilitate
electronic commerce.

Strengthen and Expand Strategic Alliances

ZDNet seeks to increase brand awareness, traffic and revenue by entering into
strategic alliances with key Internet companies. ZDNet currently has alliances
with many of the Web's leading sites, including Yahoo!, Excite, MSNBC and Deja
News, and plans to establish new alliances as opportunities arise. As part of
these alliances, ZDNet typically provides selected branded content for its
partners' sites in return for a variety of benefits including revenue and links
back to ZDNet sites from the partner's site, providing ZDNet with access to a
broader base of consumers.

Extend International Presence

ZDNet had localized foreign language editions in more than 16 countries as of
September 30, 1998 and will continue to expand into selected overseas markets
through international launches as well as joint ventures and licensing
arrangements with local operating partners.

ZDNet Sites and Services

ZDNet offers more than 60 interconnected and easily navigable sites focused
on providing comprehensive, authoritative and timely online technology content,
creating an active community environment for its users and providing
opportunities for commerce.

ZDNet considers its content to be the most thorough and interesting content
on technology that is available online. ZDNet estimates that it currently
offers more than 300,000 pages of content on its interconnected sites where
users can research, evaluate, learn, interact, download and shop. ZDNet creates
original content using its own skilled and dedicated team of 143 editors,
online producers, developers and operations staff and also has access to
content from ZD publications and various strategic alliance partners. ZDNet's
content is divided broadly into "channels" that aggregate information from a
variety of sources around a specific topic area or audience focus, thereby
facilitating accessibility. All channels can be reached through the main
zdnet.com home page or through their own distinct domains, making browsing and
searching easy.

ZDNet seeks to foster a sense of community and engage its users in an
interactive online experience where they can express opinions and share
information about technology-related products and issues. ZDNet offers a
variety of features and activities designed to facilitate its community growth
and build user loyalty and affinity. Users can

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personalize the content they seek and join user groups with others who have
similar interests. In addition, users can activate the "talk-back" feature,
which allows them to state their views, and the "e-mail to a friend" feature,
which allows them to easily send articles of interest to others. During
November 1998, ZDNet estimates that 100,000 e-mails were sent using the e-mail
to a friend feature. Many of ZDNet's channels provide moderated forums and chat
events on a variety of current news and segment topics and certain hosts of
these forums have become popular Internet personalities.

ZDNet seeks to facilitate commerce on the Internet by combining information
about hardware and software products and services with direct access to
vendors. ZDNet's primary computer commerce site, ComputerShopper.com, was one
of the first Web shopping services to integrate comparative pricing, how-to
guides, buying tips, specifications, product reviews and multiple direct
purchasing sources. ComputerShopper.com currently displays products from more
than 100 vendors in over 85 product categories and enables shoppers to both
evaluate products and directly make purchases online.

The following table highlights a number of ZDNet sites:

Selected Sites Description
- -------------- -----------
Anchor Desk..... Inside analysis of technology news and products
[LOGO]
At Home......... Resources for home computing
[LOGO]
Careers......... Employment center for computer industry professionals
[LOGO]

Classifieds..... Ads and person-to-person auctions for computing products
[LOGO]
Community
Central......... Worldwide computing community
[LOGO]
ComputerShopper.com.. Marketplace to shop, compare and buy
[LOGO]
DevHead......... Tools, tips, and advice for Web developers
[LOGO]
E-Business...... Business advice on e-commerce opportunities
[LOGO]
Enterprise...... News, reviews and analytical editorial for IT
professionals
[LOGO]
Equip........... Guide to electronic gadgets for home and office
[LOGO]
GameSpot........ Popular destination for PC and video game users
[LOGO]
Help Channel.... Advice on optimizing the use of a PC or Mac
[LOGO]

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<PAGE>

<TABLE>
<CAPTION>
Selected Sites Description
- -------------- -----------
<S> <C>
Inter@ctive
Investor........ Latest financial data and news for technology investors
[LOGO]
Inter@ctive
Week...........
[LOGO] News and resources for IT professionals in interactive communications
PC/Computing.... Advice on getting the most out of technology
[LOGO]
PC Magazine..... Comparative reviews, buying advice and commentary
[LOGO]
PC Week......... Breaking news and analysis on the technology industry
[LOGO]
Products
Channel......... Reviews to help evaluate and select products
[LOGO]
Sm@rt Reseller..
[LOGO] News and resources for computer resellers, integrators and consultants
Small Business
Advisor......... Technology solutions for small business professionals
[LOGO]
Software
Library......... Source for tested and reviewed software
[LOGO]
Yahoo! Internet
Life Online.... Reviews and links to interesting Internet sites
[LOGO]
ZDNetwork News.. Timely and comprehensive news on the technology industry
[LOGO]
ZDRewards....... Offering members discounted Ziff-Davis products and services
[LOGO]
ZDY2K........... News and resources about Year 2000 issues
[LOGO]
</TABLE>

Select ZDNet Sites

ZDNet.com (www.zdnet.com) is the home page and gateway for all of ZDNet's
sites and was ranked first among all Web sites in the category of news,
information and entertainment (as measured by net reach) in October 1998
according to Media Metrix.

ComputerShopper.com (www.computershopper.com) (formerly called NetBuyer)
supplies users with a comprehensive display of computer and technology products
in one central location with direct links to vendors to facilitate commerce
transactions. ZDNet shoppers can easily browse and search pricing and product
information, access expert recommendations and buying tips and complete their
purchases online for a unified shopping experience. Users of
ComputerShopper.com can purchase products directly on

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<PAGE>

the site using a secured server or can place orders through individual vendors
(by clicking through to the vendors' Web sites, dialing the vendors' 1-800
numbers or faxing the orders to the vendors). Over $27 million in commerce
orders were initiated through ComputerShopper.com and forwarded to vendors in
November 1998.

ZDNet Products (www.zdproducts.com) is a comprehensive and authoritative
source for information on purchasing computer products and technology. This
site is organized with user-friendly search and compare capabilities and offers
readily available expert advice and reviews for a full range of users and
systems.

ZDNet Anchordesk (www.anchordesk.com) was one of the first Web sites to
provide a combination of opinionated analysis and news in an interactive e-mail
environment featuring a talk-back capability for its subscribers. This site
offers a companion e-mail newsletter which is distributed to over 1.7 million
subscribers every business day.

ZDNetwork News (www.zdnn.com) provides 24 hours a day/7 days a week coverage
for computing and technology news and information. ZDNetwork News aggregates
news through its investigative and reporting staff, its relationship with ZDTV
and ZD publications such as PC Week, Inter@ctive Week and Sm@rt Reseller and
strategic partnerships with MSNBC, Excite and others. This site also provides
audio and video clip capabilities, e-mail and customized news with MSNBC's
NewsAlert, Backweb and Pointcast.

GameSpot and Videogames.com (www.gamespot.com, www.videogames.com) offers
comprehensive news, reviews, previews and tips for all game categories.
GameSpot had the largest share of game advertising revenue among all game Web
sites for the first six months of 1998. GameSpot is 70% owned by ZDNet with the
remaining interest owned by the founders of the site and certain other
employees.

ZDNet Help (www.zdhelp.com) offers comprehensive tips, advice and trouble-
shooting aids for a full range of hardware and software. Users can search,
browse or access experts in chat rooms and on bulletin boards.

ZDNet Software Library (www.hotfiles.com) offers over 34,000 files of
shareware, freeware and other downloadable software programs, nearly all of
which are tested for viruses and compatibility and approximately 25,000 of
these files are professionally reviewed and rated.

ZDNet Inter@ctive Investor (www.zdii.com) provides investors with extensive,
up-to-date financial company profiles and news on technology and Internet
stocks. It provides access to multiple third-party information services such as
The Red Herring magazine, institutional equity research commentary and research
reports through Multex Systems Inc. This site ranked eighth in Barron's 1998
annual survey of the top ten Internet investment sites.

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<PAGE>

Other ZDNet Channels

Ziff-Davis Print Publication Sites. Each of the Ziff-Davis print publications
has a branded Web site within ZDNet's interconnected sites. Each of the sites
contains content adapted from Ziff-Davis print media and original content
developed specifically for these sites. Among the print publication sites
operated by ZDNet are the companion sites of ZD's most successful print
magazines, such as PC Magazine, PC/Computing, PC Week and Yahoo! Internet Life.

Topical Sites. ZDNet also has eight sites, of which four were launched in
1998, that are targeted at particular audiences or topics, providing an
efficient means for advertisers and marketers to reach highly focused consumer
groups. Examples of ZDNet's targeted sites are At Home (www.zdnet.com/athome),
Enterprise (www.zdnet.com/enterprise), Small Business Advisor
(www.zdnet.com/smallbusiness), Windows (www.zdwindows.com) and Year 2000
Challenge (www.zdy2k.com). ZDNet identifies and monitors technology trends to
effectively launch and introduce new sites that address the needs of its users.

Relationship with ZD

ZDNet believes that its relationship with ZD provides it with substantial
advantages over other online technology content providers. ZDNet has rights to
use ZD's technology content online on a preferred basis. In addition, ZDNet has
access to ZD's experience in delivering technology content through print
publishing and trade shows and can leverage ZD's experience to the online
medium.

With more than 75 publications distributed worldwide, the Ziff-Davis name is
seen by a combined circulation of approximately seven million primary readers
worldwide. ZD also produced over 50 trade shows and conferences worldwide on
technology and the Internet in 1997 with over two million estimated attendees.
Through ZDU, ZD provides online interactive training to paid subscribers.
Through ZDTV, ZD offers the first 24-hour cable television channel and
integrated Web site focused exclusively on computers, technology and the
Internet. ZDNet believes that its relationship with ZD offers users the
advantages of an integrated media and marketing company with multiple
platforms.

ZDNet's relationship with ZD allows it to integrate Ziff-Davis Inc.'s
marketing activities into one cohesive resource for print, trade show and
conference and online advertising. In addition, ZDNet and ZD are able to
realize benefits from cross-promotion.

Strategic Alliances

ZDNet's strategic alliances are important sources of content exchange,
revenue, brand visibility and increased user traffic. ZDNet has strategic
alliances with many of the Web's leading sites, including Yahoo!, Excite, MSNBC
and Deja News, pursuant to which selected ZDNet-branded content is displayed on
their sites in exchange for traffic, brand recognition, content or a percentage
of the revenue generated from those sites. These alliances are generally under
short-term contracts that expire in 1999, subject to renewal upon the agreement
of both parties.

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<PAGE>

ZDNet is the exclusive high-technology content partner of MSNBC, one of the
Web's largest sites for general news and sports content. Under this arrangement
ZDNet licenses and technology content providers to use MSNBC's general news
content. ZDNet also recently started using Deja News' technology which allows
ZDNet's users to search Usenet and participate in discussion groups, including
Usenet newsgroups. In addition, ZDNet content is distributed by various
Internet service providers such as AT&T, WorldNet, MindSpring and BellSouth to
individual and corporate customers.

International

Through wholly owned sites and joint ventures, ZDNet currently operates
localized versions of certain of its Web sites in the United Kingdom, Germany,
France and Australia. In addition, through licensing arrangements with non-U.S.
operators, localized foreign language versions of ZDNet's Web sites were
available as of September 30, 1998 in more than 16 additional countries,
including Denmark, Japan, Italy, Latin America, South Africa, Spain and
Switzerland. In order to deliver high-quality content worldwide, each of
ZDNet's international Web sites offers content tailored specifically to its
local market in addition to content translated from ZDNet's U.S. Web sites. See
"Risk Factors--Risk Factors Relating to ZDNet--ZDNet's International Expansion
Strategy Exposes It to Risk".

Advertising Sales and Marketing

ZDNet derives the principal portion of its revenue from the sale of
advertisements. For 1997 and the first nine months of 1998 advertising revenue
represented 73% and 83%, respectively, of ZDNet's net revenue. Advertising
revenue is generally derived from short-term contracts on a per impression
basis and by the number of product listings for the ComputerShopper.com site.

ZDNet believes that its user demographics are attractive to technology and
general consumer product advertisers and merchants. ZDNet has developed
extensive sales and marketing programs designed to assist advertisers in
reaching their audiences through distinctive and customizable programs. ZDNet
sells display advertising in multiple formats such as banners, sponsorship
wraps, buttons, text and graphical links and e-mail sponsorships, that allow
users to link directly to the advertisers' own Web sites or to special
promotional microsites created by ZDNet on behalf of its advertisers. In
addition, advertising can be purchased in selected areas or across ZDNet's
entire network of sites.

ZDNet believes that its focused and well-trained sales and marketing
organization is important to attaining and maintaining premium advertising
pricing and maximizing revenue. ZDNet's direct sales and marketing organization
consisted of 82 professionals as of September 30, 1998. Sales and marketing are
generally organized by geographic region.

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<PAGE>

During the third quarter of 1998, 297 companies advertised with ZDNet, as
compared to 249 in the third quarter of 1997. The following is a list of
ZDNet's top fifteen advertising customers based on advertising revenue recorded
during the third quarter of 1998:

<TABLE>
<S> <C> <C>
Active Home/X-10 First USA Microsoft
Buying Chain Gateway Necx
Chumbo Hewlett Packard Onsale
Compaq IBM Symantec
E-Trade Kingston Technology 3Com/US Robotics
</TABLE>

No advertiser accounted for more than 5% of ZDNet's revenue during 1997 or
the nine months ended September 30, 1998. ZDNet's 20 largest customers
accounted for approximately 29.3% and 36.2% of net advertising revenue during
1997 and the nine months ended September 30, 1998, respectively.

Technology Infrastructure and Operations

ZDNet has developed an expandable operations infrastructure using open
standard hardware and software systems. ZDNet's network of sites are primarily
hosted on ZDNet servers maintained at multiple locations to facilitate load
balancing and reduce potential downtimes. Additionally, ZDNet outsources
certain hosting and related functions to:

. NewsCorp/News Internet Services,

. Real Networks and

. InterStep, Inc.

The primary data center is designed to minimize failures by utilizing redundant
equipment and connectivity paths.

ZDNet has developed systems allowing it to efficiently create new content
channels and build in personalization capabilities. With respect to
advertising, publishing and systems management tools, ZDNet has licensed
technology from:

. Vignette for its StoryServer publishing system,

. Thunderstone for its Texis search software and

. Proxicom for software relating to "threaded messages", which are user
originated messages that are organized under specific topics and subtopics
and then are presented to users for further discussion.

ZDNet also has developed complementary proprietary systems and solutions to
enhance traffic and advertising measurement functions.

Competition

Competition among Internet content sites is intense and is expected to
increase significantly in the future. The market for Internet content providers
is rapidly evolving and

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<PAGE>

barriers to entry are low, enabling newcomers to launch competitive sites at
relatively low cost.

ZDNet competes for advertisers, merchants, users and strategic partners with:

. Web sites specializing in technology information, such as sites provided
by c|net, CMP, IDG and Internet.com,

. Internet portals, search sites and content aggregators, such as Excite,
Infoseek, Lycos and Yahoo!,

. general purpose online service providers, such as America Online and MSN,

. general news sites, such as those provided by CNN and ABC,

. browser/software companies offering information services, such as
Microsoft and Netscape and

. large general-interest sites, such as Time-Warner's pathfinder.com.

In addition, ZDNet competes with traditional media content businesses such as
newspapers, magazines, radio and television. Additionally, certain ZDNet
channels compete with Web sites focused on a particular corresponding content
niche. For example, GameSpot competes with Web sites such as those provided by
Imagine Media and HappyPuppy, and the ZDNet Software Library competes with
several software download sites.

Primary competitive factors in attracting users are:

. quality,

. reliability,

. brand recognition and

. depth, breadth and presentation of content.

Primary competitive factors in attracting advertisers are:

. user demographics and volume,

. ability to deliver interactive and focused advertising and

. cost-effectiveness.

ZDNet's success will depend on its ability to continue to provide
comprehensive, engaging content to attract and maintain both users and
advertisers.

Employees

As of September 30, 1998, ZDNet had 304 employees, including 143 in Web
design and content development, 82 in sales, marketing, customer support and
audience development, 66 in technical development and operations and 13 in
administration, planning and finance. ZDNet also uses independent contractors
and temporary employees. None of

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ZDNet's employees is represented by a labor union. ZDNet considers its
relationship with its employees to be satisfactory.

Facilities

ZDNet's headquarters are located in San Francisco and its other principal
offices are located in the Boston metropolitan area, New York, Chicago, Los
Angeles and Seattle. Ziff-Davis Inc. leases all of the property and offices
occupied by ZDNet and as a result ZDNet pays an allocated portion of Ziff-Davis
Inc.'s lease payments. ZDNet believes that the properties it occupies are
adequate for its current operations, and that suitable additional or
alternative space, including space available under lease options, will be
available at commercially reasonable terms for future expansion.

Legal Proceedings

Ziff-Davis Inc. was named a defendant in an action, filed on April 17, 1998
in the Supreme Court of the State of New York, by minority stockholders of SIM,
formerly an indirect subsidiary of SOFTBANK Corp. The complaint alleges, among
other things, that SOFTBANK Holdings Inc. ("SBH"), SIM's majority stockholder,
acting with Ziff-Davis Inc. and two of its senior officers and directors who
were directors of SIM (and who were also named as defendants), had conflicts of
interest between SIM and other investments of SOFTBANK Corp. and its non-Ziff-
Davis Inc. affiliates (collectively, "Softbank")(including investments in Ziff-
Davis Inc.) and failed to act in the best interests of SIM and the minority
stockholders by taking actions which benefitted Ziff-Davis Inc. The complaint
states claims based on common law fraud, breach of fiduciary duty and aiding
and abetting theories and seeks in excess of $200 million in damages. Ziff-
Davis Inc. and the other defendants have moved to dismiss all of the claims
against them other than a breach of contract claim which is solely against SBH.
Although the outcome of this case cannot be predicted, Ziff-Davis Inc. believes
that there are substantial defenses to the claims and intends to defend
vigorously.

In addition, eight securities class action suits have been filed against
Ziff-Davis Inc. and certain of its directors and officers in the United States
District Court for the Southern District of New York. The complaints allege
that defendants violated Sections 11, 12(a)(2) and 15 of the Securities Act in
connection with the registration statement filed by Ziff-Davis Inc. with the
Securities and Exchange Commission relating to the initial public offering of
Ziff-Davis Inc.'s common stock. More particularly, the complaints allege that
the registration statement contained false and misleading statements and failed
to disclose facts that could have indicated an impending decline in Ziff-Davis
Inc.'s revenue. The complaints seek, on behalf of a class of purchasers of
Ziff-Davis Inc.'s common stock from the date of the initial public offering
through October 8, 1998, unspecified damages, interest, fees and costs,
rescission, and injunctive relief such as the imposition of a constructive
trust upon the proceeds of the initial public offering.

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<PAGE>

Davis Inc., et al., No. 98 Civ. 7260 (filed Oct. 15, 1998); Schindler v. Ziff-
Davis Inc., et al., No. 98 Civ. 7418 (filed Oct. 19, 1998); Miller v. Ziff-
Davis Inc., et al., No. 98 Civ. 7541 (filed Oct. 23, 1998); Felgoise v. Ziff-
Davis Inc., et al., No. 98 Civ. 8045 (filed Nov. 9, 1998) and Javier v. Ziff-
Davis Inc., et al., No. 98 Civ. 8201 (filed Nov. 17, 1998). On January 28,
1999, the court entered an order consolidating the actions, appointing lead
plaintiff's counsel and requiring the filing of a consolidated amended
complaint within 45 days. Thereafter, Ziff-Davis Inc. will have 45 days to
respond to the consolidated amended complaint.

In addition, two derivative suits have been filed by stockholders against
Ziff-Davis Inc. and all of its directors in the Court of Chancery of the State
of Delaware for New Castle County. The complaints allege that the directors
breached their fiduciary duties to Ziff-Davis Inc. by repricing the stock
options awarded to certain directors and demand the nullification of the
repricing and an injunction against exercise by the directors of any repriced
option. The complaints are as follows: Jacobs v. Ziff-Davis Inc., et al., No.
16813NC (filed Nov. 30, 1998) and Bernd Bildstein v. Ziff-Davis Inc., et al.,
No. 16835NC (filed Dec. 10, 1998). Service has been effected in the Jacobs
action but not in the Bildstein action.

Although the outcome of the foregoing cases cannot be predicted, Ziff-Davis
Inc. believes that there are substantial defenses to all of the claims.

There are no other legal proceedings to which Ziff-Davis Inc. is a party,
other than ordinary routine litigation incidental to its business that is not
otherwise material to the business or financial condition of Ziff-Davis Inc.

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<PAGE>

MANAGEMENT OF ZDNET

Executive Officers

The executive officers of ZDNet are as follows:

<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Daniel L. Rosensweig..... 37 President
Daniel B. Farber......... 48 Vice President, Editor in Chief
Barry D. Briggs.......... 43 Vice President, Advertising Sales and Marketing
Massimo De Nadai......... 43 Vice President, Business Operations
Alan Phillips............ 40 Vice President, Internet Operations and Technology
Robert C. Smahl.......... 36 Vice President, Audience Development
</TABLE>

Biographies of Executive Officers

Daniel L. Rosensweig. Daniel L. Rosensweig has been President of ZDNet since
1997, having served in 1996 and 1997 as Executive Vice President of ZD Inc.'s
Internet Publishing Group. From 1995 to 1996, Mr. Rosensweig was Vice President
and Publisher of PC Magazine, and from 1994 to 1995 was Publisher of PC
Magazine. Since joining ZD Inc. in 1983, Mr. Rosensweig has also held a number
of positions, including Associate Publisher positions at PC Magazine, Computer
Shopper and PC Sources.

Daniel B. Farber. Daniel B. Farber has been Vice President, Editor in Chief
of ZDNet since 1996. During his ten years with Ziff-Davis Inc., Mr. Farber has
also served as Vice President, Editor in Chief of PC Week and MacWeek. Prior to
joining Ziff-Davis Inc., Mr. Farber held a number of editorial positions at IDG
publications, including PC World and MacWorld.

Barry D. Briggs. Barry D. Briggs has been Vice President, Advertising Sales
and Marketing of ZDNet since 1997. During his five years with Ziff-Davis Inc.
he has served as Network Director of Corporate Sales, Associate Publisher of
ComputerLife, and Publisher of FamilyPC. Prior to joining Ziff-Davis Inc., Mr.
Briggs held a number of positions at Time Warner Inc., including Director of
Marketing and Sales Development at Sports Illustrated, National Sales Manager
for Time Magazine and Eastern Regional Director for all Time Inc. magazines.

Massimo De Nadai. Massimo De Nadai has been Vice President, Business
Operations of ZDNet since November 1998 and is responsible for managing
finance, administration, customer service and paid-content services. Mr. De
Nadai has been associated with ZDNet since December 1991, holding a variety of
positions in business management, business development and planning. Prior to
joining ZDNet, Mr. De Nadai held positions in technical development, product
management and general management at Cullinet Database Systems, which developed
and marketed database management systems, development tools and packaged
applications, Strategic Information, a former division of Ziff-Davis Inc.,
which developed packaged database management solutions for

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selected vertical markets, and Monchik-Weber Investment Systems, which
developed, maintained and installed systems for brokerage and investment
management organizations.

Alan Phillips. Alan Phillips has been Vice President, Internet Operations and
Technology of ZDNet since January 1998, having previously served as ZDNet's
Director of Internet Operations and Technology since 1995. Prior to joining
Ziff-Davis Inc., Mr. Phillips was President and CEO of Instant Information,
Inc., a leading provider of enhanced fax services from 1990 to 1994. Prior to
1990, Mr. Phillips held several executive positions at Information Marketing
Businesses, Inc., now owned by Simplex, which develops and markets labor
management software, Tekscan, Inc., which develops, manufactures and markets
proprietary sensor technology, and Data Resources, Inc., a McGraw-Hill company,
which focuses on consulting and forecasting industry economic indices.

Robert C. Smahl. Robert C. Smahl has been Vice President, Audience
Development of ZDNet since September 1997. Prior to joining ZDNet, Mr. Smahl
served as General Manager of Windows NT Intranet Solutions at ZD Expos where he
worked in various roles from 1993 to 1997. From 1985 to 1993, Mr. Smahl held a
variety of positions within the circulation department of ZD Publishing.

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<PAGE>

ZD
SELECTED HISTORICAL COMBINED FINANCIAL AND OTHER DATA

The following table presents Selected Historical Combined Financial and Other
Data for ZD as of and for the years ended December 31, 1995, 1996 and 1997, for
the nine month periods ended September 30, 1997 and 1998 and as of September
30, 1998. This data was derived from the Combined Financial Statements of ZD
included elsewhere in this prospectus. An affiliate of Ziff-Davis Inc. acquired
COMDEX, an events business, on April 1, 1995 and ZD Publishing, a print
publishing business, on February 29, 1996; the data does not include results
from the acquired businesses for periods before the respective dates of
acquisition. However, because ZD Publishing represents ZD's principal
operations, the following table also presents Selected Historical Combined
Financial and Other Data for ZD Publishing as of and for the years ended
December 31, 1993, 1994 and 1995 and as of and for the two month period ended
February 28, 1996. The data as of and for the year ended December 31, 1995 and
as of and for the two months ended February 28, 1996 was derived from the
Consolidated Financial Statements of ZD Publishing beginning on page F-82 in
this prospectus. ZD Publishing data as of for the years ended December 31, 1993
and 1994, and ZD data as of and for the periods ended September 30, 1997 and
1998, are derived from ZD Publishing unaudited financial statements. On May 4,
1998, Ziff-Davis Inc. completed a reorganization described in Note 2 to the
Combined Financial Statements of ZD beginning on page F-44; results for period
before the reorganization are not directly comparable to results for period
after the reorganization. This table should be read in conjunction with the
Selected Historical Combined Financial and Other Data and Management's
Discussion and Analysis of Financial Condition and Results of Operations for
each of ZDNet, ZD and Ziff-Davis Inc. as well as the Combined Financial
Statements for each of ZDNet, ZD and Ziff-Davis Inc., beginning on pages F-6,
F-45 and F-101 of this prospectus, respectively.
<TABLE>
<CAPTION>
ZD Publishing(1) ZD
--------------------------------------------- -------------------------------------------------------
Nine month
Two month period ended
Year ended December 31, period ended Year ended December 31, September 30,
------------------------------- February 28, --------------------------------- --------------------
1993 1994 1995 1996 1995(2) 1996(2) 1997 1997 1998
-------- ---------- ---------- ------------ ---------- ---------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Statement of (in thousands)
Operations Data:
Revenue, net........ $639,244 $ 698,030 $ 755,419 $ 122,562 $ 202,729 $ 938,924 $1,121,543 $728,910 $ 694,081
Depreciation and
amortization....... 36,650 33,045 87,506 14,540 24,305 134,251 147,259 112,173 109,814
Income (loss) from
operations......... 623,093 681,582 65,283 8,540 62,675 104,594 131,713 8,548 (8,062)
Interest expense,
net................ -- -- 92,609 14,030 44,005 120,646 190,445 141,333 111,185
Income (loss) before
income taxes....... 623,093 681,582 (36,472) (6,539) 22,869 (26,636) (71,648) (144,051) (119,456)
Net income
(loss)(3)(4)....... 25,569 82,176 (26,002) (4,547) 10,945 (52,081) (71,179) (143,810) (86,179)
Balance Sheet Data
(at period end):
Cash and cash
equivalents........ $ 34,371 $1,064,174 $ 10,083 $ 13,669 $ 27,908 $ 29,915 $ 30,273 $ 26,728
Total assets........ 303,323 2,747,968 1,625,426 1,622,438 1,090,981 3,584,963 3,548,108 3,410,982
Total long-term
debt............... 353,507 1,034,000 964,153 964,153 575,450 2,522,252 2,408,240 1,526,047
Division equity
(deficit).......... (216,848) 387,718 365,150 360,717 397,881 447,756 126,130 1,344,048
Other Data:
Capital
expenditures....... $ 13,603 $ 14,606 $ 12,573 $ 384 $ 3,367 $ 21,355 $ 27,822 $ 17,291 $ 24,218
Capital
contributions to
ZDNet.............. -- -- 7,106 2,350 -- 13,630 20,664 15,799 13,242
Investments and
acquisitions, net
of cash acquired... -- -- -- -- 814,520 2,124,823 11,002 60 8,192
</TABLE>
- -------

(1) A third party acquired ZD Publishing as of January 1, 1995. An affiliate of
Ziff-Davis Inc. acquired ZD Publishing on February 29, 1996. ZD Publishing
represents ZD's principal operations, ZD Publishing data has been presented
for periods before these dates.

(2) An affiliate of Ziff-Davis Inc. acquired COMDEX on April 1, 1995 and ZD
Publishing on February 29, 1996; ZD data does not include results from the
acquired businesses for periods before the respective dates of acquisition.

(3) During 1993 and 1994, ZD Publishing conducted its operations through
various partnerships. Accordingly, there were no income tax provisions for
those years.

(4) No historical earnings per share or share data are presented as Ziff-Davis
Inc. does not consider such data meaningful. After issuance of ZDNet Stock,
Ziff-Davis Inc. will report earnings per share data for ZD and ZDNet but
not for Ziff-Davis Inc.

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<PAGE>

ZD
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Revenue

ZD had net revenue of $1.122 billion for 1997. A substantial portion of ZD's
revenue is derived from the sale of advertising, which in 1997 accounted for
51.4% of total revenue. No single advertiser has comprised more than 4% of ZD's
advertising revenue during any of the last three years. However, ZD's top 20
advertisers accounted for 38.8% of total advertising revenue for 1997.

In the publishing segment, ZD's principal sources of revenue are advertising
(67.1% of 1997 total publishing revenue), circulation (18.1%) and other (14.8%)
for the year ended December 31, 1997. Circulation comprises both paid
subscriptions (11.2%) and newsstand sales (6.9%) while other includes
educational and training materials (5.6%) and market research studies (6.5%)
with the balance primarily consisting of royalties, reprints and other
miscellaneous sales. In the events segment, revenue is derived from two
principal sources: sale of exhibit space (64.8% of 1997 total segment revenue)
and attendee conference and seminar fees (14.9%). Unlike many trade show
producers, ZD derives a significant portion of its trade show revenue from
other sources (20.3%), including advertising in show-related publications,
billboards, banners, fees from managing customer-sponsored events and other
show-related activities. ZD believes these other sources will continue to be an
important growth area, particularly for its content-focused events.

ZD provides certain editorial content for ZDNet for which ZDNet pays a
royalty to ZD based on ZDNet's revenue. See Note 5 to ZD's Combined Financial
Statements in this prospectus.

Cost of Operations

In the publishing business, the principal components of ZD's production costs
are raw materials, printing and distribution, which represented 35.1%, 38.0%
and 27.0%, respectively, of total 1997 publishing production expenses. ZD's
principal raw material is paper. Paper supply and prices are subject to
volatility and may be significantly affected by many factors, including market
and economic conditions. See "Risk Factors--Other Ziff-Davis Inc. Risks--We May
Be Adversely Affected By Fluctuations in Paper and Postage Costs" and "--
Inflation and Fluctuations in Paper and Postage Costs". The principal
components of production costs within the events business are the costs of
renting and preparing the facilities to hold the events (33.6%), direct mail
and the related costs for promotion of the events (33.2%) and program
development and presentation costs (11.3%).

The other principal operating costs for ZD are selling, general and
administrative expenses, including editorial costs. Included in these costs are
salaries, sales commissions and benefits (50.3%) along with marketing and
promotion expenses related to advertising and circulation (19.1%).

The costs of certain Central Services are allocated between ZD and ZDNet. See
Note 5 to ZD's Combined Financial Statements in this prospectus.

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<PAGE>

Factors affecting future periods

ZD's revenue and profitability are influenced by a number of external
factors, including the volume of new technology product introductions, the
amount and allocation of marketing expenditure by ZD's clients, the extent to
which sellers elect to advertise using print and online media or participate in
trade shows and conferences, changes in paper prices, availability of
appropriate venues for its largest trade shows and conferences and competition
among computer technology marketers, including print publishers, producers of
trade shows and providers of other technology information services.
Accordingly, ZD may experience fluctuations in revenue from period to period.
Many of ZD's large customers concentrate their advertising expenditures around
major new product launches. Marketing expenditures by technology companies can
also be affected by factors affecting the computer industry generally,
including pricing pressures and temporary surpluses of inventory. Revenue and
profitability are also influenced by product mix and the timing and frequency
of ZD's new product launches and launches in new markets, as well as by
acquisitions. New publications generally require several years to achieve
profitability and upon achieving initial profitability, often have lower
margins than more established publications. The launch of new publications,
trade shows and services are funded with cash flow from operations and are
expensed as incurred. Accordingly, ZD's revenue from year to year may be
affected by the number and timing of new product launches. If ZD concludes that
a new publication, trade show or service will not achieve certain milestones
with regard to revenue, profitability and cash flow within a reasonable period
of time, management may discontinue such publication, trade show or service or
merge it into another existing publication, trade show or service. See "Risk
Factors--Other Ziff-Davis Inc. Risks--To Remain Competitive We Must Constantly
Expand And Develop New Products And Services. This Is Inherently Risky And
Expensive".

Reduced Demand for Advertising; Restructuring

Margin pressure on computer equipment manufacturers, industry and product
delays, lower demand in Asia and a focus on the Year 2000 transition are
contributing to a reduced demand for advertising in ZD's magazines, principally
PC Magazine, PC/Computing, Computer Shopper and PC Week. ZD believes these
factors will continue. In part as a result of these factors, EBITDA for the
fourth quarter of 1998 was significantly lower than EBITDA for the fourth
quarter of 1997.

As a result of this reduced demand, in October 1998, Ziff-Davis Inc.
announced a restructuring program with the intent of significantly reducing its
cost base. ZD incurred a pre-tax charge of $52.2 million for this restructuring
program. The charge will be reported as a component of income from operations
for the fourth quarter of 1998. The charge included asset impairment costs
($37.9 million), employee termination costs ($8.6 million) and costs to exit
activities ($5.7 million) principally resulting from the closing of three
publications (Windows Pro, Internet Business and Equip), and the reduction of
ZD's work force by 310 employees. The charge also included costs resulting from
the discontinuation of some

78
<PAGE>

educational journals and trade shows. The following sets forth additional
detail concerning the principal components of the charge:

. Asset impairment costs total $37.9 million. These costs, which are non-
cash, include the write-off of intangible assets associated with the
discontinued publications ($34.3 million) and trade shows ($2.9 million)
as well as deferred expenses associated with the discontinued educational
journals ($0.7 million).

. Employee termination costs relate to severed personnel at the closed
publications as well as a rationalization and resulting workforce
reduction of the remainder of ZD's operations. Employee termination costs
include payments for severance and earned vacation as well as the costs
of outplacement services and the provision of continued benefits to
personnel (COBRA). As of December 31, 1998, $5.2 million of the $8.6
million related to these employee terminations had been paid. The
remainder is expected to be paid in the first half of 1999.

See "--Liquidity and Capital Resources--Credit Facility" below.

Presentation of Financial Information

ZD is comprised of certain operations which were acquired at various times
and reflects a May 1998 reorganization (See Notes 1 and 2 to ZD's Combined
Financial Statements in this prospectus).

In order to create financial statements that separately present ZD's assets,
liabilities, revenue, expenses and cash flow while still reflecting ZD's 100%
Retained Interest in ZDNet's division equity and net losses, Ziff-Davis Inc.
has accounted for its interest in ZDNet in a manner similar to the manner
prescribed by APB No. 18, "The Equity Method of Accounting for Investments in
Common Stock". Thus, ZD's historical balance sheets reflect ZD's 100% Retained
Interest in ZDNet's division equity as "Retained interest in ZDNet". Similarly,
ZD's historical statements of operations reflect ZD's 100% Retained Interest in
ZDNet's division losses as "Loss related to retained interest in ZDNet".

Since ZD and ZDNet together constitute all of Ziff-Davis Inc. and since ZD's
financial statements have historically reflected 100% of ZDNet's division
equity and losses, ZD's division equity and net income or loss has historically
been equal to Ziff-Davis Inc.'s total stockholders' equity and net income or
loss.

However, ZD's 100% Retained Interest will decline in the future to reflect,
among other things, the ZDNet Stock sold in the offering. When ZD's Retained
Interest declines to a percentage below 100%, ZD's net income or loss will,
going forward, reflect only that reduced percentage of ZDNet's division income
or loss.

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<PAGE>

The book value associated with ZD's Retained Interest will decline in the
future to reflect sales of ZDNet Stock attributed to ZD's Retained Interest. ZD
may realize a gain or loss on any such sale, depending on the price received as
compared to the decline in book value of the Retained Interest.

In addition, the book value associated with ZD's Retained Interest will
increase or decrease to reflect ZD's proportionate Retained Interest in ZDNet's
division income or loss and will be adjusted from time to time as set forth
under Note 3 to ZD's Combined Financial Statements appearing elsewhere in this
prospectus.

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<PAGE>

Results of Operations

The table below presents the results of ZD as if the assets and operations
acquired by affiliates of Ziff-Davis Inc. on February 29, 1996 (as described in
Note 1 to the Combined Financial Statements in this prospectus) had been
acquired on January 1, 1995. Purchase accounting adjustments relating to that
acquisition have been reflected through pro forma amortization, interest and
income tax adjustments, as described in note (1) to the table. Although the
table presents numbers that are not in accordance with generally accepted
accounting principles, management believes they present the most meaningful
basis of comparison. The financial information presented below may not
necessarily reflect the results of operations which would have occurred had the
February 29, 1996 acquisition been completed on January 1, 1995.

<TABLE>
<CAPTION>
Year ended December 31,
------------------------------- Nine months ended
Pro Forma(1) Actual September 30,
-------------------- --------- --------------------
1995 1996 1997 1997 1998
--------- --------- --------- --------- ---------
(in thousands)
<S> <C> <C> <C> <C> <C>
Revenue, net:
Publishing $ 755,419 $ 796,602 $ 834,015 $ 607,227 $ 571,391
Events................ 202,729 264,884 287,528 121,683 122,690
--------- --------- --------- --------- ---------
958,148 1,061,486 1,121,543 728,910 694,081
--------- --------- --------- --------- ---------
Cost of production:
Publishing............ 192,900 212,287 221,367 161,740 159,654
Events................ 68,810 87,373 99,533 51,964 47,002
--------- --------- --------- --------- ---------
261,710 299,660 320,900 213,704 206,656
Selling, general and
administrative
expenses............... 456,669 499,901 521,671 394,485 385,673
Depreciation and
amortization........... 147,773 154,854 147,259 112,173 109,814
--------- --------- --------- --------- ---------
Income (loss) from
operations............. 91,996 107,071 131,713 8,548 (8,062)
Interest expense, net... (133,130) (135,500) (190,445) (141,333) (111,185)
Loss related to Retained
Interest in ZDNet...... (7,177) (17,933) (21,238) (18,463) (8,691)
Other non-operating
income................. 808 6,106 8,322 7,196 8,482
--------- --------- --------- --------- ---------
Loss before income
taxes.................. (47,503) (40,256) (71,648) (144,052) (119,456)
Provision (benefit) for
income taxes........... 14,313 26,755 (469) (242) (33,277)
--------- --------- --------- --------- ---------
Net loss................ $ (61,816) $ (67,011) $ (71,179) $(143,810) $ (86,179)
========= ========= ========= ========= =========
Other Data:
EBITDA(2)............... $ 235,084 $ 255,430 $ 272,894 $ 114,236 $ 106,011
Capital expenditures.... 15,940 21,739 27,822 17,291 24,218
Capital contributions to
ZDNet.................. 7,106 15,980 20,664 15,799 13,242
Investments and
acquisitions, net of
cash acquired.......... 814,520 2,124,823 11,002 60 8,192
</TABLE>
- --------

(1) The February 29, 1996 acquisition gave rise to different bases of
accounting for the period after the acquisition versus the period prior to
the acquisition. This is primarily due to a purchase price which exceeded
the book value of the assets acquired, financed by a higher level of both
debt and equity as compared to the pre-acquisition capital structure. The
above numbers assume that the acquisition took place on January 1, 1995;
therefore, depreciation and amortization, interest

81
<PAGE>

expense and net loss have been increased (decreased) by approximately
$6,064, $824, and $10,383, respectively for 1996 and $35,962, $(3,484) and
$46,759, respectively for 1995.

(2) "EBITDA" is defined as income before provision for income taxes, interest
expense, depreciation and amortization. ZD's EBITDA is calculated by adding
(a) ZD's EBITDA before losses related to its retained interest in ZDNet and
(b) ZD's proportionate interest (currently 100%) in ZDNet's EBITDA. EBITDA
is not intended to represent cash flows from operations and should not be
considered as an alternative to net income as an indicator of ZD's
operating performance or to cash flows as a measure of liquidity. Although
ZD believes that EBITDA is a standard measure commonly reported and widely
used by analysts, investors and other interested parties in the publishing
and media industries, the EBITDA presented for ZD may not be comparable to
similarly titled measures reported by other companies.

Nine months ended September 30, 1998 compared with nine months ended September
30, 1997

Revenue, net

Net revenue for the nine months ended September 30, 1998 was $694.1 million
compared to $728.9 million for the nine month ended September 30, 1997, a
decrease of $34.8 million or 4.8%. The comparability of 1998 and 1997 nine
month results was affected by the accounting treatment for certain publications
transferred to or from joint ventures as well as the shift in timing of an
event. Excluding these factors, revenue for the nine months ended September 30,
1998 decreased by $13.0 million, or 6.0% compared to the same period in 1997.

Publishing--The decline in the publishing segment's net revenue relates to
transferring certain publications to or from joint ventures. Excluding such
transfers, publishing segment net revenue decreased $8.6 million or 1.3%. The
decrease was due to lower advertising in business publications partly offset by
growth in advertising in consumer publications. Advertising revenue was lower
in the business publications principally due to factors affecting the computer
technology industry during the period (as described in "Reduced Demand for
Advertising; Restructuring" above.)

Net revenue for the Macuser and MacWeek magazines contributed to Mac
Publishing, LLC were $31.9 million for the first nine months ended September
30, 1997, but are no longer consolidated into ZD's results for 1998. On May 1,
1998, ZD acquired its joint venture partner's 50% interest in Family PC
magazine. ZD now owns 100% of the magazine and its results are included in the
consolidated results from the acquisition date. Revenue from Family PC included
in the 1998 nine months results is $4.8 million.

Events--Net revenue from the events segment increased $1.0 million or 0.8%,
primarily resulting from the fact that Seybold San Francisco/Publishing 98 was
held in the fourth quarter of 1997 and in the third quarter of 1998, offset by
revenue declines on smaller events.

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<PAGE>

Cost of production

Cost of production decreased $7.0 million or 3.3% from the 1997 period.
Publishing cost of production declined $2.0 million due to lower advertising
pages produced. The events segment accounted for $4.9 million of this decrease,
primarily attributable to the lower usage of exhibition space for the period,
partially offset by the shift in timing of Seybold San Francisco/Publishing 98.

Selling, general and administrative expenses

Selling, general and administrative expenses were $385.7 million for the nine
months ended September 30, 1998 compared to $394.5 million for the nine months
ended September 30, 1997, a decrease of $8.8 million or 2.2%. Included in the
1998 period were $3.2 million of one-time costs for office relocations along
with $9.9 million of costs related to launches of new publications. The
decrease in selling, general and administrative expenses was principally
related to efficiencies realized in combining the publishing and events
business through the reorganization and in particular, the consolidation of the
two former events entities into one business unit.

Depreciation and amortization

Total depreciation and amortization expense was $109.8 million for the 1998
period compared to $112.2 million in the 1997 period, a decrease of $2.4
million or 2.1%. The decline was the result of certain assets being fully
depreciated or amortized in 1997.

Interest expense, net

Net interest expense declined to $111.2 million for the 1998 period from
$141.3 million in 1997. The reduction was attributed to a lower level of debt
outstanding due to principal repayments and the capitalization of $908.7
million of intercompany indebtedness. The weighted average cost of debt did not
change significantly between the periods.

Loss related to Retained Interest in ZDNet

The loss from ZD's Retained Interest in ZDNet decreased to $8.7 million in
1998 from $18.5 million in 1997 due to the improved operating performance of
that business. See "ZDNet Management's Discussion and Analysis of Financial
Condition and Results of Operations".

Other non-operating income, net

Other non-operating income, net primarily reflects ZD's equity share of
earnings and losses from joint ventures and fees earned from management of
events not produced by ZD. Income of $8.5 million for the 1998 period increased
$1.3 million from the $7.2 million of income in 1997. The increase was
attributed to higher earnings from Mac Publishing, LLC partly offset by the
revised royalty and fee arrangement for the events business in Japan.

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<PAGE>

Income taxes

The combined income tax benefit was $33.3 million and $0.2 million for the
nine months ended September 30, 1998 and 1997, respectively. The increase was
due primarily to the losses with respect to the MAC Assets, which were not
deductible until the MAC Assets were purchased by ZD from an affiliate on May
4, 1998. The income tax benefit for the period results from applying ZD's
estimated annual effective tax rate to the pretax loss of the nine months ended
September 30, 1998.

Net loss

As a result of the changes described above, the net loss for the nine months
ended September 30, 1998 was $86.2 million compared to a net loss of $143.8
million for the nine months ended September 30, 1997.

EBITDA

EBITDA for the nine months ended September 30, 1998 was $106.0 million
compared to $114.2 million for the period in 1997. Results were unfavorable as
compared to last year primarily due to a lower level of advertising in the
higher margin business publications as well as a decline in the earnings from
the COMDEX/Spring event partly offset by the fact that Seybold San
Francisco/Publishing 98 was held in the fourth quarter of 1997 and in the third
quarter of 1998. In addition, during the nine months ended September 30, 1998,
ZD recorded $3.2 million of one-time costs for office relocations and incurred
$6.4 million of losses from launching new publications.

Year ended December 31, 1997 compared with Pro Forma Year ended December 31,
1996

Revenue, net

Net revenue increased by $60.0 million or 5.7% from $1,061.5 million in 1996
to $1,121.5 million in 1997.

Publishing--Net revenue from publishing grew by $37.4 million or 4.7% from
$796.6 million to $834.0 million. Approximately $22 million was due to
inclusion of a full year of results for the electronic gaming publications
acquired in mid-1996 and two publications launched in late 1996. Increases in
advertising rates, generally ranging between 3% and 10%, and a 5.1% increase in
advertising pages contributed $11.5 million. Revenue from international
operations, which generated 9.5% of the segment's revenue, decreased by $1.5
million due to the strengthening of the U.S. dollar relative to the major
European currencies. Continued growth from new educational product launches and
sales of market research studies accounted for the balance of the revenue
growth.

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<PAGE>

growth was due to higher exhibitor rates charged at the major events, partly
offset by a decline in revenue from COMDEX/Spring and certain U.K. events.

Cost of production

Production costs increased $21.2 million or 7.1% from $299.7 million to
$320.9 million.

Publishing production costs increased $9.1 million or 4.3% from $212.3
million in 1996 to $221.4 million. Costs related to new launches and volume-
related growth increased approximately $20 million but were partly offset by
approximately $10 million of lower paper costs.

The costs of producing events increased $12.2 million or 14.0% from $87.3
million to $99.5 million primarily as a result of costs related to new events
launched in 1997.

Selling, general and administrative expenses

Selling, general and administrative expenses increased $21.8 million or 4.4%
from $499.9 million to $521.7 million. The increase was due to the addition of
employees to support base business volume growth and launches of new products
and services. Results included a one-time $6.0 million charge for the
consolidation and restructuring of the events business which was announced in
the fourth quarter of 1997. Costs for the publishing segment rose 1.2% while
those for the events segment rose 22.1% due to the number of new launches and
the one-time restructuring charge.

Depreciation and amortization

Total depreciation and amortization decreased $7.6 million to $147.3 million
in 1997. The decrease in depreciation and amortization expense was a result of
certain assets being fully depreciated in 1996.

Interest expense, net

Net interest expense increased $54.9 million or 40.5% to $190.4 million in
1997 due to interest on an additional $900 million of intercompany indebtedness
to Softbank incurred to finance a return of capital.

Loss related to Retained Interest in ZDNet

The loss from ZD's Retained Interest in ZDNet increased to $21.2 million in
1997 from $17.9 in 1996 due to the operating performance of that business. See
"ZDNet Management's Discussion and Analysis of Financial Condition and Results
of Operations".

Other non-operating income, net

Other non-operating income, net increased $2.2 million from $6.1 million in
1996 to $8.3 million or 36.1% primarily due to a $2.2 million or 36.3% increase
in ZD's share of Mac Publishing, LLC's earnings.

85
<PAGE>

Income Taxes

The 1997 combined income tax benefit of $0.5 million compares to a pro forma
income tax provision of $26.8 million in 1996. The improvement in the tax
provision is due to a higher pre-tax loss giving rise to a tax benefit. The
difference between the 1997 and 1996 effective tax rates and the federal
statutory tax rate of 35.0% is primarily due to non-recognition of tax losses
generated by the MAC Assets ($42.0 million and $63.0 million in 1997 and 1996,
respectively), non-deductible goodwill amortization ($10.2 million and $8.6
million, respectively) and state and local income taxes.

Net loss

As a result of the changes described above, net loss for the period increased
$4.1 million or 6.1% from $67.0 million to $71.1 million.

EBITDA

EBITDA for 1997 was $272.9 million, an increase of $17.5 million or 6.9% from
the $255.4 million generated in 1996. The increase was due to higher revenue
and management fee income, net of higher production costs and selling, general
and administrative expenses. The ratio of EBITDA to revenue remained relatively
constant at 24.3% for 1997 compared to the 1996 margin of 24.1%.

Pro Forma Year ended December 31, 1996 compared with Pro Forma Year ended
December 31, 1995

Revenue, net

Net revenue increased by $103.4 million or 10.8% from $958.1 million in 1995
to $1,061.5 million in 1996.

Publishing--Net revenue from publishing grew by $41.2 million or 5.5% from
$755.4 million to $796.6 million. Higher overall advertising rates combined
with a 12.4% growth in advertising pages contributed 59.3% of the net revenue
increase while the mid-1996 acquisition of several electronic gaming
publications accounted for 40.7% of the increase. New educational product
launches and growth in sales of market research studies accounted for the
balance of net revenue growth.

Events--Net revenue from events increased $62.2 million or 30.7% from $202.7
million to $264.9 million. The launch of new international trade shows
accounted for 32.2% of the growth while the introduction of customized events
contributed 19.3%. The balance of the increase was due to growth in exhibitor
square footage and rates at ZD's major U.S. shows.

Cost of production

Production costs increased $38.0 million or 14.5% from $261.7 million to
$299.7 million.

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<PAGE>

Publishing production costs increased $19.4 million or 10.1% from $192.9
million to $212.3 million, primarily due to volume-related growth and higher
paper costs. Approximately 35.1% of the increase was attributed to costs for
the magazines acquired mid-year while increased frequencies on certain
publications and a full year of costs for publications launched in late 1995
accounted for 20.1% of the increase.

The costs of producing events increased $18.6 million or 27.0% from $68.8
million to $87.4 million. The increase was driven by the cost of new product
launches as well as higher direct marketing and facility-related fees for the
major U.S. events.

Selling, general and administrative expenses

Selling, general and administrative expenses rose $43.2 million or 9.5% from
$456.7 million to $499.9 million. This increase reflects the addition of
employees to support growth in the base business along with the launches of new
products and services. Costs for the publishing segment rose 3.6% while those
for the events segment rose 61.6%, reflecting a higher level of new launches
and the absence of COMDEX related expenses for the first three months of 1995.
COMDEX was acquired April 1, 1995.

Depreciation and amortization

Total depreciation and amortization of $154.9 million increased $7.1 million
from $147.8 million in 1995 primarily due to the inclusion of a full year's
depreciation and amortization relating to COMDEX, which was acquired April 1,
1995.

Interest expense, net

Net interest expense increased $2.4 million or 1.8% on a pro forma basis due
to higher average debt levels in 1996.

Loss related to Retained Interest in ZDNet

The loss from ZD's Retained Interest in ZDNet increased to $17.9 million in
1996 from the $7.2 million in 1995 due to the operating performance of that
business. See "ZDNet Management's Discussion and Analysis of Financial
Condition and Results of Operations".

Other non-operating income, net

Other non-operating income, net increased to $6.1 million compared to $0.8
million in 1995 due to ZD's share of earnings from Mac Publishing, LLC of $5.3
million.

Income Taxes

The combined income tax provision of $26.8 million compares to an income tax
provision of $14.3 million in 1995. The unfavorable variance in income taxes
and the difference in the 1996 and 1995 effective tax rates from the federal
statutory tax rate of

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<PAGE>

35% is primarily attributable to non-recognition of tax losses generated by the
MAC Assets ($63.0 million in 1996) and non-deductible goodwill amortization
($8.6 million in 1996).

Net Loss

As a result of the changes described above, net loss for the period increased
$5.2 million from $61.8 million to $67.0 million.

EBITDA

EBITDA for 1996 was $255.4 million, an increase of $20.3 million or 8.6% from
the $235.1 million generated in 1995. The increase was due to higher revenue
and management fee income, net of higher production costs and selling, general
and administrative expenses. The cost of new product launches caused the growth
rate of expenses to exceed the revenue growth rate and, as a result, the ratio
of EBITDA to revenue of 24.1% in 1996 declined slightly compared to the 1995
margin of 24.5%.

Liquidity and Capital Resources

As a result of the May 4, 1998 reorganization, ZD's intercompany debt owed to
Softbank was reduced to $83.1 million. Such indebtedness bears interest at 9.9%
and matures in February 2009. Concurrently with Ziff-Davis Inc.'s initial
public offering, Ziff-Davis Inc., on behalf of ZD, issued and sold $250 million
aggregate principal amount of Notes. In addition, Ziff-Davis Inc., on behalf of
ZD, entered into a $1.35 billion credit facility, and borrowed $1.25 billion
thereunder, to provide additional funds for the repayment of intercompany debt
to Softbank and to provide for ZD's working capital requirements. See Note 2 to
the Combined Financial Statements appearing elsewhere in this prospectus.

At September 30, 1998, ZD's outstanding total debt was $1,534.6 million,
excluding unamortized discount, which consisted of $79.6 million due to
Softbank, $250 million in notes and $1,205 million under the credit facility.
For information concerning the terms of this debt, see "Ziff-Davis Inc.'s
Debt".

Cash and cash equivalents were $26.8 million at September 30, 1998 and $37.7
million at September 30, 1997. The balance decreased $10.9 million due to the
factors discussed below:

Cash provided by operations was $87.5 million for the nine months ended
September 30, 1998 compared to a use of $9.3 million for the nine months ended
September 30, 1997. The increase from 1997 to 1998 was attributed to ZD's lower
losses and a decrease in funding to affiliates and to ZDNet.

Cash used for investing activities for the nine months ended September 30,
1998 and 1997 was $45.7 million and $33.2 million, respectively. The majority
of these expenditures were for computer equipment and leasehold improvements as
well as funding the operation of ZDNet. In addition, in 1998 ZD acquired a
trade show in Canada, an additional 50% of

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<PAGE>

Family PC and a European marketing database company. Acquisitions in the 1997
period reflected the purchase of a 70% interest in GameSpot.

Cash used in financing activities totaled $45.4 million for the nine months
ended September 30, 1998, representing proceeds from the reorganization and
initial public offering of $1.863 million, net of transaction costs, and
funding from the parent company of $20.4 million offset by the repayment of
debt and amounts due to affiliates of $1,929.3 million. Cash provided by
financing activities in the same period in 1997 amounted to $50.2 million
representing capital contributions partly offset by repayments of intercompany
debt.

ZD has a working capital deficiency of approximately $50.8 million for the
nine months ended September 30, 1998 compared to a deficit of approximately
$379.8 million at December 31, 1997. ZD's balance sheet will generally present
a working capital deficit position as a result of the significant level of
deferred revenue generated from publication subscriptions paid in advance and
prepayments from trade show exhibitors. At September 30, 1998, ZD had deferred
revenue of $220.1 million compared to $154.7 million at December 31, 1997.
Deferred revenue does not represent a cash liability owed by ZD, unless ZD
fails to deliver the magazine or cancels a trade show, and generally does not
affect ZD's ability to fund day to day operations. The working capital deficit
decreased significantly between December 31, 1997 and September 30, 1998 as a
result of the reorganization and initial public offering of Ziff-Davis Inc. and
the repayment and forgiveness of related party obligations in connection
therewith.

On December 11, 1998, Standard & Poors lowered its corporate credit and bank
loan ratings for Ziff-Davis Inc. to BB- from BB and its subordinated debt
rating for Ziff-Davis Inc. to B from B+. This downgrade had no impact on our
current borrowings. Although this downgrade may make future borrowings more
expensive, we do not believe the downgrade, by itself, will have a material
impact on our liquidity or our access to credit markets.

ZD believes, based on its current level of operations and anticipated growth,
that ZD's ability to generate cash, together with cash on hand and available
lines of credit, will be adequate to make required payments of principal and
interest on ZD's indebtedness and to fund anticipated capital expenditures and
working capital requirements. However, actual capital requirements may change,
particularly as a result of any acquisitions ZD may pursue. The ability of ZD
to meet its debt service obligations and reduce its total debt will depend upon
the future performance of ZD.

Funding for ZDNet

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<PAGE>

than transfers in return for assets or services rendered or transfers in
respect of ZD's Retained Interest that correspond to dividends paid on ZDNet
Stock, as inter-Group revolving credit advances bearing interest at the rate at
which Ziff-Davis Inc. could borrow such funds on a revolving credit basis (as
the board of directors determines in its sole discretion) unless the board of
directors determines that a given transfer or type of transfer should be
accounted for as a long-term loan, a capital contribution increasing ZD's
Retained Interest in ZDNet or a return of capital reducing ZD's Retained
Interest in ZDNet.

Credit Facility

Ziff-Davis Inc.'s credit facility consists of a seven year $400 million
reducing revolving credit facility, a seven year $450 million term loan and an
eight year $500 million term loan. There are no scheduled reductions in the
revolving credit commitment or amortization under the term loan until September
2000.

For the reasons described under "--Reduced Demand for Advertising;
Restructuring" above, Ziff-Davis Inc.'s debt to EBITDA ratio at December 31,
1998 would have been above the level that originally had been required by its
credit facility at such date. On December 16, 1998, the lenders agreed to amend
certain provisions of that facility. The amended provisions include an increase
in the allowed leverage ratios. In return, Ziff-Davis Inc. agreed to pay a one-
time fee of $3.375 million and increase rates on amounts borrowed under the
facility to rates ranging from LIBOR plus 1.5% to LIBOR plus 3.375% depending
on the type of loan. Had the increased interest rates been in effect for the
period from Ziff-Davis Inc.'s May 4, 1998 reorganization to September 30, 1998,
interest expense would have increased by approximately $7.3 million. Based on
the $1.205 billion outstanding on September 30, 1998, the increased interest
rates would have increased the annualized interest expense by $17.8 million.
The increase in interest expense will reduce the amounts otherwise available to
fund ZD or ZDNet operations. Ziff-Davis Inc. believes it should be able to
comply with the revised debt to EBITDA covenant going forward. However, this
will depend upon the future performance of Ziff-Davis Inc.

For a description of the terms of the amended credit facility, see "Ziff-
Davis Inc.'s Debt".

Interest Rate Swaps

On June 10, 1998, ZD entered into interest rate swap agreements, with an
aggregate notional amount of $550 million. Under these swap agreements, which
commenced on August 10, 1998, ZD will receive a floating rate of interest based
on three-month LIBOR, which resets quarterly, and ZD will pay a fixed rate of
interest each quarter for the terms of the respective agreements. The weighted
average fixed rate ZD will pay under these agreements is 5.85%. ZD has entered
into these agreements solely to hedge its interest rate risk.

ZDTV

In July 1997, Ziff-Davis Inc. entered into a license and services agreement
to develop ZDTV for MAC Holdings (America) Inc., or MHA, a company that is
wholly owned by Mr.

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Masayoshi Son, who is a director of Ziff-Davis Inc. Under this agreement, Ziff-
Davis Inc. agreed to fund ZDTV's operations through unsecured advances and was
granted an option to purchase ZDTV for a price equal to MHA's investment plus
10% per annum for the period of investment. On January 15, 1999, Ziff-Davis
Inc. exercised this option and on February 4, 1999 purchased ZDTV at a purchase
price of $81.4 million. Ziff-Davis Inc. paid approximately $32.8 million of the
purchase price in cash and paid the remainder by applying approximately $48.6
million in advances owed to it by MHA through December 31, 1998. Ziff-Davis
Inc. agreed to be responsible for the funding of ZDTV during the period in 1999
prior to the purchase. The cash portion of the purchase price was funded by an
advance from ZDTV to Ziff-Davis Inc., pursuant to the ZDTV cash management
system, of the funds invested in ZDTV by Vulcan Programming described below. In
connection with its acquisition of ZDTV, Ziff-Davis Inc. assumed MHA's
obligations under an option granted to DirectTV to purchase 5% of ZDTV for $15
million, subject to adjustment.

Vulcan Transactions

On February 4, 1999, Vulcan Ventures, the investment organization of Paul G.
Allen, agreed to purchase approximately three million shares of Ziff-Davis Inc.
common stock for $50 million. We expect the purchase of common stock to close
in the first quarter of 1999. On February 5, 1999, Vulcan Programming, Inc., an
entity owned by Paul G. Allen, purchased a one-third interest in ZDTV for $54
million.

Seasonality

Historically, ZD's business has been seasonal as a significant portion of
revenue has occurred in the second and fourth quarters. The following table
sets forth certain unaudited quarterly combined statements of operations data
for each of the eight quarters in the period ended September 30, 1998. In the
opinion of the Ziff-Davis Inc.'s management, this unaudited information has
been prepared on a basis consistent with the audited Combined Financial
Statements of ZD appearing elsewhere in this prospectus and includes all
adjustments (consisting only of normal recurring adjustments) necessary to
present fairly the information set forth therein when read in conjunction with
the Combined Financial Statements and related notes thereto. The operating
results for any quarter are not necessarily indicative of results for any
future period.

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<TABLE>
<CAPTION>
Quarters ended
(dollars in thousands)
-----------------------------------------------------------------------------------------------
December 31, March 31, June 30, September 30, December 31, March 31, June 30, September 30,
1996 1997 1997 1997 1997 1998 1998 1998
------------ --------- -------- ------------- ------------ --------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue, net:
Publishing............. $226,510 $204,281 $211,333 $191,613 $226,788 $191,246 $198,419 $181,726
Events................. 122,545 15,321 82,135 24,227 165,845 27,121 65,782 29,787
-------- -------- -------- -------- -------- -------- -------- --------
Total revenue........... $349,055 $219,602 $293,468 $215,840 $392,633 $218,367 $264,201 $211,513
Percentage of total
year.................. 32.9% 19.6% 26.2% 19.2% 35.0% n/a n/a n/a
Cost of production...... 92,923 60,842 91,152 61,710 107,196 69,048 74,710 62,898
Selling, general and
administrative expenses 143,235 130,837 132,015 131,633 127,186 131,177 127,114 127,382
Depreciation and
amortization........... 40,799 37,196 37,173 37,804 35,086 35,748 37,859 36,207
Income (loss) from
operations............. 72,098 (9,273) 33,128 (15,307) 123,166 (17,606) 24,518 (14,974)
Income (loss) before
taxes.................. 31,821 (59,901) (17,448) (66,703) 72,404 (68,058) (11,940) (39,458)
Net income (loss)....... 25,205 (59,817) (17,387) (66,606) 72,631 (5,121) (76,560) (4,498)
EBITDA(1)............... 109,531 24,008 66,624 18,822 156,602 13,628 62,072 25,842
Percentage of total
year.................. 43.8% 9.0% 25.0% 7.1% 58.9% n/a n/a n/a
</TABLE>
- --------

(1) "EBITDA" is defined as income before provision for income taxes, interest
expense, depreciation and amortization. ZD's EBITDA is calculated by adding
(a) ZD's EBITDA before losses related to its retained interest in ZDNet and
(b) ZD's proportionate interest (currently 100%) in ZDNet's EBITDA. EBITDA
is not intended to represent cash flows from operations and should not be
considered as an alternative to net income as an indicator of ZD's
operating performance or to cash flows as a measure of liquidity. Although
Ziff-Davis Inc. believes that EBITDA is a standard measure commonly
reported and widely used by analysts, investors and other interested
parties in the publishing and media industries, the EBITDA presented for ZD
may not be comparable to similarly titled measures reported by other
companies.

Inflation and Fluctuations in Paper and Postage Costs

ZD continually assesses the impact of inflation and changes in paper prices.
ZD generally enters into contracts for the purchase of paper which adjust the
price on a quarterly basis. Paper prices began to rise in 1994, rose
significantly in 1995 and 1996 and then decreased in 1997. During 1998, paper
prices were relatively flat. Management anticipates that paper prices will
remain relatively stable in 1999. ZD will continue to monitor the impact of
inflation and paper prices and will consider these matters in setting its
pricing policies. ZD frequently reviews its purchasing and manufacturing
processes for opportunities to reduce costs and mitigate the impact of paper
price and postage rate increases (such as purchasing lighter-grade paper stock
or, when paper prices are at cyclical lows, increasing paper inventory or
entering into longer term contracts with suppliers). However, ZD has not
entered, and does not currently plan to enter, into long-term forward price or
option contracts for paper. Management estimates postage costs will increase
approximately 3.5% in 1999. See "Risk Factors--Other Ziff-Davis Inc. Risks--We
May Be Adversely Affected By Fluctuations in Paper and Postage Costs" and "ZD
Description of Business--Print Publishing".

Year 2000 Readiness Disclosure

During 1997, Ziff-Davis Inc., including the businesses comprising ZD, began a
review of its computer systems and software to identify systems and software
which might

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malfunction due to misidentification of the Year 2000. Ziff-Davis Inc. is using
both internal and external resources to identify, correct or reprogram, and
test systems and software for Year 2000 readiness. Some of Ziff-Davis Inc.'s
computer systems and databases, including its subscription fulfillment and
payroll systems, are managed by third parties under contractual arrangements.
Ziff-Davis Inc. has requested those third parties to advise Ziff-Davis Inc. as
to whether they anticipate difficulties in addressing Year 2000 problems and,
if so, the nature of such difficulties. After evaluating its internal
compliance efforts as well as the compliance of third parties as described
above, Ziff-Davis Inc. will develop during 1999 contingency plans to address
situations in which various systems or software of Ziff-Davis Inc., or third
parties with which Ziff-Davis Inc. does business, are not Year 2000 compliant.
We do not yet have an estimate of the cost of these contingency plans.

Management of Ziff-Davis Inc. has not finally determined the cost associated
with Year 2000 readiness efforts and the related potential impact on ZD's
results of operations. Amounts expended to date have not been material. There
can be no assurances that Ziff- Davis Inc.'s systems or software, or those of
third parties on which Ziff-Davis Inc. relies, will be converted in time. If
Ziff-Davis Inc. or any subscribers, advertisers, licensors, vendors or other
third parties on whom it relies experiences a Year 2000 compliance problem,
this could have a material adverse effect on ZD's profits and liquidity. At
this point in time, based on Ziff-Davis Inc.'s progress to date and the
information it has received from third parties, Ziff-Davis Inc. is unable to
determine ZD's likely "worst case scenario".

Recently Issued Accounting Pronouncements

SFAS No. 130, "Reporting Comprehensive Income", issued in June 1997, will
require ZD to disclose, in financial statement format, all non-owner changes in
equity. Such changes include, for example, cumulative foreign currency
translation adjustments, certain minimum pension liabilities and unrealized
gains and losses on securities available for sale. This statement is effective
for fiscal years beginning after December 15, 1997 and requires presentation of
prior period financial statements for comparability purposes. Such transactions
historically have not been material to ZD.

ZD expects to adopt the above statements beginning with its 1998 financial
statements.

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<PAGE>

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ZD
DESCRIPTION OF BUSINESS

Ziff-Davis Inc. is a leading integrated media and marketing company focused
on computing and Internet-related technology. ZD is the division of Ziff-Davis
Inc. focused on the businesses of print publishing, trade shows and
conferences, market research, education, (including ZDU our Internet-based
educational service) and television (including an online component). ZD
provides global technology companies with marketing strategies for reaching key
decision-makers.

ZD's PC Magazine, PC Week and Computer Shopper magazines are the top three
computer magazines in the U.S. and are among the top 25 U.S. magazines, each as
measured by total revenue in 1997. In 1997, ZD was the largest technology
publisher in the U.S. in terms of magazine revenue with at least 50% more
magazine revenue than its closest competitor. In that same year, ZD accounted
for 36.8% of all advertising and circulation dollars spent in computer
periodicals. ZD believes its publications provide readers and advertisers with
comprehensive market and product coverage and quality editorial content.

Through ZD Events, ZD also produces some of the world's most important trade
shows serving vendors, resellers, buyers and users of computer technology and
the Internet. In 1997, ZD produced over 50 trade shows and conferences
worldwide with over two million estimated attendees. ZD's COMDEX/Fall event is
the number one ranked trade show for all industries in the U.S. as measured by
total revenue, total exhibit space and number of attendees.

ZD's other media and marketing platforms include market research, education
and publication of computer-related newsletters and training manuals and
television. ZD also currently has a 100% Retained Interest in ZDNet, Ziff-Davis
Inc.'s online business division, although that interest will decline if Ziff-
Davis Inc. completes its offering of ZDNet Stock as currently planned.

Industry Background

Technology continues to be one of the largest and fastest growing sectors of
the U.S. economy. The market for technology goods and services is rapidly
expanding due to increased integration of computers into the workplace and
home, shortened product life cycles and increased use of the Internet. The
demand for computer technology to enhance productivity and the increasing
number of applications in the areas of education, entertainment and
communications has dramatically increased the number of computers in use
worldwide (from 150 million in 1993 to over 300 million in 1997). This increase
in computer usage has significantly broadened the consumer and business markets
for computer technology. In addition, rapid technological advances have
shortened product life cycles. Today, the estimated marketable product life of
a PC is less than six months as compared to five years in 1981. The Internet
has also become a widely accepted information tool. Forrester Research Inc.
estimates that the number of adult Web users will

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reach 51 million in the U.S. by the end of 1998 and will grow to 99 million by
the end of 2001.

These factors have led to increased demand among buyers and users of computer
technology product for objective, up-to-date information and analysis. To meet
this demand, sellers of computer technology products need to effectively
advertise to increase sales, educate consumers, improve end-user satisfaction
and build brand loyalty. Computer technology-focused media enables sellers to
communicate their message effectively by targeting a focused customer base. As
a result of a broadening consumer base containing favorable demographics,
computer technology publications and other media are becoming increasingly
attractive as a platform for consumer product advertising.

Computer Technology Print Publications Market

Advertising and circulation revenue for computer-oriented print publications
grew on average 10% a year from 1994 to 1997, totaling $1.7 billion in 1997.
However, in the third quarter of 1998 computer advertising pages decreased 12%
as compared to the same period in 1997, according to Adscope and CMR. Ziff-
Davis Inc. believes the decline in the technology advertising market is due
mainly to continuing margin pressure on computer equipment manufacturers,
industry and product delays, lower demand in Asia and a focus on the Year 2000
transition.

Computer Technology Trade Shows

Trade show attendees are presented with product advertisements in the form of
exhibits and "editorial" content in the form of conferences and other ancillary
forums. Producers of trade shows and conferences generate revenue from exhibit
space sales, advertising and attendance fees. Trade shows and conferences allow
sellers to conduct a large volume of face-to-face sales presentations to
qualified buyers in a short period of time. Professional attendees include
hardware and software manufacturers and developers, sales and distribution
personnel and large volume end-users. Industry leaders such as Microsoft
Corporation and Cisco Systems, Inc. use these events to promote the launch of
important products in order to reach top-ranking decision-makers in the
computer technology industry.

Trade shows are an increasingly important marketing strategy for information
technology vendors and can be an effective medium for generating and closing
sales. In 1998 estimated exhibit space revenue from North American computer-
product trade shows was approximately $686 million, exhibit square footage rose
17% from 1997, the number of exhibiting firms increased 26% from 1997 and
attendance at such shows rose 20% from 1997.

ZD Strategy

ZD's objective is to be the preferred marketing partner to technology vendors
and service providers seeking to reach primary decision-makers involved in the
specification and purchase of their products and services. The key elements of
ZD's strategy are:

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Focus on the Technology Market

ZD believes that its focus on the technology market provides it with
substantial opportunities to attract both audiences and advertisers.

Develop the Most Comprehensive, Objective and Authoritative Content

ZD strives to produce the most differentiated, high quality content to
attract category brand-specifiers and decision-makers. ZD Labs, its computer
testing facility, enables ZD to provide reliable and authoritative product
evaluations to the business and consumer markets. The ability to provide
focused audiences with targeted information attracts leading advertisers and
exhibitors to ZD's products and services.

Build Brand Strength

ZD seeks growth in its core portfolio of leading brands, such as PC Magazine,
PC Week and COMDEX. ZD seeks to expand its market share of audiences and
advertisers while enhancing the quality and accessibility of its content and
marketing services. Ziff-Davis Inc.'s variety of business platforms enables ZD
to offer multiple media presentations of its branded content.

Leverage Multiple Media Marketing Platforms

ZD believes that the scope and depth of Ziff-Davis Inc.'s products and
services across multiple media platforms creates growth opportunities exceeding
those that ZD's businesses could achieve independently. Such opportunities
include the leveraging of strong relationships with advertisers in one media
platform into other platforms, cross-marketing products and services to the
audiences of its different platforms and packaging integrated marketing
products across all platforms for large advertisers. We believe that ZD has a
competitive advantage over single platform providers because of its ability to
offer clients multiple platform marketing solutions.

Launch New Products and Services

ZD believes that rapid advances in technology will create additional growth
opportunities to launch new products and expand its audience and advertiser
base. ZD seeks to identify new audiences and develop products and services that
respond to their informational needs. ZD believes that the scope of its
operations and its experience in launching new products across multiple media
platforms and geographic regions enable it to more readily achieve market
acceptance for new products and services.

Expand Global Reach

ZD intends to leverage its brand recognition and multinational experience to
expand further into overseas markets, focusing on key markets that have size
and growth characteristics to support ZD's strategy of cross-media operations.
ZD seeks to further

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expand internationally through the launch overseas of proven U.S. properties,
joint ventures and licensing arrangements with local operating partners and
selective acquisitions.

ZD expects to fund its business and operating strategy from internally
generated cash flow from operations, which are estimated to be sufficient to
fund investments as well as repay indebtedness. See "ZD Management's Discussion
and Analysis of Financial Condition and Results of Operations".

Print Publishing

ZD is a leading computer-related magazine publisher, with 26 primary U.S. and
international titles, including its joint ventures, and over 50 licensed
publications, totaling more than 75 publications distributed worldwide. ZD's
publications have a combined circulation of approximately seven million primary
readers worldwide. Approximately 67% and 68% of ZD's total revenue for the year
ended December 31, 1997 and for the nine months ended September 30, 1998,
respectively, was attributable to its print publishing business. ZD's magazines
are designed to appeal to a target audience of sophisticated customers in the
business and consumer markets by providing high-quality editorial content. ZD
produces monthly magazines that provide comparative, laboratory-based product
reviews and news weeklies that provide product and industry news and analysis.
ZD also serves the developing market for lifestyle and entertainment
publications that focus on technology. ZD's publications also include magazines
related to the electronic gaming industry that ZD acquired from Sendai
Publishing Group, Inc. in May 1996.

ZD believes its leading position in the computer publishing market is based
upon:

. Leading Brands in Key Categories. In 1997, ZD's PC Magazine, PC Week and
Computer Shopper magazines were the top three computer magazines in the
U.S. and among the top 25 U.S. magazines, each as measured by total
revenue.

. Strength in Advertising, Circulation and Newsstand Sales. In 1997, ZD
accounted for 36.8% of all advertising and circulation dollars spent in
computer periodicals. ZD's U.S. publications have a total circulation of
approximately six million primary readers, and ZD has a worldwide
circulation of approximately seven million primary readers. In 1997, PC
Magazine's circulation was greater than that of Business Week, Fortune or
Forbes. With respect to newsstand sales, ZD's publications accounted for
50.1% of all computer magazines sold in the first six months of 1998.

. High Quality Editorial Content. ZD's top editors and columnists are
supported by laboratory-testing facilities, producing widely acknowledged
authoritative benchmarks for determining product quality. ZD's
comprehensive content attracts focused audiences, thereby attracting
leading advertisers and exhibitors to its products and services.

. Successful Development of New Publications for Emerging Sectors. ZD has
successfully introduced publications targeted at the consumer market
(FamilyPC and Computer Gaming World), technology lifestyle (Yahoo!
Internet Life), Internet professionals (Inter@ctive Week) and resellers
(Sm@rt Reseller).

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The following table sets forth information relating to ZD's primary
publications for the first nine months of 1998.

<TABLE>
<CAPTION>
First nine
1998 months
Circulation Publication 1998
First ----------------- Frequency Advertising
Publication Issue Type(1) Amount(2) (Per Year) Pages(3)
----------- ----- ------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C>
U.S. Business
PC Magazine................... 1981 P 1,176,691 22x 3,832
PC/Computing.................. 1988 P 1,009,172 12x 1,851
Computer Shopper.............. 1979 P 561,591 12x 5,085
PC Week....................... 1983 C 340,115 51x 3,987
Inter@ctive Week.............. 1994 C 150,150 45x 1,565
Macworld(4)................... 1985 P 653,676 12x 950
Sm@rt Reseller................ 1998 C 60,431 12x 609
U.S. Consumer
Electronic Gaming Monthly..... 1988 P 370,311 12x 848
Yahoo! Internet Life.......... 1995 P 403,923 12x 434
Computer Gaming World......... 1981 P 244,711 12x 1,542
Expert Gamer(5)............... 1988 P 156,164 12x 395
Official U.S. PlayStation
Magazine..................... 1995 P 117,295 12x 502
FamilyPC(6)................... 1994 P 386,960 12x 662
International
PC Professionell (German)..... 1991 P 178,103 12x 1,515
PC Direkt (German)............ 1992 P 154,128 12x 2,228
Internet Professionell
(German)..................... 1997 P 33,978 12x 198
PC Magazine (UK).............. 1992 P 135,002 12x 3,425
PC Direct (UK)................ 1992 P 124,232 12x 6,627
PC Gaming World (UK).......... 1997 P 41,404 12x 381
IT Week (UK).................. 1998 C 55,000 45x 748
PC Expert (French)............ 1992 P 97,519 12x 1,665
PC Direct (French)............ 1992 P 92,659 12x 3,108
PC Week (China)(7)............ 1996 C 62,000 51x 3,828
PC/Computing (China)(7)....... 1994 P 48,000 12x .
PC Magazine (China)(7)........ 1994 P 55,000 12x 1,133
Sm@rt Reseller (China)(7)..... 1998 C 39,000 26x 429
</TABLE>
- --------
(1) P = Paid, C = Controlled.
(2) Based on circulation information provided by ZD to the Audit Bureau of
Circulations for paid publications and BPA International for controlled
publications for the six-month period ended June 30, 1998 for domestic
publications and based on ZD data for international publications.
(3) As reported by AdScope for the nine months ended September 30, 1998 for
domestic publications and based on ZD data for international publications.
(4) Joint venture with International Data Group, Inc.

(5) Formerly EGM/2/.

(6) Operated as a joint venture with an affiliate of The Walt Disney Company
through April 30, 1998; 100% owned by ZD thereafter.

(7) Joint venture with Richina Media Holdings and other local agencies in
China.

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Corporate Sales

ZD's corporate sales team integrates its marketing activities into one
cohesive resource for its largest customers. The corporate sales group,
originally established to provide discounts for advertisers buying across two
or more magazine titles, has been expanded to allow marketers to reach their
target buyers through any combination of Ziff-Davis Inc.'s business platforms.
Currently 25 professionals in U.S. corporate sales coordinate major
advertisers' campaigns across Ziff-Davis Inc.'s multiple platforms.

Editorial, Laboratory Testing and Benchmark Software

ZD seeks to develop and maintain a high level of technical expertise to
provide quality technology content. ZD's editorial personnel includes award-
winning editors and experts. ZD believes its publications are widely regarded
as a reliable source of objective product evaluations and industry news because
of the quality and reputation of its laboratory tests. To maintain impartiality
and objectivity in its product reviews, ZD has policies governing separation of
editorial functions from advertising sales functions and restricts trading in
securities of technology-related companies by its journalists.

ZD is committed to laboratory-based product testing as an integral part of
its editorial mission. For the year ended December 31, 1997 and for the nine
months ended September 30, 1998, ZD spent over $10 million and $8 million,
respectively, in laboratory testing. The ZD Labs staff works with testers from
many of ZD's different publications to provide comprehensive, objective test
results to assist buying decisions. In addition to the core ZD Labs staff, the
PC Magazine, PC Week, Computer Shopper and PC/Computing publications maintain
their own staff and/or testing space. The ZD Labs testing facility tests
thousands of products and systems each year and conducts large-scale tests to
simulate corporate installations. ZD believes ZD Labs gives it a competitive
advantage in terms of staffing, equipment and access to the technology
necessary to effectively evaluate products.

ZD Labs produces the core, publicly available and widely distributed
benchmark software that its publications use to measure the performance of PCs,
Macintosh systems and servers. ZD's benchmarks have become industry standards
among major buyers of computer and Internet-related technology.

Sources of Print Publishing Revenue

ZD's publications are generally either paid-circulation magazines--which
generate revenue from newsstand sales, subscriptions and advertising--or
controlled-circulation publications--which are distributed free of charge to
qualified information technology professionals, generate revenue principally
from advertising sales and provide valuable demographic information to ZD.

Advertising Sales. ZD seeks to assist its advertisers in maximizing the
return on their marketing investment. Advertising sales accounted for 78.4% and
77.1% of ZD's total

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print publishing revenue for the year ended December 31, 1997 and for the nine
months ended September 30, 1998, respectively. The ZD sales force uses market
research tools, such as ZD's InternetTrak and BrandTrak services, to inform
clients about overall industry trends. InternetTrak is a monthly survey of Web
users in the U.S. that tracks Web users and their online activities. BrandTrak
is a survey that is conducted every six months of subscribers to five ZD
publications and three European publications in order to track purchasing
behavior by brand. ZD's sales staff provides customer service, research,
promotional support and value-added programs for advertisers.

Circulation. ZD maintains centralized circulation operations, enabling it to
capitalize on its successful practices on a timely basis across all
publications. ZD strives to increase its readership by building relationships
with distributors, retailers and subscribers. Revenue from circulation of ZD's
paid-circulation magazines accounted for 18.4% and 20.0% of ZD's total print
publishing revenue in 1997 and the first nine months of 1998, respectively.
This was comprised of subscription sales (10.1% in 1997 and 10.8% in the first
nine months of 1998) and newsstand sales (8.1% in 1997 and 9.2% in the first
nine months of 1998). ZD's publications have a total circulation of
approximately seven million primary readers worldwide.

ZD's newsstand strategy focuses on developing strong relationships with key
distributors and large retail accounts. For example, ZD is the principal
supplier of computer technology publications to Warner Publisher Services, a
division of Time Warner Inc. In addition, ZD has preferred distribution
arrangements with large retailers including WalMart, Staples and Barnes &
Noble. These arrangements, which are terminable at will without notice, include
prominent magazine displays to strengthen ZD's brand identity.

ZD's subscription strategy is to maintain a highly focused readership and
increase subscriber loyalty and renewal rates. This strategy provides ZD's
advertisers with access to a precisely focused target audience.

Licensing and Joint Ventures. In its international publications, ZD seeks to
maximize global reach, maintain content quality and reduce the cost of entering
new markets. Through subsidiaries, ZD currently has publishing operations in
France, the United Kingdom and Germany. ZD also has over 50 licensed
publications worldwide. ZD's licenses are generally three to five year
agreements that provide for a minimum annual royalty against a percentage of
revenue. ZD also operates with a number of joint venture partners, including
IDG in the U.S., Richina Media Holdings and other local agencies in China and
APN Computing Group in Australia.

U.S. Publications

Business Magazines. In the U.S. market, ZD publishes eight computer
publications directed to business buyers, including four paid-circulation
magazines and four controlled-circulation weeklies or bi-weeklies. Each
publication produces authoritative, independent guidance that ZD believes is
generally considered to be the primary product resource in its

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market segment. Macworld is published by Mac Publishing L.L.C., a ZD joint
venture with IDG.

PC Magazine provides corporate buyers of computer technology with
comprehensive laboratory-based comparative reviews of PC hardware, software and
networking products, with a focus on technical specifications. With a paid
circulation of more than 1.17 million, PC Magazine is the largest circulation
computer magazine in the world, accounting for 35.7% and 35.9% of all computer
advertising revenue in directly competitive U.S. publications in 1997 and the
first nine months of 1998, respectively. PC Magazine also produces two
newsstand-only specials: Your New PC (buying advice for less sophisticated
computer buyers) and InternetUser (reviews of Internet products).

PC/Computing offers reviews of computer products, focusing on productivity
and usability. A monthly publication, it is one of only three computer
magazines to have reached a circulation of over one million readers.

Computer Shopper provides buying advice, product evaluations and technology
coverage, including availability, pricing, specifications and configurations of
thousands of computer products. Computer Shopper has a newsstand circulation of
over 275,000 (the largest newsstand sales of any computer publication).

PC Week provides enterprise product buyers and information technology
professionals at large corporate computing sites with timely information on
products, companies and general industry news. PC Week has a controlled
circulation of over 340,000 distributed to over 180,000 sites.

Inter@ctive Week provides Internet and telecommunications professionals with
information on products, events, services, strategies, alliances and key
players. With a controlled circulation of over 150,000, Inter@ctive Week became
one of the leading publications for the digital communications technology
industry in less than three years.

Sm@rt Reseller, a bi-weekly publication, provides value-added resellers,
system integrators, distributors, Web developers and Internet service providers
with in-depth news and analysis on business and technology. Sm@rt Reseller
currently has a controlled circulation of 80,000.

Macworld provides Macintosh buyers with comparative, laboratory-based product
evaluations, reviews and information about Macintosh products, supported by a
product testing facility which ZD believes is the most advanced in the
Macintosh industry. Macworld has a qualified circulation of over 650,000.

Consumer Magazines. ZD publishes six magazines that serve the rapidly growing
consumer market in order to meet the varying needs of computer enthusiasts, net
surfers, family buyers and gamers.

Electronic Gaming Monthly targets video game enthusiasts and offers news,
information and product reviews about the latest games on ten different game
systems. This

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monthly publication has a paid circulation of more than 370,000. Expert Gamer
(formerly known as EGM/2/), a companion publication to Electronic Gaming
Monthly with a paid circulation of more than 150,000, offers in-depth
strategies, exclusive tips and tricks and comprehensive maps and walk-throughs
of the latest games.

Yahoo! Internet Life is a leading Internet consumer magazine. Yahoo! Internet
Life has a paid circulation of more than 400,000 readers. It is designed to be
an entertaining and authoritative guide to the Internet, targeting an
influential, affluent and early-adopting group of readers. ZD has an exclusive
license from Yahoo! Inc. to use Yahoo! in the title of a print magazine.

Computer Gaming World provides computer game enthusiasts with results-
oriented gaming information. Computer Gaming World serves more than 240,000
game enthusiasts and is the oldest and one of the largest computer game
publications.

Official U.S. PlayStation Magazine assists Sony PlayStation users in getting
the most out of their game consoles by providing up-to-date news, interviews
and insights. This publication has a paid circulation of over 100,000
PlayStation game fans.

FamilyPC is specifically targeted to households with children and has a paid
circulation of over 380,000. Written by parents for parents in easy to
understand language, its purpose is to assist families in selecting computers
and software and thereafter ensure that they get a rewarding, productive and
educational experience from them.

International Publications

ZD publishes in the United Kingdom PC Magazine, PC Direct, PC Gaming World
and IT Week; in Germany PC Professionell, PC Direkt and Internet Professionell;
in France PC Expert and PC Direct; and in the People's Republic of China PC
Week, PC Computing, PC Magazine and Sm@rt Reseller through a venture with
Richina Media Holdings and local agencies in China.

PC Magazine (U.K.), PC Expert, PC Professionell, and PC Magazine (China) are
equivalents of PC Magazine (U.S.) adapted to their individual markets.
Similarly, PC Direct (U.K.), PC Direct (France) and PC Direkt are intended to
be equivalents of ZD's U.S. publication, Computer Shopper. IT Week includes
material from Inter@ctive Week and ZDNet News in addition to local content.

Paper and Printing

ZD maintains strong relationships with its paper suppliers and printing
companies. ZD's main paper suppliers for its U.S. publications are Bowater,
Champion, Consolidated, Fraser

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and UPM, which provided 12%, 33%, 15%, 12% and 12%, respectively, of ZD's paper
supply in 1997 as measured by tonnage. Its paper supply contracts are generally
two to three year agreements, with quarterly pricing adjustments, and are
renewable on a

staggered basis. Most agreements contain pricing clauses that seek to ensure
the most competitive pricing on a quarter to quarter basis. ZD has
relationships with a number of printing companies, including R.R. Donnelley,
Brown, Quadgraphics and Quebecor. Approximately 50% of ZD's total printing
expenditures for its U.S. publications are with R.R. Donnelley, which has a
number of alternative printing sites. Printing contracts are generally two-to-
three year agreements.

Trade Shows and Conferences

ZD is a leading producer of trade shows, conferences and customized marketing
and educational programs for the computer industry in the U.S. Approximately
26% and 18% of ZD's total revenue in 1997 and the first nine months of 1998,
respectively, was attributable to its trade show and conference business. ZD
produces the industry-wide COMDEX events, which ZD's predecessor acquired in
April 1995, other segment-focused trade shows and conferences and customized
events for specific clients. ZD produced over 50 trade shows and conferences in
1997 and over 40 in the first nine months of 1998.

The COMDEX/Fall event, held in the fourth quarter of each year, has been held
for 19 years and is the number one ranked trade show for all industries in the
U.S. as measured by total revenue, total exhibit space and number of attendees.
In 1997, ZD estimates that over two million people attended its trade shows and
conferences worldwide. In addition to COMDEX/Fall, held annually in Las Vegas,
ZD produces 18 other COMDEX events in 13 countries.

In 1997, ZD produced nine segment-focused "NetWorld+Interop" and "Seybold
Seminars" trade shows in six countries. The NetWorld+Interop trade shows focus
on the networking/interconnectivity segment of the computer industry and the
Seybold Seminars focus on technologies for publishing and graphic
communications. ZD also produces the following segment-focused trade shows:

. WINDOWS WORLD in conjunction with Microsoft Corporation,

. EXPO COMM, servicing the worldwide telecommunications industry,

. CommUnity, for the emerging corporate integrated data, voice and video
segments,

. COMDEX/Enterprise, focusing on solutions for the large corporate
information technology infrastructures,

. Java SM Business Expo SM, sponsored by Sun Microsystems, Inc. and
focusing on the full range of Java(TM) technology for information
technology professionals and

. Support Services Conference & Expo, focusing on technology for help desk
and information technology support services.

ZD also produces customized conferences that are designed to meet the marketing
needs of specific clients. For example, ZD produced the JavaOne series of
conferences for Sun Microsystems, Inc., which were designed to introduce Java
technology software to the developer community.

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Attendees at ZD's trade shows and conferences cover a wide range of
participants from the computer industry, including manufacturers, distributors,
dealers, retailers, as well as value-added and other resellers and large
corporate end-users. Each event includes an extensive conference program,
providing a forum to exchange information germane to the particular event's
focus. In addition, each event has one or more "keynote" sessions with
speakers drawn from computer industry leaders. ZD estimates that in 1997 over
5,000 companies participated as exhibitors in its trade shows and conferences
(over 4,500 in the first nine months of 1998).

The following table sets forth information relating to ZD's principal trade
shows and conferences, including joint ventures, for 1998. Substantially all of
ZD's international COMDEX events are joint ventures and substantially all
NetWorld+Interop events are owned by ZD.

<TABLE>
<CAPTION>
1998 Actual
-------------------------------------
Total Net Estimated
Launch Square Total Total
Year Footage Exhibitors Attendees
------ --------- ---------- ---------
<S> <C> <C> <C> <C>
EVENT
North America
COMDEX/Fall............................. 1979 1,229,900 1,558 220,000
COMDEX/Spring, WINDOWS WORLD & EXPO COMM
USA.................................... 1981 180,270 589 82,061
COMDEX/Canada incl. WINDOWS WORLD and
Connected Computing.................... 1992 140,663 335 54,000
COMDEX/PacRim........................... 1995 65,762 211 30,500
COMDEX/Quebec........................... 1996 36,420 134 23,000
COMDEX/Miami & EXPO COMM Miami.......... 1996 65,600 261 20,000
NetWorld+Interop & CommUnity Las Vegas.. 1986 475,484 705 55,000
NetWorld+Interop & CommUnity Atlanta.... 1992 383,048 576 44,000
Seybold San Francisco Publishing........ 1986 149,374 356 20,912
Seybold Seminars New York............... 1982 129,700 293 23,000
International
COMDEX/SUCESU-SP Brazil................. 1992 235,000 410 132,000
COMDEX/Rio.............................. 1994 30,780 . .
COMDEX & WINDOWS WORLD Mexico(1)........ 1993 44,000 250 38,000
COMDEX/INFOCOM & WINDOWS WORLD
Argentina.............................. 1997 53,000 250 35,000
COMDEX IT France........................ 1997 118,116 560 60,000
COMDEX & Object World UK(1)............. 1996 . . .
COMDEX/Japan & Object World Tokyo(2).... 1996 96,700 300 .
COMDEX/China............................ 1996 42,000 144 91,000
COMDEX/Korea............................ 1997 . . .
COMDEX/Asia at Singapore Informatics.... 1995 . . .
COMDEX/IT INDIA......................... 1996 . . .
NetWorld+Interop Paris.................. 1992 191,545 293 48,772
NetWorld+Interop Tokyo(2)............... 1993 169,800 258 99,000
Seybold Seminars Tokyo(2)............... 1996 9,800 23 20,000
Windows NT Intranet Solutions Japan(2).. 1994 49,000 130 50,000
</TABLE>
- --------
(1) These international COMDEX events are wholly owned by ZD.
(2) Trade shows in Japan are owned by Softbank and managed by ZD.

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Sources of Trade Show and Conference Revenue

Exhibitor space fees accounted for 64.8% and 58.7% of ZD's total trade show
and conference revenue for 1997 and the first nine months of 1998,
respectively. ZD believes most trade show producers receive virtually all of
their revenue from the sale of exhibitor
space fees. ZD has actively sought to increase its revenue from other sources,
including attendee fees, which accounted for 35.2% and 41.3% of all trade show
and conference revenue in 1997 and the first nine months of 1998, respectively.

All exhibitors pay the same price per square foot of booth space, regardless
of the exhibit hall selected or the location or size of the booth. Typically, a
majority of exhibitors at each trade show commit to booth space for the next
year's show. ZD encourages this commitment through a prioritized booth
selection procedure based upon seniority. Annual renewal is required for
exhibitors to maintain their seniority. Exhibitors pay for space in two or
three installments, the last of which is usually due six months prior to the
upcoming event.

Attendee fees accounted for 14.9% and 23.0% of ZD's trade show and conference
revenue for 1997 and the first nine months of 1998, respectively, primarily
from NetWorld+Interop and Seybold Seminars events. Most COMDEX attendees are
invited guests of exhibitors who receive complimentary admission tickets from
ZD for their customers and key prospects. This helps exhibitors ensure that
their best customers and prospects will attend.

Advertising revenue from ZD's trade shows and conferences is derived
principally from five products:

. a daily newspaper distributed during the show,

. the Program Exhibits Guide,

. the Preview, a newspaper distributed to pre-registrants and certain prior
year attendees before the show,

. advertising billboards and banners and

. exhibitor logo products that are sold to exhibitors to increase booth
traffic and name recognition.

ZD also maintains a continuously updated database containing the names and
certain demographic information on its attendees. This database is rented to
direct mail users on a fee-per-use basis.

COMDEX

COMDEX trade shows cover a broad range of new technologies at every stage
from their development and introduction to commercial maturity. Many of the
most significant computer product launches over the past 19 years occurred at
COMDEX, including the launch of the IBM PC, Lotus 1-2-3, Windows 3.1 and DVD.

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<PAGE>

COMDEX/Fall is a five-day trade show held annually in November in Las Vegas.
In 1998, COMDEX/Fall had approximately 1,500 exhibiting companies occupying 1.2
million net square feet of exhibit space and 220,000 attendees. COMDEX/Spring,
which was launched in 1981, is a smaller version of the fall event. In 1998, it
was held in Chicago and had approximately 580 exhibiting companies and over
82,000 attendees. For the last eight years, ZD, in cooperation with Microsoft
Corporation, has produced a WINDOWS WORLD trade show concurrently with
COMDEX/Spring.

In 1993, ZD began launching additional COMDEX events in order to capitalize
on the international recognition of the COMDEX brand name. In 1998, other
COMDEX events were held in Miami, Toronto, Vancouver, Montreal, Mexico City,
Monterrey (Mexico), Buenos Aires, Sao Paulo, Rio de Janeiro, London, Paris,
Tokyo, Seoul, New Delhi, Beijing, Singapore and Cairo.

NetWorld+Interop

NetWorld+Interop is the largest of ZD's segment-focused trade shows and is
the leading show for professionals in the rapidly growing field of computer
networking. NetWorld+Interop places strong emphasis on the quality of its
conference programs and has become a leading educational forum for the Internet
and enterprise computing communities. The largest NetWorld+Interop event is
held annually in May in Las Vegas. Each NetWorld+Interop trade show features
InteropNet, a live, multi-platform network that interconnects exhibitors to one
another and to the Internet. In 1998, the NetWorld+Interop Las Vegas event had
approximately 700 exhibiting companies occupying 475,000 net square feet of
exhibit space and 55,000 attendees. The NetWorld+Interop Atlanta event, held in
October each year, is only slightly smaller in all categories. In 1998,
NetWorld+Interop events were held in Las Vegas, Atlanta, Singapore, Tokyo,
London, Sao Paulo, Paris and Sydney.

Seybold Seminars

ZD's Seybold Seminars are also segment-focused trade shows, providing
information and education for traditional and new media publishing industries.
These shows focus on the latest technologies and products, design tools and
desktop applications. The largest of the Seybold Seminars series is held
annually each September in San Francisco. In 1998, this Seybold Seminars show
had approximately 350 exhibiting companies occupying 140,000 net square feet of
exhibit space and 20,000 attendees. Other Seybold Seminars events are held in
New York and Tokyo.

Television

In order to expand its media platforms, Ziff-Davis Inc. entered into a
license and services agreement to manage ZDTV for MHA, a company that is wholly
owned by Mr. Masayoshi Son, who is a director of Ziff-Davis Inc. In February
1999, Ziff-Davis Inc. acquired ZDTV and sold a one-third interest to Vulcan
Programming.

ZDTV, which was launched in May 1998, is the first 24-hour cable television
channel and integrated Web site focused exclusively on computers, technology
and the Internet. ZDTV targets a wide range of viewers, including computer and
technology

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<PAGE>

enthusiasts, computer gaming enthusiasts, business people, teens, families and
other viewers with a sustained interest in computers, technology and the
Internet. ZDTV's programming includes educational features, product
evaluations, gaming tips and strategies, current events and other
entertainment. ZDTV also features live interactive programming, allowing
viewers to participate through simultaneous Web programming on ZDTV.com. ZDTV
reached 8.2 million homes at September 30, 1998 according to ZDTV estimates. In
addition, ZDTV creates customized programming for third parties, including the
regional Emmy award-winning "The Site" with MSNBC and "21st Century Home" with
Home & Garden Television.

For more information about Ziff-Davis Inc.'s acquisition of ZDTV, see "ZD
Management's Discussion and Analysis of Financial Condition and Results of
Operations" and ZD's Combined Financial Statements.

Education

ZD publishes computer training products and services for end-users and
advanced technology professionals. Its products and services include Internet-
based training, computer-based training, instructor-led courseware and
customization tools. ZD believes its education offerings extend ZD's reach and
brand reputation while permitting it to attract and retain customers.

ZD produces software-specific newsletters and technology information, with
approximately 40 titles. Generally published monthly, the titles include time-
saving tips and techniques on products such as Windows 95, Novel NetWare,
Visual Basic, Word, Excel, Microsoft Office, PhotoShop and Windows NT, in
addition to several programming and operating systems journals.

ZDU is an Internet-based technology educational service through which ZD
provides interactive instructor-led training to subscribers. The ZDU service is
part of ZD but is closely integrated with ZDNet.

Market Research

ZD's market research division develops, analyzes and compiles a wide variety
of information on computer technology issues ranging from current technical
aspects to decision making trends. The ZD Market Intelligence, or ZDMI, unit
focuses on installed and planned technology hardware and software purchases. It
is a leading source in North America and Europe of fact-based information for
the computer and communications industries. ZDMI is an important part of ZD's
effort to be a single source marketing solution, as it provides marketing
customers with important targeting information. ZDMI's databases are built from
more than 45,000 telephone interviews per month and contain data on installed
and planned computer and communications products and services at over 350,000
business sites in the U.S., Canada and eight European countries, according to
ZD estimates. ZDMI identifies and targets customers by tracking current
activity and market share in the business, home and reseller channels.
Customers use ZDMI's services to make important marketing decisions.

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<PAGE>

ZD also identifies and analyzes trends in the decision making process for
computer technology consumers. This information indicates the criteria people
focus on to select products beyond technical product specifications. ZD's
market research division also consolidates information obtained in each of the
databases maintained by other operating divisions within ZD and ZDNet, so that
each division can offer the Company's clients a wide range of information to
meet their marketing needs across multiple platforms.

Competition

ZD competes with a wide range of companies for each of its products and
services. The magazine publishing business is highly competitive. ZD faces
broad competition from other technology publishers and from other media
companies such as business, news and general interest magazines. Computer and
technology publishers that directly compete with ZD in the U.S. include IDG,
CMP and Imagine Media. ZD also competes with various computer and technology
publishers in the international markets where it conducts business. A
publishing company's success depends upon a number of factors, such as
editorial quality, product positioning and price. Competitive factors for
advertising sales include quality of readership, circulation, reader response
and advertising rates.

ZD also faces competition in its trade show and conference business,
primarily from several significant trade show management companies. These
include Miller Freeman, Mecklermedia and International Data Corporation.
Competitive factors in this business include quality of conference content,
organizational efficiency and quality and number of exhibitors and attendees.

ZD's market research division faces competition from numerous market research
companies, including IDG, Gartner Group's Dataquest and IntelliQuest. Database
providers such as Information Resource Group and Dun & Bradstreet provide
additional competition.

ZD's education division competes with a variety of education providers,
including vendor-supplied training materials and traditional classroom-based
computer training.

ZDTV is the first 24-hour cable television channel and integrated Web site
focused exclusively on computers, technology and the Internet, and as such, it
is not expected to face direct competition in the near future. However, ZDTV
does compete with a variety of general and special interest television
programs. In addition, the market for television programming in general is
highly competitive, with many programming producers competing for channel
carriage, advertisers and audiences.

Trademarks

ZD has developed strong brand awareness for its principal publications, trade
shows and other products and services. Accordingly, ZD considers its
trademarks, copyrights, trade secrets and similar intellectual property as
critical to its success and relies on trademark, copyright and trade secrets
laws, as well as licensing and confidentiality agreements, to protect its
intellectual property rights. ZD generally registers its material trademarks in
the U.S. and in certain other key countries in which these trademarks are

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<PAGE>

used. Effective trademark, copyright and trade secret protection may not be
available in every country where ZD's publications and services are available.

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

Employees

As of September 30, 1998, ZD had a total of 3,218 employees. Of these
employees, 809 were engaged in U.S. magazine publishing activities, 403 in
international publishing activities, 565 in trade shows and conferences, 422 in
education activities, 496 in market research and 523 in central services. None
of ZD's U.S. employees is represented by a labor union. ZD considers its
relationships with its employees to be satisfactory.

Facilities

ZD's world headquarters are located in New York and ZD has over 50 editorial,
production and sales offices and computer labs in many other cities in the U.S.
and around the world. ZD's other principal offices are located in the Boston
and San Francisco metropolitan areas. ZD and Ziff-Davis Inc. do not own real
property that is material to its business and Ziff-Davis Inc. leases all but
one of its offices from third parties. ZD believes that its properties, taken
as a whole, are in good operating condition and are suitable and adequate for
its current operations, and that suitable additional or alternative space,
including space available under lease options, will be available at
commercially reasonable terms for future expansion.

Legal Proceedings

For information concerning certain legal proceedings to which Ziff-Davis Inc.
is a party, see "ZDNet Description of Business".

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<PAGE>

ZIFF-DAVIS INC.
SELECTED HISTORICAL COMBINED FINANCIAL AND OTHER DATA

The following table presents Selected Historical Combined Financial and Other
Data for Ziff-Davis Inc. as of and for the years ended December 31, 1995, 1996
and 1997, for the nine month periods ended September 30, 1997 and 1998 and as
of September 30, 1998. This data was derived from the Combined Financial
Statements of Ziff-Davis Inc. included elsewhere in this prospectus. An
affiliate of Ziff-Davis Inc. acquired an events business ("COMDEX") on April 1,
1995 and a print publishing business ("ZDI") on February 29, 1996; the data
does not include results from the acquired businesses for periods before the
respective dates of acquisition. However, because ZDI represents Ziff-Davis
Inc.'s principal operations, the following table also presents Selected
Historical Combined Financial and Other Data for ZDI as of and for the years
ended December 31, 1993, 1994 and 1995 and as of and for the two month period
ended February 28, 1996. ZDI data as of for the years ended December 31, 1993
and 1994, and Ziff-Davis Inc. data as of and for the periods ended September
30, 1997 and 1998, are derived from Ziff-Davis Inc.'s unaudited financial
statements. On May 4, 1998, Ziff-Davis Inc. completed a reorganization
described in Note 2 to the Combined Financial Statements of Ziff-Davis Inc.;
results for periods before the reorganization are not directly comparable to
results for periods after the reorganization. This table should be read in
conjunction with the Selected Historical Combined Financial and Other Data,
Management's Discussion and Analysis of Financial Condition and Results of
Operations for each of ZDNet, ZD and Ziff-Davis Inc. as well as the
Consolidated Financial Statements for each of ZDNet, ZD and Ziff-Davis Inc.
beginning on pages F-6, F-45 and F-101 of this prospectus, respectively.

<TABLE>
<CAPTION>
ZDI(1) Ziff-Davis Inc.
---------------------------------------------- --------------------------------------------------------
Nine month
Two month period ended
Year ended December 31, period ended Year ended December 31, September 30,
-------------------------------- February 28, --------------------------------- ---------------------
1993 1994 1995 1996 1995(2) 1996(2) 1997 1997 1998
--------- ---------- ---------- ------------ ---------- ---------- ---------- --------- ----------
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Statement of
Operations Data:
Revenue, net....... $ 649,452 $ 711,379 $ 768,995 $ 125,465 $ 202,729 $ 955,139 $1,153,761 $ 750,187 $ 730,547
Depreciation and
amortization...... 38,228 34,208 91,546 15,137 24,305 139,736 154,940 117,697 114,594
Income (loss) from
operations........ 29,481 80,723 55,750 7,270 62,675 87,181 109,232 (11,094) (17,395)
Interest expense,
net............... 14,035 17,887 92,609 14,030 44,005 120,646 190,445 141,333 111,185
Income (loss)
before income
taxes............. 13,700 77,650 (40,250) (6,995) 22,869 (27,124) (72,491) (144,794) (119,768)
Net income
(loss)(3)(4)...... 13,700 77,650 (26,002) (4,547) 10,945 (52,081) (71,179) (143,810) (86,179)
Balance Sheet Data
(at period end):
Cash and cash
equivalents....... $ 36,300 $1,066,606 $ 10,083 $ 13,669 $ 27,908 $ 29,915 $ 30,301 $ 27,153
Total assets....... 308,267 2,751,525 1,623,906 1,619,905 1,090,981 3,584,173 3,546,646 3,412,701
Total long-term
debt.............. 353,507 1,034,000 964,153 964,153 575,450 2,522,252 2,408,240 1,526,047
Stockholders'
equity (deficit).. (214,355) 391,275 365,150 360,717 397,881 447,756 126,130 1,344,048
Other Data:
Capital
expenditures...... $ 16,141 $ 15,119 $ 14,163 $ 552 $ 3,367 $ 22,365 $ 30,196 $ 18,636 $ 27,399
Investments and
acquisitions, net
of cash acquired.. -- -- -- -- 814,520 2,124,823 14,000 3,058 13,192
</TABLE>
- --------

(1) A third party acquired ZDI as of January 1, 1995. An affiliate of Ziff-
Davis Inc. acquired ZDI on February 29, 1996. Because ZDI represents Ziff-
Davis Inc.'s principal operations, ZDI data has been presented for periods
before these dates.

(2) An affiliate of Ziff-Davis Inc. acquired COMDEX on April 1, 1995 and ZDI on
February 29, 1996; Ziff-Davis Inc. data does not include results from the
acquired businesses for periods before the respective dates of acquisition.

(3) During 1993 and 1994, ZDI conducted its operations through various
partnerships. Accordingly, there were no income tax provisions for those
years.

(4) No historical earnings per share or share data are presented as Ziff-Davis
Inc. does not consider such data meaningful. See Note 2 to the Combined
Financial Statements of Ziff-Davis Inc. for certain pro forma earnings per
share information concerning Ziff-Davis Inc. After issuance of ZDNet Stock,
Ziff-Davis Inc. will report earnings per share data for ZD and ZDNet but
not for Ziff-Davis Inc.

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ZIFF-DAVIS INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Revenue

Ziff-Davis Inc. had net revenue of $1.154 billion for 1997. A substantial
portion of Ziff-Davis Inc.'s revenue is derived from the sale of advertising,
which in 1997 accounted for 51.9% of total revenue. No single advertiser has
comprised more than 3% of Ziff-Davis Inc.'s advertising revenue during any of
the last three years. However, Ziff-Davis Inc.'s top 20 advertisers accounted
for 32.1% of total advertising revenue for 1997.

In the publishing segment, Ziff-Davis Inc.'s principal sources of revenue are
advertising (67.3% of 1997 total publishing revenue), circulation (17.4%) and
other (15.3%). Circulation comprises both paid subscriptions (10.8%) and
newsstand sales (6.6%) while other includes educational and training materials
(5.4%) and market research studies (6.2%) with the balance primarily consisting
of royalties, reprints and other miscellaneous sales. In the events segment,
revenue is derived from two principal sources: sale of exhibit space (64.8% of
1997 total segment revenue) and attendee conference and seminar fees (14.9%).
Unlike many trade show producers, Ziff-Davis Inc. derives a significant portion
of its trade show revenue from the other sources (20.3%), including advertising
in show-related publications, billboards, banners, fees from managing customer-
sponsored events and other show-related activities. Ziff-Davis Inc. believes
these other sources will continue to be an important growth area, particularly
for its content-focused events.

Cost of operations

In the publishing business, the principal components of Ziff-Davis Inc.'s
production costs are raw materials, printing and distribution, which
represented 34.6%, 37.5% and 26.7%, respectively, of total 1997 publishing
production expenses. Ziff-Davis Inc.'s principal raw material is paper. Paper
supply and prices are subject to volatility and may be significantly affected
by many factors, including market and economic conditions. See also "Risk
Factors--Other Ziff-Davis Inc. Risks--We May Be Adversely Affected By
Fluctuations in Paper and Postage Costs" and "--Inflation and Fluctuations in
Paper Prices and Postage Costs". The principal components of production costs
within the events business are the costs of renting and preparing the
facilities to hold the events (33.6%), direct mail and the related costs for
promotion of the events (33.2%) and program development and presentation costs
(11.3%).

The other principal operating costs for Ziff-Davis Inc. are selling, general
and administrative expenses, including editorial costs. Included in these costs
are salaries, sales commissions and benefits (49.8%) along with marketing and
promotion expenses related to advertising and circulation (18.8%).

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Factors affecting future periods

Ziff-Davis Inc.'s revenue and profitability are influenced by a number of
external factors, including the volume of new technology product introductions,
the amount and allocation of marketing expenditure by Ziff-Davis Inc.'s
clients, the extent to which sellers elect to advertise using print and online
media or participate in trade shows and conferences, changes in paper prices,
availability of appropriate venues for its largest trade shows and conferences
and competition among computer technology marketers, including print
publishers, producers of trade shows and conferences and providers of other
technology information services. Accordingly, Ziff-Davis Inc. may experience
fluctuations in revenue from period to period. Many of Ziff-Davis Inc.'s large
customers concentrate their advertising expenditures around major new product
launches. Marketing expenditures by technology companies can also be affected
by factors affecting the computer industry generally, including pricing
pressures and temporary surpluses of inventory. Revenue and profitability are
also influenced by product mix and the timing and frequency of Ziff-Davis
Inc.'s new product launches and launches in new markets, as well as by
acquisitions. New publications generally require several years to achieve
profitability and upon achieving initial profitability, often have lower
margins than more established publications. The launch of new publications,
trade shows and services are funded with cash flow from operations and are
expensed as incurred. Accordingly, Ziff-Davis Inc.'s revenue from year to year
may be affected by the number and timing of new product launches. If Ziff-Davis
Inc. concludes that a new publication, trade show or service will not achieve
certain milestones with regard to revenue, profitability and cash flow within a
reasonable period of time, management may discontinue such publication, trade
show or service or merge it into another existing publication, trade show or
service. See "Risk Factors--Other Ziff-Davis Inc. Risks--To Remain Competitive
We Must Constantly Expand And Develop New Products And Services. This Is
Inherently Risky And Expensive".

Reduced Demand for Advertising; Restructuring

Margin pressure on computer equipment manufacturers, industry and product
delays, lower demand in Asia and a focus on the Year 2000 transition are
contributing to a reduced demand for advertising in Ziff-Davis Inc.'s
magazines, principally PC Magazine, PC/Computing, Computer Shopper and PC Week.
Ziff-Davis Inc. believes these factors will continue. In part as a result of
these factors, EBITDA for the fourth quarter of 1998 was significantly lower
than EBITDA for the fourth quarter of 1997.

As a result of this reduced demand, in October 1998 Ziff-Davis Inc. announced
a restructuring program with the intent of significantly reducing its cost
base. Ziff-Davis Inc. incurred a pre-tax charge of $52.2 million for this
restructuring program. The charge will be reported as a component of income
from operations for the fourth quarter of 1998. The charge included asset
impairment costs ($37.9 million), employee termination costs ($8.6 million) and
costs to exit activities ($5.7 million) principally resulting from the closing
of three publications (Windows Pro, Internet Business and Equip) and the
reduction of Ziff-Davis Inc.'s work force by 310 employees. The charge also
included costs resulting from the

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discontinuation of some minor educational journals and smaller trade shows. The
following sets forth additional detail concerning the principal components of
the charge:

. Employee termination costs relate to severed personnel at the closed
publications as well as a rationalization and resulting workforce
reduction of the remainder of Ziff-Davis Inc.'s operations. Employee
termination costs include payments for severance and earned vacation as
well as the costs of outplacement services and the provision of
continued benefits to personnel (COBRA). As of December 31, 1998, $5.2
million of the $8.6 million related to these employee terminations had
been paid.

. Costs to exit activities reflect the costs associated with the final
closure of the discontinued publications ($1.8 million) and the costs to
reduce office space under lease as a result of the reduced level of
employees ($3.9 million). Included in the facilities costs are the
estimated costs to terminate certain lease agreements and the costs to
sub-lease space under other lease agreements.

See "--Liquidity and Capital Resources--Credit Facility" below.

Presentation of Financial Information

Ziff-Davis Inc. is comprised of certain operations which were acquired at
various times and completed a reorganization in April 1998. See Notes 1 and 2
to the Combined Financial Statements appearing elsewhere in this prospectus.

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Results of Operations

The table below presents the results of Ziff-Davis Inc. as if the assets and
operations acquired by affiliates of Ziff-Davis Inc. on February 29, 1996 (as
described in Note 1 to the Combined Financial Statement in this prospectus) had
been acquired on January 1, 1995. Purchase accounting adjustments relating to
that acquisition have been reflected through pro forma amortization, interest
and income tax adjustments, as described in note (1) to the table. Although the
table presents numbers that are not in accordance with generally accepted
accounting principles, management believes they present the most meaningful
basis of comparison. The financial information presented below may not
necessarily reflect the results of operating which would have occurred had the
February 29, 1996 acquisition been completed on January 1, 1995.
<TABLE>
<CAPTION>
Year ended December 31,
----------------------------------- Nine months ended
Pro Forma(1) Actual September 30,
----------------------- ---------- -------------------- -------
1995 1996 1997 1997 1998
----------- ---------- ---------- --------- ---------
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenue, net:
Publishing............ $ 768,995 $ 815,720 $ 866,233 $ 628,504 $ 607,857
Events................ 202,729 264,884 287,528 121,683 122,690
----------- ---------- ---------- --------- ---------
971,724 1,080,604 1,153,761 750,187 730,547
----------- ---------- ---------- --------- ---------
Cost of production:
Publishing............ 193,646 215,271 225,712 165,264 162,528
Events................ 68,810 87,373 99,533 51,964 47,002
----------- ---------- ---------- --------- ---------
262,456 302,644 325,245 217,228 209,530
Selling, general and
administrative
expenses............... 474,992 528,636 564,344 426,356 423,818
Depreciation and
amortization........... 154,163 161,259 154,940 117,697 114,594
----------- ---------- ---------- --------- ---------
Income (loss) from
operations............. 80,113 88,065 109,232 (11,094) (17,395)
Interest expense, net... (133,130) (135,500) (190,445) (141,333) (111,185)
Other non-operating
income................. 808 6,106 8,722 7,633 8,812
----------- ---------- ---------- --------- ---------
Loss before income
taxes.................. (52,209) (41,329) (72,491) (144,794) (119,768)
Provision (benefit) for
income taxes........... 9,607 25,682 (1,312) (984) (33,589)
----------- ---------- ---------- --------- ---------
Net loss................ $ (61,816) $ (67,011) $ (71,179) $(143,810) $ (86,179)
=========== ========== ========== ========= =========
Other Data:
EBITDA(2)............... $ 235,084 $ 255,430 $ 272,894 $ 114,236 $ 106,011
Cash and cash
equivalents, end of
period................. 37,991 29,915 30,301 37,775 27,153
Net cash provided (used)
by operating
activities............. 63,231 65,681 (3,364) (20,650) 82,791
Net cash used by
investing activities... (2,889,426) (66,856) (44,196) (21,694) (40,591)
Net cash provided (used)
by financing
activities............. 1,793,361 6,768 47,946 50,204 (45,348)
</TABLE>
- -------

(1) The February 29, 1996 acquisition gave rise to different bases of
accounting for the period after the acquisition as compared to the period
prior to the acquisition. This is primarily due to a purchase price which
exceeded the book value of the assets acquired, financed by a higher level
of both debt and equity as compared to the pre-acquisition capital
structure. The above numbers assume that the acquisition took place on
January 1, 1995; therefore, depreciation and amortization, interest expense
and net loss have been increased (decreased) by approximately $6,386, $824
and $10,383, respectively, for 1996 and $38,312, $(3,484) and $46,759,
respectively, for 1995.

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Nine months ended September 30, 1998 compared with nine months ended September
30, 1997

Revenue, net

Net revenue for the nine months ended September 30, 1998 was $730.5 million
compared to $750.2 million for the nine months ended September 30, 1997, a
decrease of $19.7 million or 2.6%. The comparability of 1998 and 1997 nine
month results was affected by the accounting treatment for certain publications
transferred to or from joint ventures as well as the shift in timing of an
event. Excluding these factors, revenue for the nine months ended September 30,
1998 decreased by $2.4 million, or 0.3% compared to the same period in 1997.

Publishing--The decline in the publishing segment's net revenue relates to
transferring certain publications to or from joint ventures. Excluding such
transfers, publishing segment net revenue improved $6.5 million or 1.0%. The
increase was due to growth in advertising in consumer publications partly
offset by lower advertising in business publications. Advertising revenue was
lower in the business publications principally due to factors affecting the
computer technology industry during the period (as described in "Reduced Demand
for Advertising; Restructuring" above.)

Net revenue for the Macuser and MacWeek magazines contributed to Mac
Publishing LLC were $31.9 million for the first nine months ended September 30,
1997 but are no longer consolidated into Ziff-Davis Inc.'s results for 1998. On
May 1, 1998, Ziff-Davis Inc. acquired its joint venture partner's 50% interest
in FamilyPC magazine. Ziff-Davis Inc. now owns 100% of the magazine and its
results are included in the consolidated results from the acquisition date.
Revenue from FamilyPC included in the 1998 nine months results is $4.8 million.

Events--Revenue from the events segment increased $1.0 million or 0.8%,
primarily resulting from the fact that Seybold San Francisco/Publishing 98 was
held in the fourth quarter of 1997 and in the third quarter of 1998, offset by
revenue declines on smaller events.

Cost of production

Cost of production decreased $7.7 million or 3.5% from the 1997 period.
Publishing cost of production declined $2.8 million due to lower advertising
pages produced. The events segment accounted for $4.9 million of this decrease,
primarily attributable to the lower usage of exhibition space for the period,
partially offset by the shift in timing of Seybold San Francisco/Publishing 98.

Selling, general and administrative expenses

Selling, general and administrative expenses were $423.8 million for the nine
months ended September 30, 1998 compared to $426.4 million for the nine months
ended September 30, 1997, a decrease of $2.6 million or 0.6%. Included in the
1998 period were

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$3.2 million of one-time costs for office relocations along with $9.9 million
of costs related to launches of new publications. The decrease in selling,
general and administrative expenses was principally related to efficiencies
realized in combining the publishing and events business through the
reorganization and in particular, the consolidation of the two former events
entities into one business unit.

Depreciation and amortization

Total depreciation and amortization expense was $114.6 million for the 1998
period compared to $117.7 million in the 1997 period, a decrease of $3.1
million or 2.6%. The decline was the result of certain assets being fully
depreciated or amortized in 1997.

Interest expense, net

Other non-operating income, net

Other non-operating income, net primarily reflects Ziff-Davis Inc.'s equity
share of earnings and losses from joint ventures and fees earned from
management of events not produced by Ziff-Davis Inc. Income of $8.8 million for
the 1998 period increased $1.2 million from the $7.6 million earned in 1997.
The increase was due to Ziff-Davis Inc.'s share of increased earnings from Mac
Publishing, LLC partly offset by the revised royalty and fee arrangement for
the events business in Japan.

Income taxes

The combined income tax benefit was $33.6 million and $1.0 million for the
nine months ended September 30, 1998 and 1997, respectively. The increase was
due primarily to the losses with respect to the MAC Assets, which were not
deductible until the MAC Assets were purchased by Ziff-Davis Inc. from an
affiliate on May 4, 1998. The income tax benefit for the period results from
applying Ziff-Davis Inc.'s estimated annual effective tax rate to the pretax
loss of nine months ended September 30, 1998.

Net loss

EBITDA

EBITDA for the nine months ended September 30, 1998 was $106.0 million
compared to $114.2 million for the period in 1997. Results were unfavorable as
compared to last year

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primarily due to a lower level of advertising in the higher margin business
publications as well as a decline in the earnings from the COMDEX/Spring event
partly offset by the fact that Seybold San Francisco/Publishing 98 was held in
the fourth quarter of 1997 and in the third quarter of 1998. In addition,
during the nine months ended September 30, 1998, Ziff-Davis Inc. recorded $3.2
million of one-time costs for office relocations and incurred $6.4 million of
losses from launching new publications.

Year ended December 31, 1997 compared with Pro Forma Year ended December 31,
1996

Revenue, net

Net revenue increased by $73.2 million or 6.8% from $1,080.6 million in 1996
to $1,153.8 million in 1997.

Publishing--Net revenue from publishing grew by $50.5 million or 6.2% from
$815.7 million to $866.2 million. Approximately $22 million was due to
inclusion of a full year of results for the electronic gaming publications
acquired in mid-1996 and two publications launched in late 1996. Revenue from
Internet services increased $13.5 million or 71.9% due to higher advertising
volume attributable to Ziff-Davis Inc.'s growing presence on the Internet.
Increases in advertising rates, generally ranging between 3% and 10%, and a
5.1% increase in advertising pages contributed $11.5 million. Revenue from
international operations, which generated 10.2% of the segment's revenue,
decreased by $6.6 million due to the strengthening of the U.S. dollar relative
to the major European currencies. Continued growth from new educational product
launches and sales of market research studies accounted for the balance of the
revenue growth.

Events--Net revenue from events increased $22.6 million or 8.5% from $264.9
million to $287.5 million. Approximately $15 million of the increase was due to
11 new trade show launches, including revenue from ancillary show-related
sources. The balance of revenue growth was due to higher exhibitor rates
charged at the major events, partly offset by a decline in revenue from
COMDEX/Spring and certain U.K. events.

Cost of production

Production costs increased $22.6 million or 7.5% from $302.6 million to
$325.2 million.

Publishing production costs increased $10.4 million or 4.8% from $215.3
million in 1996 to $225.7 million. Costs related to new launches and volume-
related growth increased approximately $20 million but were partly offset by
approximately $10 million of lower paper costs.

The costs of producing events increased $12.2 million or 14% from $87.3
million to $99.5 million primarily as a result of costs related to new events
launched in 1997.

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Selling, general and administrative expenses

Selling, general and administrative expenses increased $35.7 million or 6.8%
from $528.6 million to $564.3 million. The increase was due to the addition of
employees to support base business volume growth and launches of new products
and services. Results included a one-time $6.0 million charge for the
consolidation and restructuring of events business which was announced in the
fourth quarter of 1997. Costs for the publishing segment rose 4.2% while those
for the events segment rose 22.1% due to the number of new launches and the
one-time restructuring charge.

Depreciation and amortization

Total depreciation and amortization decreased $6.3 million to $154.9 million
in 1997. The reduction in depreciation and amortization expense was a result of
certain assets being fully depreciated in 1996.

Interest expense, net

Other non-operating income, net

Other non-operating income, net primarily reflects Ziff-Davis Inc.'s equity
share of earnings and losses from joint ventures and fees earned from
management of events not produced by Ziff-Davis Inc. Income increased $2.6
million from $6.1 million in 1996 to $8.7 million or 42.6% reflecting growth in
fees from managed events and reduced losses from joint ventures.

Income Taxes

The 1997 combined income tax benefit of $1.3 million compares to a pro forma
income tax provision of $25.7 million in 1996. The improvement in the tax
provision is due to a higher pre-tax loss giving rise to a tax benefit. The
difference between the 1997 and 1996 effective tax rates and the federal
statutory tax rate of 35.0% is primarily due to non-recognition of tax losses
generated by the MAC Assets ($56.9 million and $77.2 million in 1997 and 1996,
respectively), non-deductible goodwill amortization ($10.2 million and $8.6
million, respectively) and state and local income taxes. In addition, the 1996
tax provision increased approximately $3.2 million as a result of pro forma
adjustments related to the ZDI acquisition.

Net loss

As a result of the changes described above, net loss for the period increased
$4.2 million or 6.2% from $67.0 million to $71.2 million.

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EBITDA

EBITDA for 1997 was $272.9 million, an increase of $17.5 million or 6.8% from
the $255.4 million generated in 1996. The increase was due to higher revenue
and management fee income, net of higher production costs and selling, general
and administrative expenses. The ratio of EBITDA to revenue remained relatively
constant at 23.7% for 1997 compared to the 1996 margin of 23.6%.

Pro Forma Year ended December 31, 1996 compared with Pro Forma Year ended
December 31, 1995

Revenue, net

Net revenue increased by $108.9 million or 11.2% from $971.7 million in 1995
to $1,080.6 million in 1996.

Publishing--Net revenue from publishing grew by $46.7 million or 6.1% from
$769.0 million to $815.7 million. Higher overall advertising rates combined
with a 12.4% growth in advertising pages contributed 47.5% of the net revenue
increase while the mid-1996 acquisition of several electronic gaming
publications accounted for 28.5% of the increase. New educational product
launches and growth in sales of market research studies accounted for the
balance of revenue growth. Internet revenue was slightly below the prior year
due to the transition from a business based on membership and subscription fees
to one which is supported primarily by advertising.

Events--Net revenue from events increased $62.2 million or 30.7% from $202.7
million to $264.9 million. The launch of new international trade shows
accounted for 36.7% of the growth while the introduction of customized events
contributed 19.8%. The balance of the increase was due to growth in exhibitor
square footage and rates at Ziff-Davis Inc.'s major U.S. shows.

Cost of production

Production costs increased $40.2 million or 15.3% from $262.4 million to
$302.6 million.

Publishing production costs increased $21.6 million or 11.2% from $193.7
million to $215.3 million, primarily due to volume-related growth and higher
paper costs. Approximately 31.5% of the increase was attributed to costs for
the magazines acquired mid-year while increased frequencies on certain
publications and a full year of costs for publications launched in late 1995
accounted for 18.1% of the increase.

Selling, general and administrative expenses

Selling, general and administrative expenses rose $53.6 million or 11.3% from
$475.0 million to $528.6 million. This increase reflects the addition of
employees to support growth

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in the base business along with the launches of new products and services.
Costs for the publishing segment rose 5.8% while those for the events segment
rose 61.6%, reflecting a higher level of new launches and the absence of COMDEX
related expenses for the first three months of 1995 (COMDEX was acquired April
1, 1995).

Depreciation and amortization

Total depreciation and amortization of $161.3 million increased $7.1 million
from $154.2 million in 1995 primarily due to the inclusion of a full year's
depreciation and amortization relating to COMDEX, which was acquired April 1,
1995.

Interest expense, net

Net interest expense increased $2.4 million or 1.8% on a pro forma basis due
to higher average debt levels in 1996.

Other non-operating income, net

Other non-operating income, net increased to $6.1 million compared to $0.8
million in 1995 due to the growth in fees from managed events along with
reduced losses from joint ventures.

Income Taxes

The combined income tax provison of $25.7 million compares to an income tax
provision of $9.6 million in 1995. The unfavorable variance in income taxes and
the difference in the 1996 and 1995 effective tax rates from the federal
statutory tax rate of 35% is primarily attributable to non-recognition of tax
losses generated by the MAC Assets ($77.2 million in 1996) and non-deductible
goodwill amortization ($8.6 million in 1996). In addition, the tax effects of
the 1996 and 1995 pro forma adjustments relating to the ZDI acquisition were a
$3.2 million and $11.9 million increase in tax provision, respectively.

Net Loss

As a result of the changes described above, net loss for the period increased
$5.2 million or 8.4% from $61.8 million to $67.0 million.

EBITDA

EBITDA for 1996 was $255.4 million, an increase of $20.3 million or 8.7% from
the $235.1 million generated in 1995. The increase was due to higher revenue
and management fee income, net of higher production costs and selling, general
and administrative expenses. The cost of new product launches caused the growth
rate of expenses to exceed the revenue growth rate and, as a result, the ratio
of EBITDA to revenue of 23.6% decreased slightly from 24.2% for 1995.

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Liquidity and Capital Resources

As a result of the May 4, 1998 reorganization, Ziff-Davis Inc.'s intercompany
debt owed to Softbank was reduced to $83.1 million. Such indebtedness bears
interest at 9.9% and matures in February 2009. Concurrently with Ziff-Davis
Inc.'s initial public offering, Ziff-Davis Inc. issued and sold $250 million
aggregate principal amount of notes. In addition, Ziff-Davis Inc. entered into
a $1.35 billion credit facility, and borrowed $1.25 billion under such
facility, to provide additional funds for the repayment of intercompany debt to
Softbank and to provide for Ziff-Davis Inc.'s working capital requirements.
(See Note 2 to the Combined Financial Statements included in this prospectus).

At September 30, 1998, Ziff-Davis Inc.'s outstanding total debt was $1,534.6
million (excluding unamortized discount) which consisted of $79.6 million due
to Softbank, $250 million in Notes and $1,205 million under the credit
facility. For information concerning the terms of this debt, see "Ziff-Davis
Inc.'s Debt".

Cash and equivalents were $27.2 million at September 30, 1998, a decrease of
$3.1 million from $30.3 million at December 31, 1997. The decrease was due to
factors described below:

Cash provided by operations was $82.8 million for the nine months ended
September 30, 1998 compared to a use of $20.7 million for the same period of
1997. The increase was attributed to Ziff-Davis Inc.'s lower losses and a
decrease in funding to affiliates for the 1998 period.

Cash used for investing activities for the nine months ended September 30,
1998 totaled $40.6 million compared to $21.7 million for the 1997 comparable
period. For both periods, the majority of these expenditures were for computer
equipment and leasehold improvements. Other investments represents Ziff-Davis
Inc.'s investment in Deja News. Acquisitions in the 1998 period relate to Ziff-
Davis Inc.'s acquisition of a tradeshow in Canada, an additional 50% of Family
PC magazine and a European marketing database company. Acquisitions for the
1997 period reflect the purchase of a 70% interest in GameSpot.

Cash used in financing activities totaled $45.3 million for the nine months
ended September 30, 1998, representing proceeds from the reorganization and
initial public offering of $1,863.3 million, net of transaction costs, and
funding from the parent company of $20.4 million offset by the repayment of
debt and amounts due to affiliates of $1,929.3 million. Cash provided by
financing activities in the same period in 1997 amounted to $50.2 million
representing capital contributions partly offset by repayments of intercompany
debt.

Ziff-Davis Inc. has a working capital deficit of approximately $41.6 million
for the nine months ended September 30, 1998 compared to a deficit of
approximately $371.1 million at December 31, 1997. Ziff-Davis Inc.'s balance
sheet will generally present a working capital deficit position as a result of
the significant level of deferred revenue generated from publication
subscriptions paid in advance and prepayments from trade show exhibitors. At

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September 30, 1998, Ziff-Davis Inc. had deferred revenue of $220.1 million
compared to $154.7 million at December 31, 1997. Deferred revenue does not
represent a cash liability owed by Ziff-Davis Inc., unless Ziff-Davis Inc.
fails to deliver the magazine or cancels a trade show, and generally does not
affect ZD's ability fund day to day operations. The working capital deficit
decreased significantly between December 31, 1997 and September 30, 1998 as a
result of the reorganization of Ziff-Davis Inc. and initial public offering
ofZiff-Davis Inc. and the repayment and forgiveness of related party obligators
in connection therewith.

Ziff-Davis Inc. believes, based on its current level of operations and
anticipated growth, that Ziff-Davis Inc.'s ability to generate cash, together
with cash on hand and available lines of credit, will be sufficient to make
required payments of principal and interest on Ziff-Davis Inc.'s indebtedness
and to fund anticipated capital expenditures and working capital requirements.
However, actual capital expenditures may change, particularly as a result of
any acquisitions Ziff-Davis Inc. may pursue. The ability of Ziff-Davis Inc. to
meet its debt service obligations and reduce its total debt will depend upon
the future performance of Ziff-Davis Inc.

Credit Facility

For the reasons described under "--Reduced Demand for Advertising;
Restructuring" above, Ziff-Davis Inc.'s debt to EBITDA ratio at December 31,
1998 would have been above the level that had originally been required by its
credit facility at such date. On December 16, 1998, the lenders agreed to amend
certain provisions of that facility. The amended provisions include an increase
in the allowed leverage ratios. In return, Ziff-Davis Inc. agreed to pay a one-
time fee of $3.375 million and increase rates on amounts borrowed under the
facility to rates ranging from LIBOR plus 1.5% to LIBOR plus 3.375% depending
on the type of loan. Had the increased interest rates been in effect for the
period from Ziff-Davis Inc.'s May 4, 1998 reorganization to September 30, 1998,
interest expense would have increased by approximately $7.3 million. Based on
the $1,205 million outstanding on September 30, 1998, the increased interest
rates would increase annualized interest expense by $17.8 million. The increase
in interest expense will reduce the amounts otherwise available to fund ZD or
ZDNet operations. We believe we should be able to comply with the revised debt
to EBITDA covenant going forward. However, this will depend upon the future
performance of Ziff-Davis Inc. For a description of the terms of the amended
credit facility, see "Ziff-Davis Inc.'s Debt".

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Interest Rate Swaps

On June 10, 1998, Ziff-Davis Inc. entered into interest rate swap agreements,
with an aggregate notional amount of $550 million. Under these swap agreements,
which commenced on August 10, 1998, Ziff-Davis Inc. will receive a floating
rate of interest based on three-month LIBOR, which resets quarterly, and Ziff-
Davis Inc. will pay a fixed rate of interest each quarter for the terms of the
respective agreements. The weighted average fixed rate the Ziff-Davis Inc. will
pay under these agreements is 5.85%. Ziff-Davis Inc. has entered into these
agreements solely to hedge its interest rate risk.

ZDTV

In July 1997, Ziff-Davis Inc. entered into a license and services agreement
to develop ZDTV for MHA, a company that is wholly owned by Mr. Masayoshi Son,
who is a director of Ziff-Davis Inc. Under this agreement, Ziff-Davis Inc.
agreed to fund ZDTV's operations through unsecured advances and was granted an
option to purchase ZDTV for a price equal to MHA's investment plus 10% per
annum for the period of investment. On January 15, 1999, Ziff-Davis Inc.
exercised this option and on February 4, 1999, purchased ZDTV at a purchase
price of $81.4 million. Ziff-Davis Inc. paid approximately $32.8 million of the
purchase price in cash and paid the remainder by applying approximately $48.6
million in advances owed to it by MHA through December 31, 1998. Ziff-Davis
Inc. agreed to be responsible for the funding of ZDTV during the period in 1999
prior to the purchase. The cash portion of the purchase price was funded by an
advance from ZDTV to Ziff-Davis Inc., pursuant to the ZDTV cash management
system, of the funds invested in ZDTV by Vulcan Programming described below. In
connection with its acquisition of ZDTV, Ziff Davis Inc. assumed MHA's
obligations under an option granted to DirectTV to purchase 5% of ZDTV for $15
million, subject to adjustment.

Vulcan Transactions

On February 4, 1999, Vulcan Ventures, the investment vehicle of Paul G.
Allen, agreed to purchase approximately three million shares of Ziff-Davis Inc.
common stock for $50 million. We expect the purchase of common stock to close
in the first quarter of 1999. On February 5, 1999, Vulcan Programming, an
entity owned by Paul G. Allen, purchased a one-third interest in ZDTV for $54
million.

Seasonality

Historically, Ziff-Davis Inc.'s business has been seasonal as a significant
portion of the revenue has occurred in the second and fourth quarters. The
following table sets forth certain unaudited quarterly combined statements of
operations data for each of the eight quarters in the period ended September
30, 1998. In the opinion of Ziff-Davis Inc.'s management, this unaudited
information has been prepared on a basis consistent with the

124
<PAGE>

audited Combined Financial Statements appearing elsewhere in this prospectus
and includes all adjustments (consisting only of normal recurring adjustments)
necessary to present fairly the information set forth therein when read in
conjunction with the Combined Financial Statements and related notes thereto.
The operating results for any quarter are not necessarily indicative of results
for any future period.

<TABLE>
<CAPTION>
Quarters ended
-----------------------------------------------------------------------------------------------
December 31, March 31, June 30, September 30, December 31, March 31, June 30, September 30,
1996 1997 1997 1997 1997 1998 1998 1998
------------ --------- -------- ------------- ------------ --------- -------- -------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue, net:
Publishing............. $232,884 $209,564 $219,195 $199,745 $237,729 $200,933 $210,693 $196,231
Events................. 122,545 15,321 82,135 24,227 165,845 27,121 65,782 29,787
-------- -------- -------- -------- -------- -------- -------- --------
Total revenue........... $355,429 $224,885 $301,330 $223,972 $403,574 $228,054 $276,475 $226,018
Percentage of total
year.................. 32.9% 19.5% 26.1% 19.4% 35.0% n/a n/a n/a
Cost of production...... 96,802 61,526 92,986 62,716 108,017 70,310 75,749 63,471
Selling, general and
administrative
expenses............... 150,025 139,980 143,243 143,131 137,990 144,239 140,063 139,516
Depreciation and
amortization........... 42,490 38,966 39,032 39,699 37,243 37,475 39,276 37,843
Income (loss) from
operations............. 66,112 (15,587) 26,069 (21,574) 120,324 (23,970) 21,387 (14,812)
Income (loss) before
taxes.................. 31,626 (60,145) (17,715) (66,937) 72,306 (68,287) (12,032) (39,449)
Net income (loss)....... 25,205 (59,817) (17,387) (66,609) 72,634 (5,121) (76,560) (4,498)
EBITDA(1)............... 111,027 25,534 68,216 20,486 158,658 15,127 63,397 27,487
Percentage of total
year.................. 43.5% 9.4% 25.0% 7.5% 58.1% n/a n/a n/a
</TABLE>
- --------

(1) "EBITDA" is defined as income before provision for income taxes, interest
expense, depreciation and amortization. EBITDA is not intended to represent
cash flows from operations and should not be considered as an alternative
to net income as an indicator of Ziff-Davis Inc.'s operating performance or
to cash flows as a measure of liquidity. Although Ziff-Davis Inc. believes
that EBITDA is a standard measure commonly reported and widely used by
analysts, investors and other interested parties in the publishing and
media industries, the EBITDA presented for Ziff-Davis Inc. may not be
comparable to similarly titled measures reported by other companies.

Inflation and Fluctuations in Paper Prices and Postage Costs

Ziff-Davis Inc. continually assesses the impact of inflation and changes in
paper prices. Ziff-Davis Inc. generally enters into contracts for the purchase
of paper which adjust the price on a quarterly basis. Paper prices began to
rise in 1994, rose significantly in 1995 and 1996 and then decreased in 1997.
During 1998, paper prices were relatively flat. Management anticipates that
paper prices will remain relatively stable in 1999. Ziff-Davis Inc. will
continue to monitor the impact of inflation and paper prices and will consider
these matters in setting its pricing policies. Ziff-Davis Inc. frequently
reviews its purchasing and manufacturing processes for opportunities to reduce
costs and mitigate the impact of paper price and postage rate increases such as
purchasing lighter-grade paper stock or, when paper prices are at cyclical
lows, increasing paper inventory or entering into longer term contracts with
suppliers. However, Ziff-Davis Inc. had not entered, and does not currently
plan to enter, into long-term forward price or option contracts for paper.
Management estimates postage costs will increase approximately 3.5% in 1999.
See "Risk Factors--Other Ziff-Davis Inc. Risks--We May Be Adversely Affected By
Fluctuations in Paper and Postage Costs" and "ZD Description of Business--Print
Publishing".

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<PAGE>

Year 2000 Readiness Disclosure

During 1997, Ziff-Davis Inc. began a review of its computer systems and
software which might malfunction due to misidentification of the Year 2000.
Ziff-Davis Inc. is using both internal and external resources to identify,
correct or reprogram, and test systems and software for Year 2000 readiness.
Some of Ziff-Davis Inc.'s computer systems and databases, including its
subscription fulfillment and payroll systems, are managed by third parties
under contractual arrangements. Ziff-Davis Inc. has requested those third
parties to advise Ziff-Davis Inc. as to whether they anticipate difficulties in
addressing year 2000 problems and, if so, the nature of such difficulties.
After evaluating its internal compliance efforts as well as the compliance of
third parties as described above, Ziff-Davis Inc. will develop during 1999
contingency plans to address situations in which various systems or software of
Ziff-Davis Inc., or third parties with which Ziff-Davis Inc. does business, are
not Year 2000 compliant. We do not yet have an estimate of the cost of these
contingency plans.

Management of Ziff-Davis Inc. has not finally determined the cost associated
with Year 2000 readiness efforts and the related potential impact on Ziff-Davis
Inc.'s results of operations. Amounts expended to date have not been material.
There can be no assurances that Ziff-Davis Inc.'s systems or software, or those
of third parties on which Ziff-Davis Inc. relies, will be converted in time. If
Ziff-Davis Inc. or any subscribers, advertisers, licensors, vendors or other
third parties on whom it relies experiences a Year 2000 compliance problem,
this could have a material adverse effect on Ziff-Davis Inc.'s profits and
liquidity. At this point in time, based on Ziff-Davis Inc.'s progress to date
and the information it has received from third parties, Ziff-Davis Inc. is
unable to determine its likely "worst case scenario".

Recently Issued Accounting Pronouncements

126
<PAGE>

Ziff-Davis Inc. expects to adopt the above statements beginning with its 1998
financial statements.

127
<PAGE>

ZIFF-DAVIS INC.

DESCRIPTION OF BUSINESS

General

Ziff-Davis Inc. is a leading integrated media and marketing company focused
on computing and Internet-related technology. We provide global technology
companies with marketing strategies for reaching key decision-makers. From an
accounting standpoint, we have separated our online business division from the
rest of our businesses, and we have allocated all of our consolidated assets,
liabilities, revenue, expenses and cash flow between ZD and ZDNet. For
additional information regarding the amounts allocated, see the Selected
Combined Financial and Other Data, Management's Discussion and Analysis of
Financial Condition and Results of Operations, Description of Business and
Combined Financial Statements for each of ZD and ZDNet, respectively.

Relationship with Softbank

For information concerning the formation of Ziff-Davis Inc. and its
relationship with Softbank see Note 1 to the Combined Financial Statements of
Ziff-Davis Inc. included in this prospectus and "Risk Factors--Other Ziff-Davis
Inc. Risks--Ziff-Davis Inc. Is Controlled By Its Principal Stockholders. This
Creates Potential Conflicts Of Interest".

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<PAGE>

MANAGEMENT OF ZIFF-DAVIS INC.

Directors and Executive Officers

Our directors and executive officers are set forth in the table below:

<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Eric Hippeau............ 47 Chairman, Chief Executive Officer, Director
Jason E. Chudnofsky..... 55 President and Chief Executive Officer, ZD Events, Director
Timothy C. O'Brien...... 50 Chief Financial Officer, Director
Claude P. Sheer......... 47 Chief Internet Strategist
Robert G. Brown......... 52 President, ZD Market Intelligence
Terri S. Holbrooke...... 42 President, ZD Brand and Marketing
J. Malcolm Morris....... 55 Senior Vice President, General Counsel
Daryl R. Otte........... 37 Senior Vice President, Development and Planning
Michael S. Perlis....... 45 President, ZD Publishing
Daniel L. Rosensweig.... 37 President, ZDNet, Director
William A. Rosenthal.... 37 President, ZD Education
Thomas L. Wright........ 39 Vice President, Treasurer
Masayoshi Son........... 40 Director
Yoshitaka Kitao......... 47 Director
Ronald D. Fisher........ 51 Director
Jonathan D. Lazarus..... 47 Director
Jerry Yang.............. 30 Director
</TABLE>

Ziff-Davis Inc. intends to nominate for election at least one additional
independent director. See "--Composition of the Board of Directors".

Biographies of Directors and Executive Officers

Set forth below is the biography of each of our current directors and
executive officers, all of whom have been a director or executive officer since
our initial public offering in April 1998.

Eric Hippeau. Eric Hippeau has been Chairman and Chief Executive Officer of
Ziff-Davis Inc. since 1998 and of ZD Inc. since 1993. Mr. Hippeau has been a
director of Ziff-Davis Inc. since 1998 and his current term will expire in
2001. He joined ZD Inc. in 1989 as Publisher of PC Magazine, was named
Executive Vice President of ZD Inc. in 1990, and President and Chief Operating
Officer in February 1991. Prior to joining ZD Inc., Mr. Hippeau held a number
of positions with IDG, including Vice President of computer publications in
Latin America and Publisher of IDG's InfoWorld magazine. Mr. Hippeau is
currently a Director of GeoCities, Frontier Corporation, SOFTBANK Corp. and
Yahoo! Inc.

129
<PAGE>

Jason E. Chudnofsky. Jason E. Chudnofsky has been President of ZD Events
since October 1997, has been a director of Ziff-Davis Inc. since 1998 and his
current term will expire in 1999. From 1988 to 1997, Mr. Chudnofsky was
President of the Trade Show Division of The Interface Group which was renamed
SOFTBANK COMDEX when that division was acquired by Softbank in 1995. In
addition, Mr. Chudnofsky served as President and Chief Executive Officer of the
Sands Expo and Convention Center Division from 1990 to 1995. Mr. Chudnofsky has
over 15 years of experience in the exposition, trade show and conference
industry.

Timothy C. O'Brien. Timothy C. O'Brien has been Vice President and Chief
Financial Officer of Ziff-Davis Inc. since 1998 and of ZD Inc. since 1995. Mr.
O'Brien has been a director of Ziff-Davis Inc. since 1998 and his current term
will expire in 2000. From 1985 to 1994, Mr. O'Brien was Chief Financial Officer
of Reed Elsevier Inc. and Reed Publishing USA. From 1992 to 1994, he was also
Executive Vice President of Cahners Publishing Company which he joined in 1980.
From 1970 to 1980, Mr. O'Brien was employed by Price Waterhouse LLP.

Claude P. Sheer. Claude P. Sheer has been Chief Internet Strategist of ZD
Inc. since November 1998 and was President of ZD Publishing from December 1997
to November 1998. Mr. Sheer was a director of Ziff-Davis Inc. from 1998 until
January 31, 1999. Mr. Sheer served in 1997 as President of U.S. Publications of
ZD Inc. and in 1996 as President of the Business Media Group. Since joining ZD
Inc. in 1980, Mr. Sheer has served in a number of positions including Publisher
of PC Week and Group Vice President of Controlled Circulation Publications.

Robert G. Brown. Robert G. Brown has been President of ZD Market Intelligence
since 1993. He joined ZD Inc. in 1992 as Vice President of Market Development.
Prior to that time, from March 1988 to July 1992, Mr. Brown was founder and
President of R.G. Brown & Associates, a direct marketing and management
consulting company working with computer hardware and software companies. Mr.
Brown was previously President of Quadram, a unit of Intelligent Systems, L.P.,
which manufactured and sold peripheral products to PC users.

Terri S. Holbrooke. Terri S. Holbrooke has been President of ZD Brand &
Market Services since July 1997. From October 1996 to July 1997, Ms. Holbrooke
was Senior Vice President of Marketing for ZD Inc. From January 1996 to October
1996, Ms. Holbrooke was Vice President of SOFTBANK Exposition and Conference
Company. From 1986 to 1995, Ms. Holbrooke held several executive marketing
positions at Novell Inc., including head of Worldwide Marketing Communications
and Vice President of Strategic Planning.

J. Malcolm Morris. J. Malcolm Morris has been Senior Vice President, General
Counsel of Ziff-Davis Inc. since 1998, having previously served as Vice
President, General Counsel of ZD Inc. since 1990. Mr. Morris joined ZD Inc. in
1980 as Assistant General Counsel. Prior to joining ZD Inc., Mr. Morris was
engaged in the practice of law at the New York firm of Cleary, Gottlieb, Steen
& Hamilton.

130
<PAGE>

Daryl R. Otte. Daryl R. Otte has been Senior Vice President of Development
and Planning for Ziff-Davis Inc. since 1998 and for ZD Inc. since 1997. From
1995 to 1997, Mr. Otte was Vice President of Planning. From 1989 to 1995, Mr.
Otte held various corporate finance and planning positions at Reed Elsevier
Inc., and its predecessors, including Vice President of Planning, Cahners
Publishing Company, and Assistant to the Chief Financial Officer of Reed
Publishing USA.

Michael S. Perlis. Michael S. Perlis has been President of ZD Publishing
since November 1998. From June 1996 to September 1998, Mr. Perlis was President
and Chief Operating Officer of TVSM, the largest publisher of cable television
listing and guidance publications. From 1994 to 1996, Mr. Perlis was Publisher
of Gentleman's Quarterly. In previous posts, Mr. Perlis has served as Publisher
and President of the Playboy Publishing Group, President and Chief Executive,
International Data Group--Peterborough and Group Publisher, Rodale Press.

Daniel L. Rosensweig. Daniel L. Rosensweig has been President of ZDNet since
1997, having served in 1996 and 1997 as Executive Vice President of ZD Inc.'s
Internet Publishing Group. Mr. Rosensweig has been a director of Ziff-Davis
Inc. since February 1999 and his current term will expire in 2000. From 1995 to
1996, Mr. Rosensweig was Vice President and Publisher of PC Magazine, and, from
1994 to 1995, was Publisher of PC Magazine. Since joining ZD Inc. in 1983, Mr.
Rosensweig has also held a number of positions, including Associate Publisher
positions at PC Magazine, Computer Shopper and PC Sources.

William A. Rosenthal. William A. Rosenthal has been President of ZD Education
since 1997 having served as President of ZD Inc.'s Logical Operations division
in 1996 and 1997. From 1993 to 1996, Mr. Rosenthal was the General Manager for
ZD Inc.'s Logical Operations division and from 1987 to 1993 was Vice President
of Sales and Marketing for that division.

Thomas L. Wright. Thomas L. Wright has been Treasurer of Ziff-Davis Inc.
since 1998 and of ZD Inc. since 1995. Mr. Wright has been Vice President and
Treasurer of SOFTBANK Holdings Inc. since 1996. Prior to joining ZD Inc.,
Mr. Wright held various positions from 1986 to 1995 at Reliance Group Holdings,
Inc., most recently as Vice President and Assistant Treasurer.

Masayoshi Son. Masayoshi Son has been President and Chief Executive Officer
of SOFTBANK Corp. since 1981. Mr. Son has been a director of Ziff-Davis Inc.
since 1998 and his current term will expire in 2001. Mr. Son has been President
and Chief Executive Officer of Mediabank Corporation since 1994 and GeoCities
Japan Corporation since 1997 and was President and Chief Executive Officer of
Japan Sky Broadcasting Co. Ltd., from 1996 to 1998 and SOFTBANK Networks
Corporation from 1997 to 1998. In addition, Mr. Son currently serves as a
Director of PASONABANK Inc. and Yahoo! Japan Corporation and as a
Representative Director of Cisco Systems Inc. and Son Kosan Ltd.

Yoshitaka Kitao. Yoshitaka Kitao has been Executive Vice President and Chief
Financial Officer of SOFTBANK Corp. since 1995. Mr. Kitao has been a director
of Ziff-Davis Inc. since 1998 and his current term will expire in 2000. Mr.
Kitao has been

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<PAGE>

President and Chief Executive Officer of SoftVenture Capital Inc. since 1996,
SOFTBANK Ventures Inc. since 1996 and SOFTBANK Contents Partners Corporation
since 1997. Since 1997, Mr. Kitao has been President of Cybercash KK and a
Director of Trendmicro Inc. Previously, Mr. Kitao served as Director of Nomura
Wasserstein Perella Co., Ltd. from 1992 to 1993, Managing Director of
Wasserstein Perella & Co., Inc. from 1989 to 1992 and was the General Manager
for the Nomura Securities Co., Ltd.'s Corporate Finance and Services Dept. from
1992 to 1995.

Ronald D. Fisher. Ronald D. Fisher has been the Vice Chairman of SOFTBANK
Holdings Inc. since 1995 and the Vice Chairman of SOFTBANK America Inc. since
1998. Mr. Fisher has been a director of Ziff-Davis Inc. since 1998 and his
current term will expire in 1999. From 1990 to 1995, Mr. Fisher was the Chief
Executive Officer of Phoenix Technologies Ltd., a leading developer and
marketer of system software products for personal computers. From 1984 through
1989, Mr. Fisher was the President of Interactive Systems Corporation. His
prior experience also includes senior management positions at Visicorp, TRW and
ICL (USA). In addition to being a Board member of SOFTBANK Corp., Mr. Fisher
serves on the board of directors of Phoenix Technologies Ltd.

Jonathan D. Lazarus. Jonathan D. Lazarus has been a director of Ziff-Davis
Inc. since 1998 and his current term expires in 1999. Mr. Lazarus was with
Microsoft Corporation from 1985 through 1996, serving most recently as Vice
President, Strategic Relations. Mr. Lazarus serves on the board of directors of
HomeGrocer.com, Liquid Audio, NetGravity and Vision Solutions. Mr. Lazarus is
also an advisor to Microsoft Corporation, the Universal Studios New Media Group
and ZDTV.

Jerry Yang. Jerry Yang has been a director of Ziff-Davis Inc. since 1998 and
his current term expires in 2000. Mr. Yang co-founded Yahoo! Inc. in 1995 and
has served as an officer and a member of the board of directors of Directors of
Yahoo! Inc. since March 1995. Mr. Yang co-developed Yahoo! Inc. in 1994 while
he was working towards his Ph.D. in electrical engineering at Stanford
University.

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<PAGE>

EXECUTIVE COMPENSATION

Summary Compensation Table

The table below sets forth the compensation paid to, deferred or accrued for
the benefit of, our Chief Executive Officer and each of the four other most
highly compensated executive officers for services rendered in all capacities
to Ziff-Davis Inc. during the last two fiscal years.

<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
----------------------- ---------------------
Name and Principal Securities Underlying All Other
Position Year Salary($) Bonus($) Options (#)(1) Compensation($)(2)
------------------ ---- --------- -------- --------------------- ------------------
<S> <C> <C> <C> <C> <C>
Eric Hippeau............ 1998 1,050,000 0 1,665,032(3) 17,566
Chairman and Chief 1997 1,350,000 14,063 31,000 17,566
Executive Officer
Jason E. Chudnofsky..... 1998 800,000 273,552 378,395(4) 76,918(5)
President and Chief 1997 800,000 300,000 10,000 28,269
Executive Officer, ZD
Events
Claude P. Sheer......... 1998 537,500 27,524 277,798(6) 17,866
Chief Internet 1997 457,500 342,656 9,500 17,566
Strategist
Timothy C. O'Brien...... 1998 485,833 136,163 312,988(7) 42,892
Chief Financial Officer 1997 462,500 305,850 7,700 36,806
Terri S. Holbrooke...... 1998 430,000 137,993 193,410(8) 14,018
President, ZD Brand & 1997 380,000 143,993 5,000 8,868
Market Services
</TABLE>
- --------
(1) The options granted in 1997 are options to purchase common stock of
SOFTBANK Corp. under the SOFTBANK Group Executive Stock Option Plans (the
"Softbank Options"). The options listed for 1998 include the Softbank
Options granted in 1996 and 1997 which were repriced in 1998 to (Yen)4,000
(the "Repriced Softbank Options"). No additional Softbank Options were
granted in 1998.

(2) All Other Compensation for 1998 reflects contributions to Ziff-Davis Inc.'s
defined contribution plan, group term life insurance, and reimbursement of
certain medical expenses and housing costs.

(3) Includes options to purchase 860,000 shares of common stock of Ziff-Davis
Inc., options to purchase 560,000 shares of ZDNet Stock and 245,032
Repriced Softbank Options (including the 31,000 granted in 1997).

(4) Includes options to purchase 300,000 shares of common stock of Ziff-Davis
Inc., options to purchase 52,500 shares of ZDNet Stock and 25,895 Repriced
Softbank Options (including the 10,000 granted in 1997).

(5) Includes a makeup payment of $75,735 resulting from the termination of a
defined benefit plan.

(6) Includes options to purchase 200,000 shares of common stock of Ziff-Davis
Inc., options to purchase 52,500 shares of ZDNet Stock and 25,298 Repriced
Softbank Options (including the 9,500 granted in 1997).

(7) Includes options to purchase 150,000 shares of common stock of Ziff-Davis
Inc., options to purchase 140,000 shares of ZDNet Stock and 22,988 Repriced
Softbank Options (including the 7,700 granted in 1997).

(8) Includes options to purchase 135,000 shares of common stock of Ziff-Davis
Inc., options to purchase 52,500 shares of ZDNet Stock and 5,910 Repriced
Softbank Options (including the 5,000 granted in 1997).

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<PAGE>

Option Grants and Exercises in 1998

The following two tables summarize stock option grants to, and exercises by,
each of the executive officers named in the Summary Compensation Table during
1998 and the value of the options held by them as of December 31, 1998.

Option Grants in 1998

<TABLE>
<CAPTION>
Percent of Potential Realized
Total Value at Assumed
Number of Options Annual Rates of Stock
Securities Granted to Exercise Price Appreciation
Underlying Employees or Base for Option Term
Name and Principal Option in Fiscal Price ----------------------
Position Granted(#) Year(%) ($/Sh) Expiration Date 5%($) 10%($)
------------------ ---------- ---------- -------- ----------------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Eric Hippeau............ 860,000(1) . 6.00(2) June 24, 2008 3,245,096 8,223,711
Chairman and Chief 560,000(3) 5.6 4.29 December 21, 2008 1,509,347 3,824,982
Executive Officer 245,032(4) . 35.37(5) January 31, 2007 5,450,493 13,812,618
Jason E. Chudnofsky .... 300,000(1) . 6.00(2) June 24, 2008 1,132,010 2,868,736
President and Chief 52,500(3) .5 4.29 December 21, 2008 141,501 358,592
Executive Officer, 25,895(4) . 35.37(5) January 31, 2007 576,008 1,459,719
ZD Events
Claude P. Sheer......... 200,000(1) . 6.00(2) June 24, 2008 754,674 1,912,491
Chief Internet 52,500(3) .5 4.29 December 21, 2008 141,501 358,592
Strategist 25,298(4) . 35.37(5) January 31, 2007 562,729 1,426,065
Timothy C. O'Brien...... 150,000(1) . 6.00(2) June 24, 2008 566,005 1,434,368
Chief Financial 140,000(3) 1.4 4.29 December 21, 2008 377,337 956,245
Officer 22,988(4) . 35.37(5) January 31, 2007 511,345 1,295,849
Terri S. Holbrooke...... 135,000(1) . 6.00(2) June 24, 2008 509,405 1,290,931
President, ZD Brand 52,500(3) .5 4.29 December 21, 2008 141,501 358,592
& Market Services 5,910(4) . 35.37(5) January 31, 2007 131,462 333,151
</TABLE>
- --------

(1) Represents options to purchase shares of common stock of Ziff-Davis Inc.

(2) Ziff-Davis Inc. stock options were repriced from $16.00 to $6.00 per share
in 1998.

(3) Represents options to purchase shares of ZDNet Stock.

(4) Represents Repriced Softbank Options.

(5) Softbank Options were repriced from . to (Yen)4,000 per share in 1998; the
exercise price per share is based on an assumed exchange rate of 113.08
(Yen)/USD per share, the exchange rate as of December 31, 1998.

134
<PAGE>

Aggregated Option Exercises in 1998 and Fiscal Year-End Option Values

<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised
Unexercised In-The-Money Options at
Options at Fiscal Year-End (#) Fiscal Year-End($)
Shares ---------------------------------- -------------------------
Name and Principal Acquired On Value
Position Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
------------------ ------------ ------------ -------------- ---------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Eric Hippeau............ -- -- 0 860,000(1) -- $8,438,750
Chairman and Chief -- -- 0 560,000(2) -- --
Executive Officer -- -- 28,062 216,970(3) $694,849 $5,372,438
Jason E. Chudnofsky..... -- -- 0 300,000(1) -- $2,943,750
President and Chief -- -- 0 52,500(2) -- --
Executive Officer, -- -- 9,358 16,537(3) $231,715 $ 409,476
ZD Events
Claude P. Sheer......... -- -- 0 200,000(1) -- $1,962,500
Chief Internet -- -- 0 52,500(2) -- --
Strategist 7,548(3) $133,796 0 17,750(3) -- $ 439,511
Timothy C. O'Brien...... -- -- 0 150,000(1) -- $1,471,875
Chief Financial -- -- 0 140,000(2) -- --
Officer -- -- 7,005 15,983(3) $173,452 $ 395,758
Terri S. Holbrooke...... -- -- 0 135,000(1) -- $1,324,688
President, ZD Brand -- -- 0 52,500(2) -- --
& Market Services 1,325 $ 24,642 0 4,585(3) -- $ 113,530
</TABLE>

- --------

(1) Represents options to purchase shares of common stock of Ziff-Davis Inc.

(2) Represents options to purchase shares of ZDNet Stock.

(3) Represents Repriced Softbank Options.

Composition of the Board of Directors

The board of directors currently consists of nine members. The board of
directors intends to nominate for election one additional "independent
director" within the meaning of the regulations of the NYSE. Our directors are
currently elected annually by the stockholders to serve during the ensuing year
or until their respective successors are duly elected and qualified. The board
of directors is divided into three classes each of whose members serves for a
staggered three-year term. Upon the expiration of the term of a class of
directors, directors in such class are elected for three-year terms at the
annual meeting of stockholders in the year in which such term expires. See
"Description of Capital Stock--Certain Other Provisions of the Amended and
Restated Certificate of Incorporation and By-laws".

Committees of the Board of Directors

The board of directors currently has two committees: an audit committee and a
compensation committee.

Each of our audit committee and our compensation committee is currently
comprised of Messrs. Fisher, Lazarus and Yang.

Our audit committee reviews and recommends to the board of directors, as it
deems necessary, our internal accounting and financial controls and the
accounting principles and

135
<PAGE>

auditing practices and procedures to be employed in preparation and review of
our financial statements. Our audit committee makes recommendations to the
board of directors concerning the engagement of independent public accountants
and the scope of the audit to be undertaken by such accountants.
PricewaterhouseCoopers LLP presently serves as our independent accountants.

Our compensation committee reviews and, as it deems appropriate, recommends
to the board of directors policies, practices and procedures relating to the
compensation of the officers and other managerial employees and the
establishment and administration of employee benefit plans. The compensation
committee exercises all authority under any employee stock option plans of
Ziff-Davis Inc. as the compensation committee therein specifies, unless the
board of directors resolution appoints any other committee to exercise such
authority, and advises and consults with the officers of Ziff-Davis Inc. as may
be requested regarding managerial personnel policies. The compensation
committee will have such additional powers and be granted additional authority
as may be conferred upon it from time to time by the board of directors.

Each of Messrs. Fisher, Lazarus and Yang is independent of management. Mr.
Fisher is the Vice Chairman of SBA, our majority stockholder, and Mr. Yang is a
co-founder and Chief Yahoo of Yahoo! Inc. For information concerning certain
relationships between Ziff-Davis Inc. and SBA and its officers and between
Ziff-Davis Inc. and Yahoo! Inc., see "Certain Relationships With Our Majority
Stockholders And Related Transactions".

Compensation Committee Interlocks and Insider Participation

For information regarding compensation committee interlocks and insider
participation, see "Committees of the Board of Directors".

Compensation of Directors

Directors who are not executive officers or employees of Ziff-Davis Inc. or
SOFTBANK Corp., SBH or SBA will receive an annual retainer of $25,000 for board
of directors service and a fee of $2,000 for each meeting of the board of
directors or any committee thereof attended.

Directors of Ziff-Davis Inc. who are not employees of Ziff-Davis Inc.,
SOFTBANK Corp., SBH or SBA will automatically participate in the 1998 Non-
Employee Directors' Stock Option Plan (the "Non-Employee Directors' Plan"). The
Non-Employee Directors' Plan is administered by the compensation committee.

Shares Reserved for Issuance

The aggregate number of shares reserved for issuance under the Non-Employee
Directors' Plan is 300,000 shares of common stock (regardless of series),
subject to adjustment by the compensation committee in the event of any change
in the outstanding shares of common stock by reason of any:

. stock dividend or split,

. recapitalization,

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. merger,

. consolidation,

. spinoff,

. combination,

. exchange of shares or other corporate change or

. distributions to common stockholders other than regular cash dividends.

Shares subject to or underlying an option that expires unexercised, or is
forfeited, terminated or canceled, or is paid in cash in lieu of common stock
and shares that are tendered to pay for the exercise of an option will
thereafter be available for grant under the Non-Employee Directors' Plan.

Pursuant to the Non-Employee Directors' Plan, each non-employee director will
receive upon election as a member of the board of directors an initial grant of
stock options to purchase 15,000 shares of common stock which shall be composed
of shares of ZD Stock and shares of ZDNet Stock as the board may direct
provided that:

. each non-employee director who is on the board of directors on the date
of the initial public offering of ZDNet Stock will receive a grant of
stock options to purchase 15,000 shares of ZDNet Stock on the date of
such offering at the initial public offering price and

. each non-employee director who was on the board of directors on the date
of the initial public offering of its common stock in April 1998 received
such initial grant on the date of such initial public offering.

On the date of each annual shareholders meeting thereafter, each non-employee
director shall automatically receive an annual grant of stock options to
purchase 7,500 additional shares of common stock which shall be composed of
shares of ZD Stock and shares of ZDNet Stock as the board may direct.

The terms of each stock option granted to a non-employee director will
provide that:

. the option price will be equal to 100% of the fair market value (as
defined in the 1998 Incentive Compensation Plan) of the common stock on
the date of grant,

. such option will be exercisable for a period of 10 years following the
date of grant and

. such option will vest and become exercisable in five equal installments
beginning on the first anniversary of the date of grant.

Upon ceasing to be a non-employee director, such option will terminate except
with respect to any portion of such option then exercisable, which portion will
remain exercisable for a period of:

. 90 days, if the termination as director resulted from any reason other
than death, disability or cause or

. one year, if the termination resulted from death or disability;

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provided that, in the event the termination resulted from a removal for cause,
such option will immediately terminate and no longer be exercisable to any
extent; provided, further, that in no event will any such option remain
exercisable past the remainder of its scheduled ten-year term.

Change In Control

Upon a "change in control" of Ziff-Davis Inc., each outstanding option will
fully vest and become immediately exercisable in full. In addition, the
compensation committee may provide in its sole discretion that upon a change in
control of Ziff-Davis Inc., each non-employee director will be entitled to
receive in cancellation of such non-employee director's outstanding and
unexercised stock options, a cash payment in an amount equal to the difference
between the option price of such stock options and:

. in the event the change of control is the result of a tender offer or
exchange offer for the common stock, the final offer price per share
paid for the common stock, multiplied by the number of shares of common
stock covered by such stock options or

. in the event the change of control is the result of any other
occurrence, the aggregate value of the common stock covered by such
stock options, as determined by the compensation committee at such time.

Amendment and Termination

The board of directors may amend, suspend or terminate the Non-Employee
Directors' Plan or any portion thereof at any time; provided that, no amendment
shall be made:

. without stockholder approval if such approval is necessary in order for
the Non-Employee Directors' Plan to comply with any applicable law,
regulation or stock exchange rule and

. except in the case of a change in control of Ziff-Davis Inc., that would
adversely affect the rights of any non-employee director under any
outstanding option without such non-employee director's written consent.

Incentive Compensation Plan

General

Ziff-Davis Inc. has adopted the 1998 Incentive Compensation Plan (the
"Incentive Plan") to provide long-term incentives for its key employees and
enhance stockholder value, the principal terms and conditions of which are set
forth below.

The Incentive Plan will be administered by the board of directors or the
compensation committee which:

. selects the participants and determines the type of awards and the
number of shares or share units subject to awards and

. interprets the Incentive Plan and makes all other determinations
necessary or advisable for its administration.

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All employees and consultants of Ziff-Davis Inc. and our affiliates who have
demonstrated significant management potential or the capacity for contributing
substantially to the successful performance of Ziff-Davis Inc. and our
affiliates, are eligible to be participants in the Incentive Plan. Awards may
consist of stock awards, stock options (either incentive stock options within
the meaning of Section 422 of the Internal Revenue Code of 1986, as amended, or
nonstatutory stock options), stock appreciation rights, performance shares
(which may be granted as performance share units) and restricted stock, which
may be granted as restricted stock units.

Under the Incentive Plan up to 17,827,400 shares of common stock, regardless
of series, will be available for issuance out of authorized and unissued shares
or treasury shares, as the compensation committee may from time to time
determine, and up to an additional 327,625 shares will be available out of
outstanding shares to be supplied by SBA in respect of Awards of stock options
granted to certain participants in connection with the cancellation of
corresponding options to purchase stock of SOFTBANK Corp. For additional
information concerning options granted in connection with the cancellation of
corresponding options to purchase stock of SOFTBANK Corp., see "Certain
Relationships With Our Majority Stockholders And Related Transactions".

In the event of any change in the outstanding shares by reason of any:

. stock dividend or split,

. recapitalization, merger,

. other corporate change, or

. distributions to common stockholders other than regular cash dividends

the compensation committee may make such substitution or adjustment, if any, as
it deems to be equitable, as to the number or kind of shares of common stock or
other securities issued pursuant to the Incentive Plan and to outstanding
awards. Shares subject to an award that expires unexercised or is forfeited,
terminated, canceled or paid in cash in lieu of common stock, and shares
tendered to pay for the exercise of a stock option, will thereafter again be
available for grant under the Incentive Plan.

Each award under the Incentive Plan will be evidenced by an agreement setting
forth the terms and conditions, as determined by the compensation committee,
which apply to such award. In the sole discretion of the compensation
committee, a participant may be permitted to defer the receipt of cash or
common stock otherwise deliverable under any award.

Stock Options

The compensation committee will establish the option price at the time each
stock option is granted, which price will generally not be less than 100% of
the fair market value of the common stock on the date of grant, unless
otherwise specifically determined by the compensation committee. Stock options
will vest and become exercisable at a rate determined by the compensation
committee, and will remain exercisable for such period as specified by the
compensation committee. The award agreements in respect of options that

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are intended to qualify as incentive stock options will contain any additional
provisions necessary to comply with the requirements of Section 422 of the
Internal Revenue Code. In no event may any employee receive in any calendar
year grants of stock options with respect to more than 1,000,000 shares of
common stock; provided that, solely for the 1998 calendar year, no individual
employee may receive grants of options with respect to more than 2,600,000
shares of common stock.

The option price of each share as to which a stock option is exercised will
be paid in full at the time of such exercise in cash, by tender of shares of
common stock owned by the participant valued at fair market value, by a "sale
to cover" broker transaction or other cashless exercise method permitted under
Regulation T of the Federal Reserve Board, or by a combination of cash, shares
of common stock and other consideration as the compensation committee deems
appropriate.

Stock Appreciation Rights

Stock appreciation rights, also known as SARs, may be granted in tandem with
a stock option or may be unrelated to a stock option. SARs will vest and become
exercisable at a rate determined by the compensation committee, and will remain
exercisable for such period as specified by the compensation committee. SARs
entitle holders to receive from Ziff-Davis Inc. an amount equal to the excess
of the fair market value of a share of common stock on the exercise of the SAR
over the fair market value of a share of common stock on the date of grant. The
compensation committee will determine in its sole discretion whether a SAR will
be settled in cash, common stock or a combination thereof. In no event may any
employee receive in any calendar year grants of SARs with respect to more than
500,000 shares of common stock.

Performance Shares

Performance shares may be granted in the form of actual shares of common
stock or share units having a value equal to an identical number of shares of
common stock. The performance conditions and the length of the performance
period will be determined by the compensation committee but in no event may a
performance period be less than one year. The compensation committee will
determine in its sole discretion whether performance shares granted in the form
of share units shall be paid in cash, common stock or a combination thereof.

Unless the compensation committee determines otherwise, awards of performance
shares to a covered employee will be subject to performance conditions based on
the achievement by Ziff-Davis Inc. of target levels of items such as
consolidated net income, return on stockholders' equity, return on net assets
or share price performance. For purposes of the Incentive Plan, a "covered
employee" generally includes any employee that would be a covered employee
within the meaning of Section 162(m) of the Code and any other employee of
Ziff-Davis Inc. or its subsidiaries designated by the Committee in its
discretion. The maximum number of performance shares subject to any award to a
Covered Employee is 500,000 for the first 12 months during the performance
period and each 12-month period thereafter.

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Restricted Stock

Restricted stock may be granted in the form of actual shares of common stock
or share units having a value equal to an identical number of shares of common
stock. The employment conditions and the length of the period for vesting of
restricted stock will be established by the compensation committee at time of
grant, except that each restriction period will not be less than 12 months.
During the restricted period, shares of restricted stock may not be:

.sold,

.assigned,

.transferred,

.otherwise disposed of,

. pledged or hypothecated as collateral for a loan or as security for the
performance of any obligation

. or for any other purpose as the compensation committee determines.

The compensation committee will determine in its sole discretion whether
restricted stock granted in the form of share units will be paid in cash,
common stock or a combination thereof.

Stock Awards

In addition to awards of performance shares and restricted stock, awards of
common stock may be granted under the Incentive Plan in the form of actual
shares of common stock. Full ownership of such shares, whether issued in the
form of a certificate or in book entry, including the right to vote and receive
dividends, will immediately vest in such participant.

Change in Control

In the event of a Change in Control (as defined below):

. all stock options will be fully vested and exercisable in full,

. all SARs which have not been granted in tandem with stock options will
become exercisable in full,

. the restrictions applicable to all shares of restricted stock will lapse
and such shares will be deemed fully vested and all restricted stock
granted in the form of share units will be paid in cash,

. all performance shares will be deemed to be earned at target level and

. all performance shares granted in the form of share units will be paid in
cash.

For purposes of the Incentive Plan, "Change in Control" is generally defined
as:

(1) a change in the majority of the board of directors except upon consent
of the previous board of directors,

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(2) certain mergers, consolidations or similar corporate transactions in
which Ziff-Davis Inc. is not the surviving corporation or entity or

(3) a plan of complete liquidation or dissolution of Ziff-Davis Inc. or a
sale of all or substantially all of Ziff-Davis Inc.'s assets that is
approved by the stockholders of Ziff-Davis Inc.;

provided that, a Change in Control will not be deemed to occur under clause (2)
if SOFTBANK Corp., directly or indirectly, is the beneficial owner of more than
25% of the Ziff-Davis Inc.'s voting securities or of the voting securities of
any surviving corporation, respectively.

Amendment and Termination

The board of directors may amend, suspend or terminate the Incentive Plan or
any portion thereof at any time; provided that:

. no amendment will be made without stockholder approval (including an
increase in the number of shares reserved for issuance under the
Incentive Plan) if such approval is necessary in order for the Incentive
Plan to comply with any applicable law, regulations or stock exchange
rule and

. except as otherwise provided under the cashout provisions in the event of
a Change in Control, no amendment will be made that would adversely
affect the rights of a participant under any award previously granted,
without such participant's written consent.

Effective Date

The Incentive Plan has a term of 10 years from February 13, 1998, subject to
earlier termination.

Repricing

On September 23, 1998, the Committee authorized the amendment of options
granted under the Incentive Plan on June 24, 1998. Pursuant to such amendment,
the exercise price of such options will be reduced from $16.00 to $6.00 (the
closing price of our common stock on September 23, 1998), but the options will
not vest until three months after the dates on which the options were
originally to become vested.

Employee Stock Purchase Plan

General

Ziff-Davis Inc. has adopted the 1998 Employee Stock Purchase Plan (the "Stock
Purchase Plan"), the principal terms and conditions of which are set forth
below.

The Stock Purchase Plan is intended to meet the applicable requirements of
Section 423 of the Internal Revenue Code and will be administered by a
committee appointed by the board of directors.

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Shares Subject to Plan

The aggregate maximum number of shares of common stock, regardless of series,
purchasable under the Stock Purchase Plan is 2,500,000, subject to adjustment
by the committee in its sole discretion in the event of any change in the
outstanding shares of common stock by reason of any:

.stock dividend or split,

. recapitalization,

. merger,

. consolidation,

. spin-off,

. combination,

. exchange of shares,

. other corporate change or

. distribution to common stockholders other than cash dividends.

Upon the dissolution or liquidation of Ziff-Davis Inc., or upon a
reorganization, merger or consolidation of Ziff-Davis Inc., as a result of
which Ziff-Davis Inc. is not the surviving corporation, or upon a sale of
substantially all of Ziff-Davis Inc.'s assets or a sale or distribution of a
subsidiary of Ziff-Davis Inc., any affected participant will thereafter be
entitled to receive, for each share of common stock subject to such
participant's option, the cash, securities and/or property which a holder of
one share of common stock was entitled to receive upon and at the time of such
transaction.

Option to Purchase

Under the Stock Purchase Plan, all full-time and certain part-time employees
of Ziff-Davis Inc. who meet certain minimum service requirements will be
eligible to purchase shares of common stock by means of payroll deductions.
Eligible employees may elect to participate in offering periods by authorizing
after-tax payroll deductions of between 1% and 10% (in whole percentages) of
their base pay for the purchase of shares of common stock.

The price at which shares of common stock will be purchased at the end of
each purchase period will be the lesser of:

. 85% of the fair market value of a share of common stock on the first
business day of such purchase period or

. 85% of the fair market value on the last business day of such purchase
period. No participating employee will be entitled in any calendar year
to purchase common stock having an aggregate fair market value as of the
first business day in any purchase period in excess of $25,000.

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Amendment and Termination

The board of directors may at any time terminate or amend the Stock Purchase
Plan. No such termination will adversely affect options previously granted and
no amendment may make any change in any option theretofore granted which
adversely affects the rights of any participant. No amendment will be effective
unless approved by the stockholders of Ziff-Davis Inc. if such stockholder
approval of such amendment is required to comply with any law, regulation or
stock exchange rule.

Softbank Executive Stock Option Plans

The SOFTBANK Group Executive Stock Option Plans authorize the grant of
options to those officers, directors and key employees of Softbank as selected
by a committee appointed by the board of directors of SBH. The Softbank Plans
authorize the granting of options to purchase SOFTBANK Corp. common stock at
not less than 100% of the closing market price on the date the option is
granted. As of December 31, 1997, substantially all options granted become
exercisable in various installments over the first six anniversaries of the
date of grant and expire ten years after the date of grant.

As of December 31, 1997, 966,986 options had been granted under the Softbank
Plans. On January 19, 1998, the exercise price of all options was reset at
4,000 Japanese yen per share, the market price of SOFTBANK Corp.'s common stock
on that date.

For information concerning the grant of certain Ziff-Davis Inc. options in
connection with the cancellation of certain Softbank Corp. options see "Certain
Relationships With Our Majority Stockholders And Related Transactions".

Employment Agreements

Eric Hippeau

Ziff-Davis Inc. has entered into an employment agreement with Mr. Hippeau,
dated as of April 1, 1998, pursuant to which Mr. Hippeau will serve as our
Chairman and Chief Executive Officer through March 31, 2004. Pursuant to this
agreement, Mr. Hippeau will receive an annual base salary of not less than
$900,000 and an annual incentive bonus of not less than $600,000, as determined
by a compensation committee assuming the achievement of performance targets.
Pursuant to the Incentive Plan, we have granted Mr. Hippeau options to acquire
up to 860,000 shares of common stock, of which 430,000 shares are based upon
the achievement of certain performance targets, and options to acquire up to
560,000 shares of ZDNet Stock.

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Upon certain terminations of employment, we will pay Mr. Hippeau his base
salary plus his average incentive bonus for the preceding two years for a
period ending on the later of the date that is two years after the date of
termination or March 31, 2001. In the event that Mr. Hippeau's employment is
terminated in connection with a Change of Control, Ziff-Davis Inc. will pay Mr.
Hippeau an amount which, on an after-tax basis, will equal any excise tax
imposed by Section 4999 of the Internal Revenue Code as a result of payments
made under the agreement.

Jason Chudnofsky

We have entered into an employment agreement with Mr. Chudnofsky, dated as of
April 1, 1998, pursuant to which Mr. Chudnofsky will serve as the President and
Chief Executive Officer of ZD Events, Inc. through March 31, 2001. Pursuant to
this agreement, Mr. Chudnofsky will receive an annual base salary of not less
than $800,000 and an annual incentive bonus of $300,000, subject to adjustment
and assuming the achievement of earnings and other performance targets, as
determined by the board of directors of ZD Events, Inc. Pursuant to the
Incentive Plan, we have granted Mr. Chudnofsky options to acquire up to 300,000
shares of common stock and options to acquire up to 52,500 shares of ZDNet
Stock.

Upon certain terminations of employment, we will pay Mr. Chudnofsky his base
salary plus his average incentive bonus for the year of termination and the
preceding two years for a period ending on the later of the date that is two
years after the date of termination or March 31, 2001.

Terri S. Holbrooke

We have entered into an employment agreement with Ms. Holbrooke, dated as of
April 1, 1998, pursuant to which Ms. Holbrooke will serve as President of ZD
Brand and Marketing through March 31, 2001. Pursuant to this agreement, Ms.
Holbrooke will receive an annual base salary of not less than $420,000 and an
annual incentive bonus of $150,000, subject to adjustment and assuming the
achievement of earnings and other performance targets, as determined by the
board of directors of Ziff-Davis Inc. Pursuant to the Incentive Plan, we have
granted Ms. Holbrooke options to acquire up to 135,000 shares of common stock
and options to acquire up to 52,500 shares of ZDNet Stock.

Upon certain terminations of employment, we will pay Ms. Holbrooke severance
equal to the sum of her then current base salary and her annual incentive
compensation, using the average amount of incentive compensation earned in the
preceding two calendar years.

Timothy C. O'Brien

We have entered into an employment agreement with Mr. O'Brien, dated as of
April 1, 1998, pursuant to which Mr. O'Brien will serve as Vice President,
Chief Financial Officer of Ziff-Davis Inc. through March 31, 2001. Pursuant to
this agreement, Mr. O'Brien will receive an annual base salary of not less than
$490,000 and an annual incentive bonus of

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$300,000, subject to adjustment and assuming the achievement of earnings and
other performance targets, as determined by the board of directors of Ziff-
Davis Inc. Pursuant to the Incentive Plan, we have granted Mr. O'Brien options
to acquire up to 150,000 shares of common stock and options to acquire up to
140,000 shares of ZDNet Stock.

Upon certain terminations of employment, we will pay Mr. O'Brien severance
equal to the sum of his then current base salary and his annual incentive
compensation, using the average amount of incentive compensation earned in the
preceding two calendar years.

Michael S. Perlis

We have entered into an employment agreement with Mr. Perlis, dated as of
November 6, 1998, pursuant to which Mr. Perlis will serve as President of ZD
Publishing through December 31, 2001. Pursuant to this agreement, Mr. Perlis
will receive an annual base salary of not less than $650,000 and an annual
incentive bonus equal to a percentage of the EBITDA for ZD Publishing above a
base amount. Pursuant to the Incentive Plan, we have granted Mr. Perlis options
to acquire up to 250,000 shares of common stock and options to acquire up to
78,750 shares of ZDNet Stock.

Upon certain terminations of employment, we will pay Mr. Perlis severance
equal to the sum of his then current base salary and his annual incentive
compensation, using the amount earned the most recent completed year.

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CERTAIN RELATIONSHIPS WITH OUR MAJORITY STOCKHOLDERS

AND RELATED TRANSACTIONS

Arrangements Between Majority Stockholders and Ziff-Davis Inc.

We have entered into certain agreements with Softbank governing ongoing
business relationships. It is possible that the terms of these agreements are
not those that would result from an arm's-length dealing among unrelated
parties.

In July 1997, we entered into a license agreement with SOFTBANK Corp. for
Softbank to operate a localized edition of ZDNet in Japan. Pursuant to the
agreement, we paid SOFTBANK Corp. $ . on July 9, 1998, in connection with the
1997 launch of the localized edition of ZDNet. This amount is based on an
assumed exchange rate of .(Yen)/$.. In addition, SOFTBANK Corp. pays ZDNet
royalties equal to 30% of the operating income of the localized edition, which
were approximately $ . in 1997 and $ . in 1998.

In April 1998, we entered into a master license agreement with SOFTBANK Corp.
for Softbank to produce and distribute ZD publications in Japan. Pursuant to
the agreement, SOFTBANK Corp. incurred royalties equal to approximately $ . in
1998.

In April 1998, we entered into a series of agreements with Softbank,
including:

.a trademark license agreement,

.a technical assistance agreement and

.an accounting and administrative agreement,

pursuant to which Softbank produces ZD Events trade shows and conferences in
Japan and we provide management and other services for those trade shows and
conferences. Total revenue earned by us from such trade shows and conferences
agreements was approximately 50% of the pre-tax income generated by such trade
shows and conferences, which was $ . in 1998.

In May 1998, we entered into an undertaking with SOFTBANK Corp. whereby
SOFTBANK Corp., on behalf of it and its affiliates, agreed that as long as it
owns 40% of the voting power in our stock and can elect a majority of the board
of directors, it will not expand its operations outside Japan in competition
with us without our prior approval which involve:

. publishing information on computing and Internet-related technology
through the media of print, CD-Rom/DVD, Internet and television or

. producing trade shows, conferences, exhibitions and similar events
primarily related to computing and Internet-related technology.

This undertaking does not preclude investments by venture capital funds managed
by Softbank. Softbank manages certain venture capital funds which invest in,
among other things, computer and Internet-related companies. These funds may be
able to co-invest with or compete with us with respect to new investments. In
addition, Softbank may also develop new funds in the future which may compete
with us for investment opportunities. We have agreed not to compete with
Softbank in Japan without the prior approval of SOFTBANK

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Corp.'s board of directors and have given Softbank the continuing right to
license all of our products and services in Japan. See "Risk Factors--Other
Ziff-Davis Inc. Risks--Ziff-Davis Inc. Is Controlled by Its Principal
Stockholders. This Creates Potential Conflicts Of Interest".

We entered into a registration rights agreement, dated as of April 1, 1998,
in connection with the initial public offering of our existing common stock.
The agreement gives Softbank the right to require us to register any or all of
our existing common stock held by it in a public offering pursuant to the
Securities Act, and to "piggyback" or include its shares of our existing common
stock in any registration of our existing common stock made by us.

The Reorganization

Prior to our initial public offering in April 1998, our businesses were
conducted through various indirect subsidiaries of SOFTBANK Corp. and were
acquired through a series of acquisitions and internal reorganizations
undertaken by Softbank as follows:

. Softbank acquired the computer technology publishing operations of Ziff-
Davis Publishing Company ("ZD Pubco"), which was renamed Ziff-Davis Inc.
and subsequently named ZD Inc., in February 1996 for $1.8 billion in
cash,

. Softbank acquired the SB COMDEX computer-related trade show operations
("COMDEX"), which was renamed SOFTBANK COMDEX Inc. ("SB COMDEX"), in
April 1995 for $803 million in cash, and

. Softbank acquired the computer and network-related trade show operations
of Ziff-Davis Exposition and Conference Company ("ZD Expos"), which was
subsequently renamed SOFTBANK Forums Inc. ("SB Forums"), in December 1994
for $127 million in cash.

Concurrently with the ZD Pubco and ZD Expos acquisitions described above, MAC
purchased certain operations and assets of these companies for $302 million and
$75 million, respectively (the "MAC Assets"). The MAC Assets consisted of
certain publications, international trade shows and the ZDNet business, most of
which were still under development. The MAC Assets and related operations were
managed by ZD Inc. and ZD Events after their acquisition by MAC and were
acquired by us for approximately $370 million in May 1998.

In October 1997, Softbank combined the businesses of ZD Inc., SB COMDEX and
SB Forums. SB Forums and SB COMDEX were merged as of December 31, 1997, with
the surviving corporation named ZD COMDEX and Forums Inc., which is now ZD
Events Inc.

The amount of intercompany indebtedness converted to equity consisted of:

. the obligations due to Softbank as of December 31, 1997 other than those
repaid with borrowings under our credit facility and the proceeds of our
offering of senior subordinated notes and

. a $94.2 million note which matures on February 28, 2009.

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At an initial public offering price of $15.50 per share, the value of the
capitalized intercompany indebtedness was equal to 59.9 million shares of our
existing common stock.

In addition, we exchanged 580,645 shares of our existing common stock, valued
at the initial public offering price, and $100,000 in funds for approximately
$9.1 million of fixed assets from Kingston Technology Company. Kingston
Technology is a subsidiary of SOFTBANK Kingston Inc., which in turn is a wholly
owned subsidiary of SBH. We subsequently leased back the assets we received in
this exchange to Kingston Technology and on May 4, 1998, Kingston Technology
transferred the shares of our existing common stock to SOFTBANK Kingston.

At the time of the initial public offering of our existing common stock and
senior subordinated notes in April 1998, we reorganized our structure so that:

. All of the stock of the corporations owning our publishing and events
businesses, ZD Inc. and ZD Events, was contributed to Ziff-Davis Inc. in
exchange for approximately 72% of our existing common stock.

. We purchased certain operations owned by MAC but managed by our
publishing business, including certain publications, international trade
shows and ZDNet.

. We entered into a $1.35 billion credit facility with a group of financial
institutions and borrowed $1.25 billion under that facility.

. Approximately $909 million of our obligations to SOFTBANK Corp. were
converted to equity.

. We repaid approximately $1.6 billion of our obligations to Softbank.

Certain Related Party Transactions

We are a member of a group of companies affiliated through common ownership
under SOFTBANK Corp. Accordingly, we have had various transactions and have
various relationships with members of the group, including SOFTBANK Corp.'s
wholly owned U.S. subsidiary, SBH. It is possible that the terms of the various
transactions are not those that would result from an arm's-length dealing among
unrelated parties.

In December 1994, as part of the acquisition of ZD Expos, MAC purchased a
portion of the trade show assets for $45 million and its parent company, Son
Kosan Ltd., purchased an additional portion for $30 million. At that time, SB
Forums and Son Kosan Inc. entered into a management agreement pursuant to which
SB Forums agreed to provide management services with respect to certain Son
Kosan operations in Japan, France and Germany. SB Forums earned approximately
$0.8 million, $1.7 million and $2.6 million for such services for the years
ended December 31, 1995, 1996 and 1997 respectively. Son Kosan's trade show
assets were sold to SB Forums for $10 million in January 1997 and certain of
MAC's trade show assets were contributed to ZD Events as part of the
reorganization.

In February 1996, as part of the acquisition of ZD Pubco, MAC purchased
certain publishing assets for $302 million in cash. At that time, we entered
into a management

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<PAGE>

agreement with MAC pursuant to which we agreed to provide management services
with respect to the purchased assets. We earned approximately $2 million for
such services for each of the years ended December 31, 1996 and 1997 and $ .
million in 1998, respectively. Of these assets, a portion was transferred to us
for $100 million as of October 31, 1997 and the balance was sold to us for $270
million concurrently with our initial public offering in May 1998. The purchase
price for the assets sold to ZD Inc. was not more than fair market value as
determined by an independent appraiser.

We entered into a series of license and syndication agreements with Softbank
pursuant to which Softbank was granted the license to publish, or use in Japan
certain materials from certain publications, including PC Week, Computer
Shopper, PC/Computing, Computer Gaming World and PC Magazine. We earned
approximately $963,948 and $1,817,986 in connection therewith for the years
ended December 31, 1996 and 1997, respectively. Such agreements were combined
into the master license agreement described above.

We have advanced funds for the account of MAC in managing the MAC Assets and
ZDTV, bearing interest at the 30-day LIBOR rate plus .50%; subject to periodic
reimbursement by MAC. Such advances totaled $68.2 million, $71.6 million and $
. million in 1996, 1997 and 1998, respectively. The remaining outstanding
amount as of December 31, 1997 of $42.6 million was reimbursed in May 1998, in
connection with our reorganization.

For information concerning the development of ZDTV and our purchase from an
affiliate, see "Ziff-Davis Inc. Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital
Resources--ZDTV".

During 1997 and 1998, we entered into an operating lease with GE Capital
Corp. for certain television production equipment that we subleased to ZDTV on
similar terms. The total amount of leased equipment does not exceed $10
million.

During 1996, 1997 and 1998, we recorded revenue of approximately $.9 million,
$2.7 million and . , respectively, from sales of advertising space and trade
show services to Kingston Technology, an 80%-owned Softbank partnership. These
services were provided under terms consistent with those provided to
unaffiliated customers. See Note 10 to the Notes to the Combined Financial
Statements of Ziff-Davis Inc. appearing in this prospectus. Concurrently with
the initial public offering of our existing common stock, we entered into a
sale-leaseback transaction with Kingston Technology.

In 1997, we had an arrangement with SIM, a 65.3%-owned Softbank subsidiary,
for it to be ZDNet's advertising sales representative. We paid SIM
approximately $0.6 million and $1.8 million in commissions for the years ended
December 31, 1996 and 1997, respectively. Effective December 31, 1997, SIM was
acquired by an unrelated third party and we terminated our representation
agreement with SIM. See Note 10 to the Notes to the Combined Financial
Statements of Ziff-Davis Inc. appearing in this prospectus.

During 1996, 1997 and 1998, we were party to a joint venture agreement with
Softbank pursuant to which we managed all ZD Events trade shows and conferences
conducted

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<PAGE>

outside the U.S. We earned approximately $3.4 million, $4.0 million and $ .
million for such services for the years ended December 31, 1996, 1997 and 1998,
respectively.

During 1996, 1997 and 1998, we incurred $2 million, approximately $1.6
million and $ . , respectively, in advertising expenses with Yahoo! Inc., which
is approximately 30.1% owned by Softbank. Mr. Yang, one of our directors, is a
co-founder and Chief Yahoo, and Mr. Hippeau, our Chief Executive Officer, is a
director of, Yahoo! Inc.

During 1996 to 1997, we issued notes payable to Softbank in an aggregate
principal amount of $2.5 billion as of December 31, 1997, principally for
indebtedness incurred in the acquisition of ZD Expos, COMDEX and ZD Pubco. In
the course of our reorganization and initial public offering, all but $83.1
million of these notes were either repaid or converted into equity. See Notes 2
and 10 to the Notes to the Combined Financial Statements of Ziff-Davis Inc.
appearing in this prospectus.

As part of the acquisition by our former owner in 1994, we agreed to assume
certain obligations to management arising out of prior employment arrangements
with Ziff Communications Company. In 1995 and immediately after the end of the
1996 calendar year, under such arrangements we paid approximately $29.7 million
to Mr. Hippeau, our Chairman and CEO and one of our directors, and
approximately $1.0 million to Mr. Sheer, Chief Internet Strategist and one of
our directors. See Note 10 to the Notes to the Combined Financial Statements of
Ziff-Davis Inc. appearing in this prospectus.

Prior to the initial public offering of our existing common stock, we
participated in the Softbank cash management program for its U.S. operations.
Under this program we periodically transferred excess cash to SBH and in turn
received cash advances from SBH to fund our short-term working capital
requirements. Interest was accrued based on the net balance outstanding at the
end of each month. Interest income was earned at the 30-day LIBOR rate.
Interest expense was incurred at such rate plus .50%. As of December 31, 1996
and 1997, such net cash transfers from us to SBH amounted to $41.3 million and
$76.5 million, respectively. We have not participated in this program since our
initial public offering. See Note 10 to the Notes to the Combined Financial
Statements of Ziff-Davis Inc.

During 1997, we were a guarantor under SBH's $150 million loan agreement with
The Bank of New York. As of December 31, 1997, $102.5 million was outstanding
under this agreement, bearing interest at a weighted average rate of 6.5% per
year. In March, 1998 this agreement was amended and restated to increase the
loan amount to $450 million. Under the amended agreement, we were a guarantor
under SBH's $450 million credit facility with The Bank of New York, as agent,
The Bank of New York and Morgan Stanley Senior Funding, Inc., as lenders, and
certain affiliate guarantors. Concurrently with the initial public offering of
our existing common stock, we repaid obligations due to SBH and SBH used a
portion of such proceeds to prepay the loans under the credit facility and the
guarantees were terminated.

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<PAGE>

SBH and its subsidiary, SBH Delaware, agreed to act as guarantors for
payments under our lease for our new headquarters located at 28 East 28th
Street, New York, New York. In addition, the various intercompany loans from
SBH Delaware to us were subordinated to the lease agreement. In accordance with
the terms of these agreements, those arrangements were terminated at the time
of our reorganization.

From 1997 to date, we have participated in a global insurance program
implemented by SBH. The total amount of insurance expenses allocated to us for
the period from August 1, 1997 to July 30, 1999 does not exceed $1.4 million.

On May 14, 1998, SOFTBANK Kingston sold 50,000 shares of our existing common
stock to an unrelated third party.

On May 28, 1998, the U.S. underwriters for our initial public offering
exercised their option to purchase two million additional shares of Ziff-Davis
Inc. common stock to cover over-allotments. We purchased the additional shares
from SBH resulting in no change to the total number of shares outstanding.

On December 29, 1998, SOFTBANK Kingston sold 30,000 shares of Ziff-Davis Inc.
common stock to an unrelated third party. On December 31, 1998 SBH contributed
71,619,355 shares of Ziff-Davis Inc. common stock to SOFTBANK America Inc., or
SBA, an affiliate of Softbank.

On January 29, 1999, Ziff-Davis Inc. granted options to a number of employees
in connection with the cancellation of corresponding options to purchase stock
of SOFTBANK Corp. In connection with these grants, an affiliate of SOFTBANK
Corp. has agreed with Ziff-Davis Inc. that, if and when any of these options
are exercised, (a) that affiliate will cause the shares of Ziff-Davis Inc.
common stock issuable upon such exercise to be supplied to Ziff-Davis and (b)
Ziff-Davis will deliver to that affiliate or its designee the exercise price
paid upon such exercise. Thus, the exercise of these options will not increase
the number of shares of Ziff-Davis Inc. common stock outstanding or Ziff-Davis
Inc.'s stockholders' equity. However, Ziff-Davis Inc. expects to recognize
compensation expense for accounting purposes of approximately $ . million over
three years as a result of these grants. In order to address this point, an
affiliate of SOFTBANK Corp. has agreed to reimburse Ziff-Davis Inc. for any
compensation expense recognized by it for accounting purposes as a result of
such grants. Any such payment would likely not be treated as income for
accounting purposes, and thus would likely not offset such compensation
expense, but would restore Ziff-Davis Inc.'s stockholders' equity to the level
it would have been in the absence of these grants.

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<PAGE>

SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Certain Beneficial Owners

The following table sets forth, as of February 1, 1999, certain information
with respect to the beneficial ownership of:

. our existing common stock prior to the offering and

. ZD Stock assuming completion of the offering

by each person or entity which beneficially owns more than five percent of the
outstanding shares of the common stock of Ziff-Davis Inc. None of these
entities will own any ZDNet Stock upon completion of the offering.

<TABLE>
<CAPTION>
Prior to the Offering After the Offering
--------------------- ---------------------
Number of
shares of
common stock Number of
of Ziff- Percent shares of ZD Percent
Beneficial Owner Davis Inc. of Class Stock(1) of Class
- ---------------- ------------ -------- ------------ --------
<S> <C> <C> <C> <C> <C>
SBA(2).......................... 71,619,355 71.6% 71,619,355 71.6%
SBH(3).......................... 72,120,000 72.1 72,120,000 72.1
SOFTBANK Corp.(4)............... 72,120,000 72.1 72,120,000 72.1
Masayoshi Son(5)................ 72,120,000 72.1 72,120,000 72.1
</TABLE>
- --------

(1) Assumes no exercise of the underwriters' over-allotment option in the
offering and does not include . shares of ZD Stock or . shares of ZDNet
Stock reserved for issuance under Ziff-Davis Inc.'s Incentive Compensation,
Non-Employee Directors' and Employee Stock Purchase Plans. See "Management
of Ziff-Davis Inc.--Stock Plans".

(2) SBA's address is 10 Langley Road, Suite 403, Newton Center, MA 02459.

(3) Includes shares owned by SBA and 500,645 shares owned by SOFTBANK Kingston,
all of which may be deemed to be beneficially owned by SBH. SBH's address
is 10 Langley Road, Suite 403, Newton Center, MA 02459.

(4) Includes shares owned by SBA and SOFTBANK Kingston, all of which may be
deemed to be beneficially owned by SOFTBANK Corp. SOFTBANK Corp.'s address
is 24-1 Nihonbashi-Hakozakicho, Chuo-ku, Tokyo 103, Japan.

(5) Includes shares owned by SBA and SOFTBANK Kingston, all of which may be
deemed to be beneficially owned by Mr. Son (who owns 43.3% of SOFTBANK
Corp. and is its President). Mr. Son's address is c/o SOFTBANK Corp., 24-1
Nihonbashi-Hakozakicho, Chuo-ku, Tokyo 103, Japan.

As a result of its beneficial ownership of common stock, Softbank is able to
influence significantly matters affecting Ziff-Davis Inc.. Softbank is able to
elect all members of the board of directors and to control those actions that
require the approval of holders of a majority of the voting stock of Ziff-Davis
Inc., including amendments to our amended and restated certificate of
incorporation and approval of any business combinations. See "Risk Factors--
Other Ziff-Davis Inc. Risks--Ziff Davis Inc. Is Controlled By Its Principal
Stockholders. This Creates Potential Conflicts Of Interest" and "Description of
Capital Stock--Certain Other Provisions of the Amended and Restated Certificate
of Incorporation and By-laws".

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<PAGE>

Management

The following table sets forth, as of February 1, 1999, certain information
with respect to the beneficial ownership of:

. our existing common stock prior to the offering,

. ZD Stock assuming completion of the offering,

. ZDNet Stock assuming completion of the offering and

. the common stock of SOFTBANK Corp.

by:

. each executive officer named in the Summary Compensation Table,

. each director of Ziff-Davis Inc. and

. all executive officers and directors of Ziff-Davis Inc. as a group.

<TABLE>
<CAPTION>
Prior to the Offering After the Offering
--------------------------- --------------------------------------------------------
Number of
Number of shares of
shares of Number of Number of common
common shares of shares of stock of
stock of Percent ZD Percent ZDNet Percent SOFTBANK Percent
Beneficial Owner Ziff-Davis Inc.(1) of Class Stock(2) of Class Stock of Class Corp.(3) of Class
- ---------------- ------------------ -------- --------- -------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Eric Hippeau(4)......... . *% *% .
Jason E. Chudnofsky(4).. . * * .
Timothy C. O'Brien(4)... . * * .
Claude P. Sheer(4)...... . * * .
Terri S. Holbrooke...... . * * .
Daniel L. Rosensweig.... . * * .
Masayoshi Son........... . . . .
Yoshitaka Kitao......... . * * .
Ronald D. Fisher........ 5,000 * * .
Jonathan D. Lazarus(5).. . * 0 0
Jerry Yang.............. . * 0 0
Officers and directors
as a group............. . . . .
</TABLE>
- --------
* Less than one percent.

(1) The shares beneficially owned and percentage of ownership are based on (a)
. shares of common stock of Ziff-Davis Inc. outstanding prior to the
offering and (b) . shares of ZD Stock and . shares of common stock of
SOFTBANK Corp. outstanding upon consummation of the offering. Gives effect
to the shares of common stock issuable within 60 days of February 1, 1999,
upon the exercise of all options beneficially owned by the indicated
stockholders on that date. Shares of common stock subject to options which
are currently exercisable or exercisable within 60 days of February 1,
1999, are deemed outstanding for computing the percentages of the person
holding such options, but are not deemed outstanding for computing the
percentages of any other person. Beneficial ownership is determined in
accordance with the rules of the Securities and Exchange Commission and
includes voting and investment power with respect to shares. Unless
otherwise indicated, the persons named in the table have sole voting and
sole investment control with respect to all shares beneficially owned.

(2) Assumes no exercise of the underwriters' over-allotment option in the
offering and does not include . shares of ZD Stock or . shares of ZDNet
Stock reserved for issuance under Ziff-Davis Inc.'s Incentive Compensation,
Non-Employee Directors' and Employee Stock Purchase Plans. See "Management
of Ziff-Davis Inc.--Stock Plans".

(3) Reflecting options granted in 1996 and 1997 to purchase common stock of
SOFTBANK Corp. under the SOFTBANK Group Executive Stock Option Plans.

(4) Both a director and an executive officer named in the Summary Compensation
Table.

(5) Reflecting shares owned by Lazarus Family Investments LLC, all of which may
be deemed to be beneficially owned by Jonathan D. Lazarus, a member of such
LLC.

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<PAGE>

CERTAIN CASH MANAGEMENT AND ALLOCATION POLICIES

In order to prepare separate financial statements for ZD and ZDNet, Ziff-
Davis Inc. has allocated all of its consolidated assets, liabilities, revenue,
expenses and cash flow between ZD and ZDNet. In this prospectus, each of ZD and
ZDNet is sometimes called a "Group". Thus, the financial statements of ZD and
ZDNet, taken together, comprise all of the accounts included in the
corresponding combined financial statements of Ziff-Davis Inc.

The financial statements of ZD and ZDNet reflect the application of certain
cash management and allocation policies adopted by the board of directors.
These policies are summarized below.

The board of directors may, in its sole discretion, modify, rescind or add to
any of these policies, although it has no present intention to do so. The
decision of the board of directors to modify, rescind or add to any of these
policies would, however, be subject to the board of directors' general
fiduciary duties.

Even though Ziff-Davis Inc. has allocated all of its consolidated assets,
liabilities, revenue, expenses and cash flow between ZD and ZDNet, holders of
ZDNet Stock will continue to be common stockholders of Ziff-Davis Inc. and, as
such, will be subject to all risks associated with an investment in Ziff-Davis
Inc. and all of its businesses, assets and liabilities. See "Risk Factors--Risk
Factors Relating To ZDNet Stock--Holders Of ZDNet Stock Will Be Common
Stockholders Of Ziff-Davis Inc. And Will Be Subject To Risks Associated With An
Investment In Ziff-Davis Inc. As A Whole".

Treasury Activities

Ziff-Davis Inc. manages most treasury activities on a centralized,
consolidated basis. These activities include the investment of surplus cash,
the issuance, repayment and repurchase of short-term and long-term debt, and
the issuance and repurchase of common stock and preferred stock. Each Group
generally remits its cash receipts, other than receipts of foreign operations
or operations that are not wholly owned, to Ziff-Davis Inc., and Ziff-Davis
Inc. generally funds each Group's cash disbursements, other than disbursements
of foreign operations or operations that are not wholly owned, on a daily
basis.

In the historical financial statements of ZD and ZDNet:

. all external debt and equity transactions, and the proceeds thereof,
were attributed to ZD,

. whenever ZDNet held cash, other than cash of ZDNet's foreign
operations or of ZDNet's operations that are not wholly owned, that
cash was transferred to ZD and accounted for as a return of capital,
i.e., as a reduction in ZDNet's division equity and ZD's Retained
Interest in ZDNet and

. whenever ZDNet had a cash need, other than cash needs of ZDNet's
foreign operations or of ZDNet's operations that are not wholly
owned, that cash need was funded by ZD and accounted for as a capital
contribution, i.e., as an increase in ZDNet's division equity and
ZD's Retained Interest in ZDNet.

155
<PAGE>

Ziff-Davis Inc. intends to continue these practices until ZDNet Stock is first
issued. Accordingly, no interest expense has been or will be reflected in the
financial statements of ZDNet, and no interest income from ZDNet has been or
will be reflected in the financial statements of ZD, for any period prior to
the date on which ZDNet Stock is first issued.

After the date on which ZDNet Stock is first issued:

(1) Ziff-Davis Inc. will attribute each future incurrence or issuance of
external debt or preferred stock and the proceeds thereof to ZD, unless the
board of directors determines otherwise. The board of directors may, but is
not required to, attribute an incurrence or issuance of debt or preferred
stock, and the proceeds thereof, to ZDNet to the extent that Ziff-Davis
Inc. incurs or issues the debt or preferred stock for the benefit of ZDNet.

(2) Ziff-Davis Inc. will attribute each future issuance of ZD Stock, and
the proceeds thereof, to ZD. Ziff-Davis Inc. may attribute any future
issuance of ZDNet Stock and the proceeds thereof:

. to ZD in respect of its Retained Interest in ZDNet, in a manner
analogous to a secondary offering of common stock of a subsidiary
owned by a corporate parent, or

. to ZDNet, in a manner analogous to a primary offering of common
stock.

Dividends on and repurchases of ZD Stock will be charged against ZD, and
dividends on and repurchases of ZDNet Stock will be charged against ZDNet. In
addition, at the time of any dividend on ZDNet Stock, Ziff-Davis Inc. will
credit to ZD, and charge against ZDNet, a corresponding amount in respect of
ZD's Retained Interest in ZDNet. See "--Description of Capital Stock--ZD's
Retained Interest in ZDNet".

(3) Whenever ZDNet holds cash, other than cash of ZDNet's foreign
operations or cash of ZDNet's operations that are not wholly owned, ZDNet
will normally transfer that cash to ZD. Conversely, whenever ZDNet has a
cash need, other than cash needs of ZDNet's foreign operations or cash
needs of ZDNet's operations that are not wholly owned, ZD will normally
fund that cash need. However, the board of directors will determine, in its
sole discretion, whether to provide any particular funds to either ZD or
ZDNet and will not be obligated to do so.

(4) Ziff-Davis Inc. will account for all cash transfers from one Group to
or for the account of the other Group, other than transfers in return for
assets or services rendered or transfers in respect of ZD's Retained
Interest that correspond to dividends paid on ZDNet Stock, as inter-Group
revolving credit advances unless:

. the board of directors determines that a given transfer or type of
transfer should be accounted for as a long-term loan,

. the board of directors determines that a given transfer or type of
transfer should be accounted for as a capital contribution increasing
ZD's Retained Interest in ZDNet or

. the board of directors determines that a given transfer or type of
transfer should be accounted for as a return of capital reducing ZD's
Retained Interest in ZDNet.

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<PAGE>

There are no specific criteria to determine when Ziff-Davis Inc. will
account for a cash transfer as a long-term loan, a capital contribution or
a return of capital rather than an inter-Group revolving credit advance.
The board of directors would make such a determination in the exercise of
its business judgment at the time of such transfer, or the first of such
type of transfer, based upon all relevant circumstances. Factors the board
of directors would consider include:

. the current and projected capital structure of each Group,

. the relative levels of internally generated funds of each Group,

. the financing needs and objectives of the recipient Group,

. the investment objectives of the transferring Group,

. the availability, cost and time associated with alternative financing
sources and

. prevailing interest rates and general economic conditions.

(5) Any cash transfer accounted for as an inter-Group revolving credit
advance will bear interest at the rate at which the board of directors, in
its sole discretion, determines Ziff-Davis Inc. could borrow such funds on
a revolving credit basis. Any cash transfer accounted for as a long-term
loan will have interest rate, amortization, maturity, redemption and other
terms that generally reflect the then prevailing terms on which the board
of directors, in its sole discretion, determines Ziff-Davis Inc. could
borrow such funds.

(6) Any cash transfer from ZD to ZDNet or for ZDNet's account accounted
for as a capital contribution will correspondingly increase ZDNet's
division equity and ZD's Retained Interest in ZDNet. As a result, the
number of shares of ZDNet Stock that Ziff-Davis Inc. may issue for the
account of ZD in respect of its Retained Interest (which we call the
"Number of Shares Issuable with Respect to ZD's Retained Interest in
ZDNet") will increase by the amount of such capital contribution divided by
the Market Value of ZDNet Stock on the date of transfer.

This increase in the Number of Shares Issuable with Respect to ZD's
Retained Interest in ZDNet may also be expressed as follows:

Amount of Capital Contribution to ZDNet
-----------------------------------------

Market Value of ZDNet on the Date of Transfer

(7) Any cash transfer from ZDNet to ZD, or for ZD's account, accounted
for as a return of capital will correspondingly reduce ZDNet's division
equity and ZD's Retained Interest in ZDNet. As a result, the Number of
Shares Issuable with Respect to ZD's Retained Interest in ZDNet will
decrease by the amount of such return of capital divided by the Market
Value of ZDNet Stock on the date of transfer.

This decrease in the Number of Shares Issuable with Respect to ZD's
Retained Interest in ZDNet may also be expressed as follows:

Amount of Return of Capital to ZDNet
----------------------------------------------

Market Value of ZDNet Stock on the Date of Transfer

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<PAGE>

Corporate General and Administrative Expenses

Ziff-Davis Inc. allocates the cost of certain corporate general and
administrative services and shared services to the Groups generally based on
utilization. These shared services include:

.legal,

.accounting (tax and financial),

.information services,

.telecommunications,

.purchasing,

.marketing,

.intellectual property,

.public relations,

.corporate office and

.travel expenses.

Where determinations based on utilization alone are impracticable, Ziff-Davis
Inc. uses other methods and criteria that management believes are fair to
provide a reasonable estimate of the cost attributable to each Group.

Taxes

Federal income taxes, which are determined on a consolidated basis, are
allocated to each Group and reflected in their respective financial statements
in accordance with Ziff-Davis Inc.'s tax allocation policy. In general, this
policy provides that the consolidated tax provision and related tax payments or
refunds are allocated between the Groups based principally upon the financial
income, taxable income, credits and other amounts directly related to the
respective Groups. Tax benefits that cannot be used by the Group generating
such attributes, but can be utilized on a consolidated basis, are allocated to
the Group that generated such benefits. As a result, the allocated Group
amounts of taxes payable or refundable are not necessarily comparable to those
that would have resulted if the Groups had filed separate tax returns. State
income taxes generally are computed on a separate company basis.

Royalty Charges

ZD charges ZDNet an annual fee for the use of various brands and editorial
content. The current annual fee, which is reflected in ZDNet's financial
statements as part of its production and content costs and in ZD's financial
statements as a reduction in selling, general and administrative expenses, is
equal to 5% of the first $100 million of ZDNet's revenue for the year, 4% of
the next $50 million of ZDNet's revenue for that year and 3% of any incremental
revenue over $150 million for that year. The board of directors may, in its
sole discretion, at some point in the future change this fee as it deems
appropriate in light of the circumstances from time to time.

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<PAGE>

DESCRIPTION OF CAPITAL STOCK

The following description is not complete and should be read with the
restated charter, which we have filed as an exhibit to the registration
statement of which this prospectus is a part.

General

Our current certificate of incorporation authorizes us to issue 130 million
shares, consisting of 120 million shares of common stock, par value $.01 per
share, and 10 million shares of preferred stock, par value $.01 per share. Only
the preferred stock is currently issuable in series by the Board. As of
February 1st, 1999, we had approximately 100 million shares of common stock and
no shares of preferred stock issued and outstanding.

Before the offering, we will file an amended and restated certificate of
incorporation which would further amend and restate our current certificate of
incorporation. This amended and restated certificate of incorporation (the
"restated charter") will:

. Increase the number of authorized shares of common stock from 120 million
to 200 million.

. Authorize the board of directors to issue common stock in two series--
Ziff-Davis Inc.--ZD Common Stock ("ZD Stock") and Ziff-Davis Inc.--ZDNet
Common Stock ("ZDNet Stock"). Initially, we will designate 120 million
shares as ZD Stock and80 million shares as ZDNet Stock.

. We intend ZDNet Stock to reflect the performance of ZDNet.

. We intend ZD Stock to reflect the performance of ZD.

. We have allocated all of Ziff-Davis Inc.'s consolidated assets,
liabilities, revenue, expenses and cash flow between ZD and ZDNet. In
the future, we will publish combined financial statements of ZD and
combined financial statements of ZDNet together with consolidated
financial statements of Ziff-Davis Inc.

. Re-classify each outstanding share of common stock into a share of ZD
Stock. (The filing would not change the authorized preferred stock.)

The full definitions of the terms "ZD" and "ZDNet" are set forth under "--
Mandatory Dividend, Redemption or Exchange on Disposition of All or
Substantially All of the Assets of a Group" below.

Before the time of the offering, the board of directors will designate the
initial Number of Shares Issuable with Respect to ZD's Retained Interest in
ZDNet. See "--ZD's Retained Interest in ZDNet" and "--Number of Shares Issuable
with Respect to ZD's Retained Interest in ZDNet" and our restated charter for
additional information about ZD's Retained Interest in ZDNet and the Number of
Shares Issuable with Respect to ZD's Retained Interest in ZDNet.

159
<PAGE>

The board of directors will have the authority to increase or decrease from
time to time the total number of authorized shares comprising either series of
common stock. However, the board of directors could not increase the number of
authorized shares of a series above a number which, when added to all of the
authorized shares of the other series of common stock, would exceed the total
authorized number of shares of common stock. Likewise, the board of directors
could not decrease the number of authorized shares of a series below the number
of shares of such series then outstanding.

The board of directors will have the authority in its sole discretion to
issue authorized but unissued shares of common stock from time to time for any
proper corporate purpose. The board of directors will have the authority to do
so without stockholders approval, except as provided by Delaware law or the
rules and regulations of any securities exchange on which any series of
outstanding common stock may then be listed.

Dividends

We currently intend to retain all of our earnings to finance operations,
repay our indebtedness and fund future growth. We do not expect to pay
dividends on ZD Stock or ZDNet Stock for the foreseeable future.

Although our various debt instruments currently prohibit the payment of
dividends, and in any event, as stated above, we do not expect to pay any
dividends for the foreseeable future on any series of common stock,

. we will otherwise be permitted to pay dividends on ZD Stock out of assets
of Ziff-Davis Inc. legally available for the payment of dividends under
Delaware law, but the total amounts paid as dividends on ZD Stock cannot
exceed the Available Dividend Amount for ZD and

. we will otherwise be permitted to pay dividends on ZDNet Stock out of the
assets of Ziff-Davis Inc. legally available for the payment of dividends
under Delaware law, and transfer corresponding amounts to ZD in respect
of its Retained Interest in ZDNet. However, the total amounts paid as
dividends on ZDNet Stock and the corresponding amounts transferred to ZD
in respect of its Retained Interest in ZDNet cannot exceed the Available
Dividend Amount for ZDNet.

The "Available Dividend Amount" for ZD at any time is the amount that would
then be legally available for the payment of dividends on ZD's common stock
under Delaware law if

. ZD and ZDNet were each a separate Delaware corporation,

. ZD had outstanding (a) a number of shares of common stock, par value
$0.01 per share, equal to the number of shares of ZD Stock that are then
outstanding and (b) a number of shares of preferred stock, par value
$0.01 per share, equal to the number of shares of preferred stock of
Ziff-Davis Inc. that have been attributed to ZD and are then outstanding,

. the assumptions about ZDNet set forth in the next sentence were true and

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. ZD owned a number of shares of ZDNet Stock equal to the Number of Shares
Issuable with Respect to ZD's Retained Interest in ZDNet.

Similarly, the "Available Dividend Amount" for ZDNet at any time is the amount
that would then be legally available for the payment of dividends on ZDNet's
common stock under Delaware law if ZDNet were a separate Delaware corporation
having outstanding:

. a number of shares of common stock, par value $0.01 per share, equal to
the number of shares of ZDNet Stock that are then outstanding plus the
Number of Shares Issuable with Respect to ZD's Retained Interest in ZDNet
and

. a number of shares of preferred stock, par value $0.01 per share, equal
to the number of shares of preferred stock of Ziff-Davis Inc. that have
been attributed to ZDNet and are then outstanding.

The amount legally available for the payment of dividends on common stock of
a corporation under Delaware law is generally limited to:

. the total assets of the corporation less its total liabilities less

. the aggregate par value of the outstanding shares of its common and
preferred stock.

However, if that amount is not greater than zero, the corporation may also
pay dividends out of the net profits for the corporation for the fiscal year in
which the dividend is declared and/or the preceding fiscal year. As mentioned
above, these restrictions will form the basis for calculating the Available
Dividend Amounts for ZD and ZDNet. These restrictions will also form the basis
for calculating the aggregate amount of dividends that Ziff-Davis Inc. as a
whole can pay on its common stock, regardless of series. Thus, net losses of
either Group, and any dividends and distributions on, or repurchases of, either
series of common stock, will reduce the assets legally available for dividends
on both series of common stock.

Subject to the foregoing limitations and to any other limitations set forth
in any future series of Preferred Stock or in any agreements binding on Ziff-
Davis Inc. from time to time, we have the right to pay dividends on both, one
or neither series of common stock in equal or unequal amounts, notwithstanding
the performance of either Group, the amount of assets available for dividends
on either series, the amount of prior dividends paid on either series, the
respective voting rights of each series or any other factor.

At the time of any dividend on the outstanding shares of ZDNet Stock,
including any dividend required as a result of a disposition of All or
Substantially All of the Assets of ZDNet but excluding any dividend payable in
shares of ZDNet Stock, we will credit to ZD, and charge against ZDNet, a
corresponding amount in respect of ZD's Retained Interest in ZDNet.
Specifically, the corresponding amount will equal (1) the aggregate amount of
such dividend times (2) a fraction, the numerator of which is the Number of
Shares Issuable with Respect to ZD's Retained Interest in ZDNet and the
denominator of which is the number of shares of ZDNet Stock then outstanding.

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<PAGE>

This amount can also be expressed as follows:

(Aggregate Amount of Dividend) X (Number of Shares Issuable with Respect of
ZD's Retained Interest)

(Number of Shares of ZDNet Stock Outstanding)

Mandatory Dividend, Redemption or Exchange on Disposition of All or
Substantially All of the Assets of a Group

If we dispose of All or Substantially All of the Assets of a Group to one or
more persons or entities, in one transaction or a series of related
transactions (collectively, a "Disposition"), and the Disposition is not an
Exempt Disposition as defined below, we would be required, by the 85th Trading
Day after the consummation of such Disposition, to either:

. declare and pay a dividend to holders of the series of common stock that
relates to that Group in cash, securities (other than common stock of
Ziff-Davis Inc.) or other property, or a combination thereof, in an
amount having a Fair Value equal to their Proportionate Interest in the
Net Proceeds of such Disposition,

. redeem from holders of the series of common stock that relates to that
Group, for cash, securities (other than common stock of Ziff-Davis Inc.)
or other property, or a combination thereof, in an amount having a Fair
Value equal to their Proportionate Interest in the Net Proceeds of such
Disposition, all of the outstanding shares of the relevant series of
common stock (or, if such Group continues after such Disposition to own
any material assets other than the proceeds of such Disposition, a number
of shares of such series of common stock having an aggregate average
Market Value, during the 20 consecutive Trading Day period beginning on
the 16th Trading Day immediately following the date on which the
Disposition is consummated, equal to such Fair Value) or

. issue shares of the series of common stock that does not relate to that
Group in exchange for all of the outstanding shares of the series of
common stock that relates to that Group at a 10% premium, based on the
average Market Value of the relevant series of common stock as compared
to the average Market Value of the other series of common stock during
the 20 consecutive Trading Day period beginning on the 16th Trading Day
immediately following the date on which the Disposition is consummated.

In connection with any special dividend on, or redemption of, ZDNet Stock as
described above, we will credit to ZD, and charge against ZDNet, a
corresponding amount in respect of ZD's Retained Interest in ZDNet.
Specifically, the corresponding amount will equal

. the aggregate Fair Value of such dividend or redemption times

. a fraction, the numerator of which is the Number of Shares Issuable with
Respect to ZD's Retained Interest in ZDNet and the denominator of which is
the number of shares of ZDNet Stock then outstanding.

This amount can also be represented by the following:

(Aggregate Fair Value) X (Number of Shares Issuable with Respect to ZD's
Retained Interest)

(Number of Shares of ZDNet Stock Outstanding)

In addition, in connection with any redemption of ZDNet Stock as described
above, we will decrease the Number of Shares Issuable with Respect to ZD's
Retained Interest in ZDNet by the same proportion as the proportionate
decrease in outstanding shares of ZDNet caused by such redemption.

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<PAGE>

At any time within one year after completing any dividend or partial
redemption of the sort referred to above, we will have the right to issue
shares of the series of common stock that does not relate to the Group in
question in exchange for outstanding shares of the series of common stock that
relates to that Group at a 10% premium. The exchange ratio that will result in
a 10% premium will be calculated based on the average Market Value of the
relevant series of common stock as compared to the average Market Value of the
other series of common stock during the 20 consecutive Trading Day period
ending on the 5th Trading Day immediately preceding the date on which Ziff-
Davis Inc. mails the notice of exchange to holders of the relevant series. In
determining whether to effect any such exchange following such a dividend or
partial redemption, we would, in addition to other matters, consider:

. whether the remaining assets of such Group continue to constitute a
viable business,

. the number of shares of such common stock remaining issued and
outstanding,

. the per share market price of such common stock and

. the ongoing cost of continuing to have a separate series of such common
stock outstanding.

The following terms used in this prospectus have the meanings specified in
our restated charter and are set forth below:

"All or Substantially All of the Assets" of either Group means a portion of
such assets that represents at least 80% of the then-current Fair Value of the
assets of such Group.

"Exempt Disposition" means any of the following:

. a Disposition in connection with the liquidation, dissolution or winding-
up of Ziff-Davis Inc. and the distribution of assets to stockholders,

. a Disposition to any person or entity controlled by Ziff-Davis Inc., as
determined by the board of directors in its sole discretion,

. a Disposition by either Group for which Ziff-Davis Inc. receives
consideration primarily consisting of equity securities, including,
without limitation:

. capital stock of any kind,

. interests in a general or limited partnership,

. interests in a limited liability company or

. debt securities convertible into or exchangeable for any of the
above, or options or warrants to acquire any of the above,

in each case without regard to the voting power or other management or
governance rights associated therewith, of:

. an entity which is primarily engaged or proposes to engage primarily
in one or more businesses similar or complementary to businesses
conducted by such Group prior to the Disposition, as determined by
the board of directors in its sole discretion,

. a dividend, out of ZDNet's assets, to holders of ZDNet Stock, and a
transfer of a corresponding amount to ZD in respect of its Retained
Interest in ZDNet,

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. a dividend, out of ZD's assets, to holders of ZD Stock and

. any other Disposition, if

. at the time of the Disposition there are no shares of ZD Stock
outstanding,

. at the time of the Disposition there are no shares of ZDNet Stock
outstanding or

. before the 30th Trading Day following the Disposition we have mailed
a notice stating that we are exercising our right to exchange all of
the outstanding shares of ZD Stock or ZDNet Stock for newly issued
shares of the other series of common stock as contemplated under "--
Optional Exchange of One Series of Common Stock for the Other Series"
below.

"Fair Value" means:

. in the case of cash, the amount thereof,

. in the case of capital stock that has been Publicly Traded for a period
of at least 15 months, the Market Value thereof and

. in the case of other assets or securities, the fair market value thereof
as the Board shall determine in good faith.

(Any good faith board of directors' determination of Fair Value shall be
conclusive and binding on all stockholders.)

"Market Capitalization" of either series of common stock on any date means
the Market Value of a share of such series on such date times the number of
shares of such series outstanding on such date. Shares issuable with respect to
ZD's Retained Interest in ZDNet are not considered to be outstanding unless and
until they are in fact issued to third parties.

"Market Value" of a share of any class or series of capital stock on any
Trading Day generally means the average of the high and low reported sale
prices of a share of such class or series on such Trading Day, subject to
certain exceptions described in our restated charter.

The "Net Proceeds" of a Disposition of any assets of a Group means the
positive amount, if any, remaining from the gross proceeds of such Disposition
after any payment of, or reasonable provision for:

.any taxes payable by Ziff-Davis Inc. in respect of such Disposition,

. any taxes payable by Ziff-Davis Inc. in respect of any resulting dividend
or redemption,

. any transaction costs, including, without limitation, any legal,
investment banking and accounting fees and expenses and

. any liabilities, contingent or otherwise, of, attributed to or related
to, such Group, including, without limitation, any liabilities for
deferred taxes, any indemnity or guarantee obligations which are
outstanding or incurred in connection with the Disposition or otherwise,
any liabilities for future purchase price adjustments and any

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obligations with respect to outstanding securities, other than common
stock, attributed to such Group, as determined in good faith by the board
of directors.

"Proportionate Interest" of holders of ZDNet Stock in the Net Proceeds of a
ZDNet Disposition, or in the outstanding shares of common stock of any
subsidiaries holding ZDNet's assets and liabilities, means

. the amount of such Net Proceeds, or the number of such shares, times

. the number of shares of ZDNet Stock outstanding divided by

. the Total Number of Notional ZDNet Shares Deemed Outstanding.

This amount can also be expressed as follows:

<TABLE>
<S> <C>
(Net Proceeds or Number of Shares) X (Total Number of Notional ZDNet Shares Deemed Outstanding)
----------------------------------------------------------
Total Number of ZDNet Shares Outstanding
</TABLE>

"Proportionate Interest" of holders of ZD Stock in the Net Proceeds of a ZD
Disposition (or in the outstanding shares of common stock of any subsidiaries
holding ZD's assets and liabilities) means the amount of such Net Proceeds (or
the number of such shares).

"Publicly Traded" with respect to any security means:

. registered under Section 12 of the Securities Exchange Act of 1934, as
amended, (the "Exchange Act") or any successor provision of law, and

. listed for trading on the NYSE, or any other national securities exchange
registered under Section 7 of the Exchange Act, or any successor
provision of law, or

. listed on the Nasdaq National Market, or any successor market system.

"Total Number of Notional ZDNet Shares Deemed Outstanding" means the number
of shares of ZDNet Stock outstanding plus the Number of Shares Issuable with
Respect to ZD's Retained Interest in ZDNet.

"Trading Day" means each weekday on which the relevant security or, if there
are two relevant securities, each relevant security, is traded on the principal
national securities exchange on which it is listed or admitted to trading or on
the Nasdaq National Market or, if such security is not listed or admitted to
trading on a national securities exchange or quoted on the Nasdaq National
Market, traded in the principal over-the-counter market in which it trades.

"ZD" means:

. all of the businesses, assets and liabilities of Ziff-Davis Inc. and its
subsidiaries, other than the businesses, assets and liabilities that are
part of ZDNet,

. the rights and obligations of ZD under any inter-Group debt deemed to be
owed to or by ZD, as such rights and obligations are defined in
accordance with policies established from time to time by the board of
directors, and

. a proportionate interest in ZDNet, after giving effect to any options,
preferred stock, other securities or debt issued or incurred by Ziff-
Davis Inc. and attributed to ZDNet, equal to the Retained Interest
Percentage; provided that:

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. Ziff-Davis Inc. may re-allocate assets from one Group to the other
Group in return for other assets or services rendered by that other
Group in the ordinary course of business or in accordance with
policies established by the board of directors from time to time and

. if Ziff-Davis Inc. transfers cash, other assets or securities to
holders of shares of ZDNet Stock as a dividend or other distribution
on shares of ZDNet Stock, other than a dividend or distribution
payable in shares of ZDNet Stock, or as payment in a redemption of
shares of ZDNet Stock effected as a result of a ZDNet Disposition,
then the board of directors shall re-allocate from ZDNet to ZD cash
or other assets having a Fair Value equal to the aggregate Fair Value
of the cash, other assets or securities so transferred times a
fraction, the numerator of which shall equal the Number of Shares
Issuable with Respect to ZD's Retained Interest in ZDNet on the
record date for such dividend or distribution, or on the date of such
redemption, and the denominator of which shall equal the number of
shares of ZDNet Stock outstanding on such date.

This last amount can also be expressed as follows:
<TABLE>
<S> <C>
(Fair Value of Cash, Assets or Securities Transferred) X Number of Shares Issuable with Respect to
ZD's Retained Interest in ZDNet)
-----------------------------------------
(Number of Shares of ZDNet Outstanding)
</TABLE>

"ZDNet" means:

. the online business division of Ziff-Davis Inc., including all of the
businesses, assets and liabilities of Ziff-Davis Inc. and its
subsidiaries that the board of directors has, as of the date on which our
restated charter becomes effective under Delaware law (the "Effective
Date"), allocated to ZDNet but excluding any ownership interest in Ziff-
Davis Inc.'s ZDU and ZDTV businesses,

. any assets or liabilities acquired or incurred by Ziff-Davis Inc. or any
of its subsidiaries after the Effective Date in the ordinary course of
business and attributable to ZDNet,

. any businesses, assets or liabilities acquired or incurred by Ziff-Davis
Inc. or any of its subsidiaries after the Effective Date that the board
of directors has specifically allocated to ZDNet or that Ziff-Davis Inc.
otherwise allocates to ZDNet in accordance with policies established from
time to time by the board of directors and

. the rights and obligations of ZDNet under any inter-Group debt deemed to
be owed to or by ZDNet, as such rights and obligations are defined in
accordance with policies established from time to time by the board of
directors; provided that:

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<PAGE>

This last amount can also be expressed as follows:

<TABLE>
<S> <C> <C>
(Fair Value of Cash, Assets or X (Number of Shares Issuable with Respect to
Securities Transferred) ZD's Retained Interest in ZDNet)
------------------------------------------
(Number of Shares of ZDNet Outstanding)
</TABLE>

Optional Exchange of One Series of Common Stock for the Other Series

We will have the right, at any time before ZDNet Stock exceeds the 65% of
Total Market Capitalization Trigger, to issue shares of ZD Stock in exchange
for outstanding shares of ZDNet Stock at a premium. The premium will initially
be 25%, for exchanges occurring in the first quarter after issuance, and will
decline each quarter over a period of 3 years to 15%.

We will have the right, at any time after ZDNet Stock exceeds the 65% of
Total Market Capitalization Trigger but before ZDNet Stock falls below the 50%
of Total Market Capitalization Threshold, to issue shares of ZDNet Stock in
exchange for outstanding shares of ZD Stock at a 15% premium.

The exchange ratio that will result in the specified premium will be
calculated based on the average Market Value of ZD Stock as compared to the
average Market Value of ZDNet Stock during the 20 consecutive Trading Day
period ending on, and including, the 5th Trading Day immediately preceding the
date on which we mail the notice of exchange to holders of the outstanding
shares being exchanged.

In addition, we will have the right, if ZDNet Stock exceeds the 65% of Total
Market Capitalization Trigger and thereafter falls below the 50% of Total
Market Capitalization Threshold, and regardless of whether ZDNet Stock
thereafter remains below the 50% of Total Market Capitalization Threshold or
the 65% of Total Market Capitalization Trigger, to issue shares of either
series of common stock in exchange for outstanding shares of the other series
of common stock on a value for value basis. The exchange ratio that will result
in a value for value exchange will be based on the average Market Value of the
series of the common stock being exchanged as compared to the average Market
Value of the other series of common stock during the 20 consecutive Trading Day
period ending on, and

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including, the 5th Trading Day immediately preceding the date on which we mail
the notice of exchange to holders of the outstanding shares being exchanged.

ZDNet Stock will exceed the "65% of Total Market Capitalization Trigger" if
the Market Capitalization of the outstanding ZDNet Stock exceeds 65% of the
Total Market Capitalization of both series of common stock for 30 Trading Days
during any 60 consecutive Trading Day period. Thereafter, ZDNet Stock will fall
below the "50% of Total Market Capitalization Threshold" if, after exceeding
the 65% of Total Market Capitalization Trigger, the Market Capitalization of
the outstanding ZDNet Stock falls below 50% of the total Market Capitalization
of both series of common stock for 30 Trading Days during any 60 consecutive
Trading Day period.

If we have the right, on the date on which we mail a notice of exchange as
contemplated above, to issue shares of ZD Stock or ZDNet Stock in exchange for
outstanding shares of the other series of common stock as described above, we
will not lose that right even if ZDNet Stock subsequently exceeds the 65% of
Total Market Capitalization Trigger or falls below the 50% of Total Market
Capitalization Threshold.

Optional Exchange for Stock of a Subsidiary

At any time at which all of the assets and liabilities of a Group, and no
other assets or liabilities of Ziff-Davis Inc. or any subsidiary thereof, are
held directly or indirectly by one or more wholly owned subsidiaries of Ziff-
Davis Inc. (the "Group Subsidiaries"), we will have the right to deliver to
holders of the relevant series of common stock their Proportionate Interest in
all of the outstanding shares of the common stock of the Group Subsidiaries in
exchange for all of the outstanding shares of such series of common stock.

. If the series of common stock being exchanged is ZD Stock and the Number
of Shares Issuable with Respect to ZD's Retained Interest in ZDNet is
greater than zero, we will also issue a number of shares of ZDNet Stock
equal to the then current Number of Shares Issuable with Respect to ZD's
Retained Interest in ZDNet and deliver those shares to the holders of ZD
Stock or to one of the Group Subsidiaries, at our option.

. If the series of common stock being exchanged is ZDNet Stock and the
Number of Shares Issuable with Respect to ZD's Retained Interest in ZDNet
is greater than zero (so that less than all of the shares of common stock
of the Group Subsidiaries are being delivered to the holders of ZDNet
Stock), we may retain the remaining shares of common stock of the Group
Subsidiaries or distribute those shares as a dividend on ZD Stock.

General Dividend, Exchange and Redemption Provisions

If we complete a Disposition of All or Substantially All of the Assets of a
Group, other than an Exempt Disposition, we would be required, not more than
the 10 Trading Days after the consummation of such Disposition, to issue a
press release specifying:

. the Net Proceeds of such Disposition,

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. the number of shares of the series of common stock related to such Group
then outstanding,

. the number of shares of such series of common stock issuable upon
conversion, exchange or exercise of any convertible or exchangeable
securities, options or warrants and the conversion, exchange or exercise
prices thereof and

. if the Group is ZDNet, the Number of Shares Issuable with Respect to ZD's
Retained Interest in ZDNet.

Not more than 30 Trading Days after such consummation, we would be required to
announce by press release which of the actions specified in the first paragraph
under "--Mandatory Dividend, Redemption or Exchange" we have determined to
take, and upon making that announcement, that determination would become
irrevocable. In addition, we would be required, not more than 30 Trading Days
after such consummation and not less than 10 Trading Days before the applicable
payment date, redemption date or exchange date, to send a notice by first-class
mail, postage prepaid, to holders of the relevant series of common stock at
their addresses as they appear on our transfer books.

. If we determine to pay a special dividend, we would be required to
specify in the notice (1) the record date for such dividend, (2) the
payment date of such dividend (which cannot be more than 85 Trading Days
after such consummation) and (3) the aggregate amount and type of
property to be paid in such dividend (and the approximate per share
amount thereof).

. If we determine to undertake a redemption, we would be required to
specify in the notice (1) the date of redemption (which cannot be more
than 85 Trading Days after such consummation), (2) the aggregate amount
and type of property to be paid as a redemption price (and the
approximate per share amount thereof), (3) if less than all shares of the
relevant series of common stock are to be redeemed, the number of shares
to be redeemed and (4) the place or places where certificates for shares
of such series of common stock, properly endorsed or assigned for
transfer (unless we waive such requirement), should be surrendered in
return for delivery of the cash, securities or other property to be paid
by Ziff-Davis Inc. in such redemption.

. If we determine to undertake an exchange, we would be required to specify
in the notice (1) the date of exchange (which cannot be more than 85
Trading Days after such consummation), (2) the number of shares of the
other series of common stock to be issued in exchange for each
outstanding share of such series of common stock and (3) the place or
places where certificates for shares of such series of common stock,
properly endorsed or assigned for transfer, unless we waive such
requirement, should be surrendered in return for delivery of the other
series of common stock to be issued by Ziff-Davis Inc. in such exchange.

If we determine to complete any exchange described under "--Optional Exchange
of One Series of Common Stock for the Other Series" or "Optional Exchange for
Stock of a Subsidiary", we would be required, between 10 to 30 Trading Days
before the exchange date, to send a notice by first-class mail, postage
prepaid, to holders of the relevant series of common stock at their addresses
as they appear on our transfer books, specifying (1) the

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exchange date and the other terms of the exchange and (2) the place or places
where certificates for shares of such series of common stock, properly endorsed
or assigned for transfer, unless we waive such requirement, should be
surrendered for delivery of the stock to be issued or delivered by Ziff-Davis
Inc. in such exchange.

Neither the failure to mail any required notice to any particular holder nor
any defect therein would affect the sufficiency thereof with respect to any
other holder or the validity of any dividend, redemption or exchange.

If we are redeeming less than all of the outstanding shares of a series of
common stock as described above, we would redeem such shares pro rata or by lot
or by such other method as the board of directors determines to be equitable.

No holder of shares of a series of common stock being exchanged or redeemed
will be entitled to receive any cash, securities or other property to be
distributed in such exchange or redemption until such holder surrenders
certificates for such shares, properly endorsed or assigned for transfer, at
such place as we specify, unless we waive such requirement. As soon as
practicable after our receipt of certificates for such shares, we would deliver
to the person for whose account such shares were so surrendered, or to the
nominee or nominees of such person, the cash, securities or other property to
which such person is entitled, together with any fractional payment referred to
below, in each case without interest. If less than all of the shares of common
stock represented by any one certificate were to be exchanged or redeemed, we
would also issue and deliver a new certificate for the shares of such common
stock not exchanged or redeemed.

We would not be required to issue or deliver fractional shares of any capital
stock or any other fractional securities to any holder of common stock upon any
exchange, redemption, dividend or other distribution described above. If more
than one share of common stock were held at the same time by the same holder,
we may aggregate the number of shares of any capital stock that would be
issuable or any other securities that would be distributable to such holder
upon any such exchange, redemption, dividend or other distribution. If there
are fractional shares of any capital stock or any other fractional securities
remaining to be issued or distributed to any holder, we would, if such
fractional shares or securities were not issued or distributed to such holder,
pay cash in respect of such fractional shares or securities in an amount equal
to the Fair Value thereof, without interest.

From and after the date set for any exchange or redemption, all rights of a
holder of shares of common stock that were exchanged or redeemed would cease
except for the right, upon surrender of the certificates representing such
shares, to receive the cash, securities or other property for which such shares
were exchanged or redeemed, together with any fractional payment as provided
above, in each case without interest and, if such holder was a holder of record
as of the close of business on the record date for a dividend not yet paid, the
right to receive such dividend. A holder of shares of common stock being
exchanged would not be entitled to receive any dividend or other distribution
with respect to shares of the other series of common stock until after the
shares being exchanged are surrendered as contemplated above. Upon such
surrender, we would pay to the holder the

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amount of any dividends or other distributions, without interest, which
theretofore became payable with respect to a record date occurring after the
exchange, but which were not paid by reason of the foregoing, with respect to
the number of whole shares of the other series of common stock represented by
the certificate or certificates issued upon such surrender. From and after the
date set for any exchange, we would, however, be entitled to treat the
certificates for shares of common stock being exchanged that were not yet
surrendered for exchange as evidencing the ownership of the number of whole
shares of the other series of common stock for which the shares of such common
stock should have been exchanged, notwithstanding the failure to surrender such
certificates.

We would pay any and all documentary, stamp or similar issue or transfer
taxes that might be payable in respect of the issue or delivery of any shares
of capital stock and/or other securities on any exchange or redemption
described herein. We would not, however, be required to pay any tax that might
be payable in respect of any transfer involved in the issue or delivery of any
shares of capital stock and/or other securities in a name other than that in
which the shares so exchanged or redeemed were registered, and no such issue or
delivery will be made unless and until the person requesting such issue pays to
Ziff-Davis Inc. the amount of any such tax or establishes to our satisfaction
that such tax has been paid.

We may, subject to applicable law, establish such other rules, requirements
and procedures to facilitate any dividend, redemption or exchange contemplated
as described above as the board of directors may determine to be appropriate
under the circumstances.

Voting Rights

Holders of ZD Stock and ZDNet Stock will vote together as one class on all
matters as to which common stockholders generally are entitled to vote, unless
a separate class vote is required by applicable law. On all such matters for
which no separate vote is required,

. each outstanding share of ZD Stock entitles the holder to one vote and

. each outstanding share of ZDNet Stock entitles the holder to a number of
votes, calculated to the nearest five decimal places, equal to the
average Market Value of a share of ZDNet Stock divided by the average
Market Value of a share of ZD Stock during the 20 consecutive Trading Day
period ending on, and including, the 5th Trading Day before the
applicable record date.

The voting formula is intended to equate the proportionate voting rights of
each series of common stock to its respective Market Values at the time of any
vote. On matters where holders of either series of common stock are entitled to
vote as a separate class, each share of that series would be entitled to one
vote in the separate vote on such matter.

The relative voting rights of ZD Stock and ZDNet Stock will fluctuate from
time to time based on the respective Market Values of the two series of common
stock. Fluctuations in the relative voting rights of ZD Stock and ZDNet Stock
could influence an investor interested in acquiring and maintaining a fixed
percentage of the voting power in Ziff-Davis Inc. to acquire such percentage of
all series of common stock, and would limit the ability of

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investors in one series to acquire for the same consideration relatively more
or less votes per share than investors in the other series.

When holders of ZD Stock and ZDNet Stock vote together as a single class, the
holders of the series of common stock entitled to a majority of the votes will
be in a position to control the outcome of the vote even if the matter involves
a conflict of interest between the holders of ZD Stock and holders of ZDNet
Stock.

The Delaware general corporation law requires a separate vote of holders of
shares of common stock of any series on any amendment if the amendment would
increase or decrease the par value of the shares of such series or alter or
change the powers, preferences or special rights of the shares of such series
so as to affect them adversely.

After ZDNet Stock is issued, we will set forth the number of outstanding
shares of ZD Stock and ZDNet Stock in our annual and quarterly reports filed
pursuant to the Exchange Act, and disclose in any proxy statement for a
stockholder meeting the number of outstanding shares and per share voting
rights of ZD Stock and ZDNet Stock.

Liquidation

The holders of ZD Stock and ZDNet Stock will be entitled, upon voluntary or
involuntary liquidation, dissolution or winding-up of Ziff-Davis Inc., to
receive in respect of shares of ZD Stock and shares of ZDNet Stock their
proportionate interest in the net assets of Ziff-Davis Inc., if any, remaining
for distribution to stockholders after payment of or provision for all
liabilities, including contingent liabilities, of Ziff-Davis Inc. and payment
of the liquidation preference payable to any holders of our preferred stock,
pro rata in accordance with the average Market Value of a share of ZD Stock
divided by the average Market Value of a share of ZDNet Stock during the 20
consecutive Trading Day period ending on, and including, the 5th Trading Day
before the date of the first public announcement of (1) a voluntary
liquidation, dissolution or winding-up by Ziff-Davis Inc. or (2) the
institution of any proceeding for the involuntary liquidation, dissolution or
winding-up of Ziff-Davis Inc.

The liquidation formula is intended to provide liquidation rights for each
series of common stock proportionate to the respective Market Values at the
time of any liquidation.

Neither the merger nor consolidation of Ziff-Davis Inc. with any other
entity, nor a sale, transfer or lease of all or any part of the assets of Ziff-
Davis Inc., would alone be deemed a liquidation, dissolution or winding-up for
these purposes.

ZD's Retained Interest in ZDNet

In this document, we call the percentage interest in ZDNet intended to be
represented at any time by the outstanding shares of ZDNet Stock the
"Outstanding Interest Percentage", and we call the remaining percentage
interest in ZDNet intended to be represented at any time by ZD's Retained
Interest in ZDNet the "Retained Interest Percentage". At any time, the
Outstanding Interest Percentage equals the number of shares of ZDNet Stock
outstanding divided by the Total Number of Notional ZDNet Shares

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Deemed Outstanding, expressed as a percentage. The Outstanding Interest
Percentage can also be expressed as follows:

Number of Shares of ZDNet Stock Outstanding
---------------------------------------------------------

Total Number of Notional ZDNet Shares Deemed Outstanding

The Retained Interest Percentage equals the Number of Shares Issuable with
Respect to ZD's Retained Interest in ZDNet divided by the Total Number of
Notional ZDNet Shares Deemed Outstanding, expressed as a percentage. The
Retained Interest can also be expressed as follows:

Number of Shares Issuable with Respect to ZD's Retained Interest In ZDNet
----------------------------------------------------------------------

Total Number of Notional ZDNet Shares Deemed Outstanding

The sum of the Outstanding Interest Percentage and the Retained Interest
Percentage always equals 100%. Thus:

Outstanding Interest Percentage + Retained Interest Percentage = 100%
------------------------------------------------------------

At the time that we file the restated charter, the Retained Interest
Percentage will be 100% and the Outstanding Interest Percentage will be 0%.

Number of Shares Issuable with Respect to ZD's Retained Interest in ZDNet

The board of directors has determined that the initial Number of Shares
Issuable with Respect to ZD's Retained Interest in ZDNet will be 70,000,000. In
the offering, we will attribute the net proceeds of 1,500,000 shares (the
"Primary Shares") to the equity of ZDNet and will attribute the net proceeds of
the remaining shares (the "Secondary Shares") to ZD in respect of its Retained
Interest. The issuance of the Primary Shares will have no effect on the Number
of Shares Issuable with Respect to ZD's Retained Interest in ZDNet, but the
issuance of the Secondary Shares will correspondingly reduce that number. Thus,
after giving effect to the offering,

. there will be 10,000,000 shares of ZDNet Stock outstanding, or 11,500,000
shares if the underwriters fully exercise their option to purchase
additional shares,

. the Number of Shares Issuable with Respect to ZD's Retained Interest in
ZDNet will decline to 61,500,000, or 60,000,000 if the underwriters fully
exercise their option to purchase additional shares,

. the Total Number of Notional ZDNet Shares Deemed Outstanding will be
71,500,000,

. the Outstanding Interest Fraction will be approximately 14.0%, or
approximately 16.1% if the underwriters fully exercise their option to
purchase additional shares and

. the Retained Interest Fraction will be approximately 86.0%, or
approximately 83.9% if the underwriters fully exercise their option to
purchase additional shares.

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Attribution of Issuances of ZDNet Stock

After the offering, whenever we decide to issue shares of ZDNet Stock, we
would determine, in our sole discretion, whether to attribute that issuance,
and the proceeds thereof:

. to ZD in respect of its Retained Interest in ZDNet, in a manner analogous
to a secondary offering of common stock of a subsidiary owned by a
corporate parent, or

. to ZDNet, in a manner analogous to a primary offering of common stock.

If we issue any shares of ZDNet Stock and attribute that issuance, and the
proceeds thereof, to ZD in respect of its Retained Interest in ZDNet, the
Number of Shares Issuable with Respect to ZD's Retained Interest in ZDNet would
be reduced by the number of shares so issued, the number of outstanding shares
of ZDNet Stock would be increased by the same amount, the Total Number of
Notional ZDNet Shares Deemed Outstanding would remain unchanged, the Retained
Interest Percentage would be reduced and the Outstanding Interest Percentage
would be correspondingly increased. If we instead attribute that issuance (and
the proceeds thereof) to ZDNet, the Number of Shares Issuable with Respect to
ZD's Retained Interest in ZDNet would remain unchanged, the number of
outstanding shares of ZDNet Stock and the Total Number of Notional ZDNet Shares
Deemed Outstanding would be increased by the number of shares so issued, the
Retained Interest Percentage would be reduced and the Outstanding Interest
Percentage would be correspondingly increased.

Issuances of ZDNet Stock as Distributions on ZD Stock

We reserve the right to issue shares of ZDNet Stock as a distribution on ZD
Stock, although we do not currently intend to do so. If we did so, we would
attribute that distribution to ZD in respect of its Retained Interest in ZDNet.
As a result, the Number of Shares Issuable with Respect to ZD's Retained
Interest in ZDNet would be reduced by the number of shares so distributed, the
number of outstanding shares of ZDNet Stock would be increased by the same
amount, the Total Number of Notional ZDNet Shares Deemed Outstanding would
remain unchanged, the Retained Interest Percentage would be reduced and the
Outstanding Interest Percentage would be correspondingly increased. If instead
we issued shares of ZDNet Stock as a distribution on ZDNet Stock, we would
attribute that distribution to ZDNet, in which case we would proportionately
increase the Number of Shares Issuable with Respect to ZD's Retained Interest
in ZDNet. As a result, the Number of Shares Issuable with Respect to ZD's
Retained Interest in ZDNet and the Total Number of Notional ZDNet Shares Deemed
Outstanding would each be increased by the same percentage as the number of
outstanding shares of ZDNet Stock is increased and the Retained Interest
Percentage and Outstanding Interest Percentage would remain unchanged.

Dividends on ZDNet Stock

At the time of any dividend on the outstanding shares of ZDNet Stock,
including any dividend required as a result of a Disposition of All or
Substantially All of the Assets of

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ZDNet, but excluding any dividend payable in ZDNet Stock, we will credit to ZD,
and charge against ZDNet, a corresponding amount in respect of ZD's Retained
Interest in

ZDNet. Specifically, the corresponding amount will equal the aggregate amount
of such dividend times a fraction, the numerator of which is the Number of
Shares Issuable with Respect to ZD's Retained Interest in ZDNet and the
denominator of which is the number of shares of ZDNet Stock then outstanding.

This amount can also be expressed as follows:

<TABLE>
<C> <S> <C>
(Aggregate Amount of Dividend on X (Number of Shares Issuable with Respect
ZDNet Stock) to ZD's Retained Interest in ZDNet)
---------------------------------------
(Number of Shares of ZDNet Stock
Outstanding)
</TABLE>

Repurchases of ZDNet Stock

If we decide to repurchase shares of ZDNet Stock, we would determine, in our
sole discretion, whether to attribute that repurchase and the cost thereof to
ZD, in a manner analogous to a purchase of common stock of a subsidiary by a
corporate parent, or to ZDNet, in a manner analogous to an issuer repurchase.
If we repurchase shares of ZDNet Stock and attribute that repurchase and the
cost thereof to ZD, the Number of Shares Issuable with Respect to ZD's Retained
Interest in ZDNet would be increased by the number of shares so purchased, the
number of outstanding shares of ZDNet Stock would be decreased by the same
amount, the Total Number of Notional ZDNet Shares Deemed Outstanding would
remain unchanged, the Retained Interest Percentage would be increased and the
Outstanding Interest Percentage would be correspondingly decreased. If we
instead attribute that repurchase and the cost thereof to ZDNet, the Number of
Shares Issuable with Respect to ZD's Retained Interest in ZDNet would remain
unchanged, the number of outstanding shares of ZDNet Stock and the Total Number
of Notional ZDNet Shares Deemed Outstanding would be decreased by the number of
shares so repurchased, the Retained Interest Percentage would be increased and
the Outstanding Interest Percentage would be correspondingly reduced.

Transfers of Cash or Other Property between ZD and ZDNet

We may, in our sole discretion, determine to transfer cash or other property
of ZDNet to ZD in return for a decrease in ZD's Retained Interest in ZDNet, in
a manner analogous to a return of capital, or to transfer cash or other
property of ZD to ZDNet in return for an increase in ZD's Retained Interest in
ZDNet, in a manner analogous to a capital contribution. If we determine to
transfer cash or other property of ZDNet to ZD in return for a decrease in ZD's
Retained Interest in ZDNet, the Number of Shares Issuable with Respect to ZD's
Retained Interest in ZDNet and the Total Number of Notional ZDNet Shares Deemed
Outstanding would each be decreased by an amount equal to the Fair Value of
such cash or other property divided by the Market Value of a share of ZDNet
Stock on the day of transfer, the number of outstanding shares of ZDNet Stock
would remain unchanged, the Retained Interest Percentage would be decreased and
the Outstanding Interest Percentage would be correspondingly increased.

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If we instead determine to transfer cash or other property of ZD to ZDNet in
return for an increase in ZD's Retained Interest in ZDNet, the Number of Shares
Issuable with Respect to ZD's Retained Interest in ZDNet and the Total Number
of Notional ZDNet Shares Deemed Outstanding would each be increased by an
amount equal to the Fair Value of such cash or other property divided by the
Market Value of a share of ZDNet Stock on the day of transfer, the number of
outstanding shares of ZDNet Stock would remain unchanged, the Retained Interest
Percentage would be increased and the Outstanding Interest Percentage would be
correspondingly decreased.

We may not attribute issuances of ZDNet Stock to ZD, transfer cash or other
property of ZDNet to ZD in return for a decrease in its Retained Interest in
ZDNet or take any other
action to the extent that doing so would cause the Number of Shares Issuable
with Respect to ZD's Retained Interest in ZDNet to decrease below zero.

For illustrations showing how to calculate the Retained Interest Percentage,
the Outstanding Interest Percentage, the Number of Shares Issuable with Respect
to ZD's Retained Interest in ZDNet and the Total Number of Notional ZDNet
Shares Deemed Outstanding after giving effect to certain hypothetical
dividends, issuances, repurchases and transfers, see "Illustration of Certain
Terms".

Effectiveness of Certain Terms

The terms described under "-- Dividends", "--Mandatory Dividend, Redemption
or Exchange on Disposition of All or Substantially All of the Assets of a
Group", "--Optional Exchange of One Series of Common Stock for the Other
Series", "--Optional Exchange for Stock of a Subsidiary", "--Voting Rights" and
"--Liquidation" above apply only when there are shares of both series of common
stock outstanding.

Determinations by the Board

The restated charter will provide that, subject to applicable law, any
determinations made by the board of directors in good faith under the charter
or in any certificate of designation filed pursuant thereto would be final and
binding on all stockholders of Ziff-Davis Inc.

Preemptive Rights

Holders of ZD Stock and ZDNet Stock will not have any preemptive rights to
subscribe for any additional shares of capital stock or securities that we may
issue in the future.

Certain Other Provisions of the Amended and Restated Certificate of
Incorporation and By-laws

Preferred Stock

The restated charter, like our current charter, provides that the board of
directors may issue shares of preferred stock in one or more series from time
to time. The board of

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directors has the authority to fix by resolution or resolutions the
designations and the powers, preferences and rights, and the qualifications,
limitations and restrictions thereof, of the shares of each series of preferred
stock, including without limitation, the following:

. the distinctive serial designation of such series which shall distinguish
it from other series,

. the number of shares included in such series,

. the dividend rate, or method of determining such rate, payable to holders
of the shares of such series,

. any condition upon which such dividends shall be paid and the date or
dates upon which such dividends shall be payable,

. whether dividends on the shares of such series shall be cumulative and,
in the case of shares of any series having cumulative dividend rights,
the date or dates or method of determining the date or dates from which
dividends on the shares of such series shall be cumulative,

. the amount or amounts which shall be payable out of the assets of Ziff-
Davis Inc. to holders of the shares of such series upon voluntary or
involuntary liquidation, dissolution or winding-up Ziff-Davis Inc. and
the relative rights of priority, if any, of payment of the shares of such
series,

. the price or prices at which, the period or periods within which and the
terms and conditions upon which the shares of such series may be
redeemed, in whole or in part, at the option of Ziff-Davis Inc. or at the
option of the holder or holders thereof or upon the happening of a
specified event or events,

. the obligation, if any, of Ziff-Davis Inc. to purchase or redeem shares
of such series pursuant to a sinking fund or otherwise and the price or
prices at which, the period or periods within which and the terms and
conditions upon which the shares of such series shall be redeemed or
purchased, in whole or in part, pursuant to such obligation,

. whether or not the shares of such series shall be convertible or
exchangeable, at any time or times at the option of the holder or holders
thereof or at the option of Ziff-Davis Inc. or upon the happening of a
specified event or events, into shares of any other class or classes or
any other series of the same or any other class or classes of stock of
Ziff-Davis Inc. and the price or prices or rate or rates of exchange or
conversion and any adjustments applicable thereto and

. whether or not holders of the shares of such series shall have voting
rights, in addition to the voting rights provided by law, and if so the
terms of such voting rights.

Unless a corporation's certificate provides otherwise, Section 242(b)(2) of
the Delaware general corporation law automatically gives holders of the
outstanding shares of a class the option to vote as a class on amendments to
increase or decrease the number of authorized shares of such class. Our
restated charter provides, however, that, subject to the rights of holders of
any series of preferred stock, the number of authorized shares of any class or
series of preferred stock may be increased or decreased (but not below the
number of

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shares thereof then outstanding) by the affirmative vote of holders of a
majority of the outstanding shares entitled to vote, irrespective of the
provisions of Section 242(b)(2) of the Delaware general corporation law or any
corresponding provision hereafter enacted.

Staggered Board of Directors

The board of directors is divided into three classes, each of whose members
serve for a staggered three-year term. Upon the expiration of the term of a
class of directors, directors in such class are elected for three-year terms at
the annual meeting of stockholders in the year in which such term expires. The
classification of the board of directors has the effect of making it more
difficult for stockholders to change the composition of the board of directors,
because only a minority of the directors are up for election at each annual
meeting, and the board of directors may not be replaced by vote of the
stockholders at any one time.

Number of Directors; Removal; Filling Vacancies

The number of members of the board of directors will be fixed from time to
time pursuant to our by-laws. Our by-laws provide that the board of directors
will consist of one or more members, the number of which is determined from
time to time by the board of directors. In the event of any increase or
decrease in the authorized number of directors:

. a director shall nevertheless continue as a director of the class of
which he is a member until the expiration of his current term, or his
earlier death, retirement, resignation or removal and

. newly created or eliminated directorships resulting from such increase or
decrease shall be apportioned by the board of directors among the three
classes of directors so as to maintain such classes as nearly equal in
number as reasonably possible.

Directors may be removed only for cause. However, a director who is also an
officer may be removed upon ceasing to be an officer. Vacancies, whether
arising through death, retirement, resignation or removal of a director or
through an increase in the authorized number of directors of any class, may
only be filled by a majority vote of the remaining directors of the class in
which such vacancy occurs, the sole remaining director of that class if one
such director remains, the majority vote of the directors of the remaining
classes if no such director remains or stockholders at an annual meeting of
stockholders of Ziff-Davis Inc.

A director elected to fill a vacancy shall serve for the remainder of his
term of office of the class to which he is elected. These provisions prevent
any stockholder from enlarging the board of directors and then filling the new
directorships with such stockholder's own nominees.

No Stockholder Action by Written Consent; Special Meetings

Any action required or permitted to be taken by the stockholders of Ziff-
Davis Inc. must be duly effected at a duly called annual or special meeting of
such holders and may not be taken by any consent in writing by such holders.
Special meetings of stockholders of

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Ziff-Davis Inc. may be called only by the chairman of the board of directors or
the board of directors pursuant to a resolution stating the purpose or purposes
of the special meeting. Any power of stockholders to call a special meeting is
specifically denied. No business other than that stated in the notice shall be
transacted at any special meeting. These provisions have the effect of delaying
consideration of a stockholder proposal until the next annual meeting unless a
special meeting is called by the Chairman, Vice Chairman, President or the
board of directors for consideration of such proposal.

Advance Notice for Stockholder Nominations and Proposals of New Business

Our by-laws establish an advance notice procedure. This procedure requires
stockholders to deliver to Ziff-Davis Inc. notice of any proposal to be
presented or of a candidate to be nominated for election as a director of Ziff-
Davis Inc. not less than 60 nor more than 90 days prior to the date of the
meeting. However, if the date of the meeting is first publicly announced or
disclosed, in a public filing or otherwise, is less than 70 days prior to the
date of the meeting, such advance notice shall be given not more than 10 days
after such date is first so announced or disclosed. Accordingly, failure by a
stockholder to act in compliance with the notice provisions will mean that the
stockholder will not be able to nominate directors or propose new business.

Amendments

The affirmative vote of holders of at least 80% of the stock entitled to vote
generally in the election of directors, voting together as a single class, or a
majority of the board of directors, is required to amend provisions of our by-
laws relating to stockholder action without a meeting, the calling of special
meetings, the number, or manner of determining the number, of Ziff-Davis Inc.'s
directors, the election and term of Ziff-Davis Inc.'s directors, the filling of
vacancies and the removal of directors.

Certain Provisions of Delaware Law

Ziff-Davis Inc. is subject to the business combination provisions of Section
203 of the Delaware general corporation law. In general, such provisions
prohibit a publicly-held Delaware corporation from engaging in various business
combination transactions with any interested stockholder for a period of three
years after the date of the transaction in which the person became an
interested stockholder unless:

. the business combination transaction, or the transaction in which the
interested stockholder became an interested stockholder, is approved by
the board of directors prior to the date the interested stockholder
obtained such status,

. upon consummation of the transaction which resulted in the stockholder
becoming an interested stockholder, the interested stockholder owned at
least 85% of the voting stock of the corporation outstanding at the time
the transaction commenced, excluding for purposes of determining the
number of shares outstanding those shares owned by

. persons who are directors and also officers and

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. employee stock plans in which employee participants do not have the
right to determine confidentially whether shares held subject to the
plan will be tendered in a tender or exchange offer or

. on or subsequent to such date the business combination is approved by the
board of directors and authorized at an annual or special meeting of
stockholders by the affirmative vote of at least 66 2/3% of the
outstanding voting stock which is not owned by the interested
stockholder.

A "business combination" is defined to include mergers, asset sales and other
transactions resulting in financial benefit to a stockholder. In general, an
"interested stockholder" is a person who, together with affiliates and
associates, owns (or, within three years, did own) 15% or more of a
corporation's voting stock. The statute could prohibit or delay mergers or
other takeover or change in control attempts with respect to Ziff-Davis Inc.
and, accordingly, may discourage attempts to acquire Ziff-Davis Inc. Since the
board of directors approved the acquisition of common stock by SBH before SBH
acquired such common stock, SBH is not an interested stockholder for these
purposes.

Limitations on Liability and Indemnification of Officers and Directors

Section 102 of the Delaware general corporation law authorizes a Delaware
corporation to include a provision in its certificate of incorporation limiting
or eliminating the personal liability of its directors to the corporation or
its stockholders for monetary damages for breach of the directors' fiduciary
duty of care. The duty of care requires that, when acting on behalf of the
corporation, directors exercise an informed business judgment based on all
material information reasonably available to them. Absent the limitations
authorized by such provision, directors are accountable to corporations or
their stockholders for monetary damages for conduct constituting gross
negligence in the exercise of their duty of care. Although Section 102 of the
Delaware general corporation law does not change a director's duty of care, it
enables corporations to limit available relief to equitable remedies such as
injunction or rescission. Our restated charter and by-laws include provisions
which limit or eliminate the personal liability of Ziff-Davis Inc.'s directors
to the fullest extent permitted by Section 102 of the Delaware general
corporation law. Consequently, a director will not be personally liable to
Ziff-Davis Inc. or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for any breach of the directors' duty of
loyalty to Ziff-Davis Inc. or its stockholders, acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
unlawful payments of dividends or unlawful stock repurchases, redemptions or
other distributions and any transaction from which the director derived an
improper personal benefit.

Our by-laws provide that the Ziff-Davis Inc. indemnify to the full extent
permitted by law any person made or threatened to be made a party to any
action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that such person or such person's testator
or intestate is or was a director, officer or employee of Ziff-Davis Inc. or
serves or served at the request of Ziff-Davis Inc. any other enterprise as a
director, officer or employee. Our by-laws provide that expenses, including
attorneys' fees,

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incurred by any such person in defending any such action, suit or proceeding
will be paid or reimbursed by Ziff-Davis Inc. promptly upon receipt by it of an
undertaking of such person to repay such expenses if it shall ultimately be
determined that such person is not entitled to be indemnified by Ziff-Davis
Inc. The inclusion of these indemnification provisions in our by-laws is
intended to enable Ziff-Davis Inc. to attract qualified persons to serve as
directors and officers who might otherwise be reluctant to do so.

The directors and officers of Ziff-Davis Inc. are insured under policies of
insurance maintained by Ziff-Davis Inc., subject to the limits of the policies,
against certain losses arising from any claim made against them by reason of
being or having been such officers or directors. In addition to the protection
available under our restated charter, by-laws and insurance policies, we have
entered into agreements with our outside directors to indemnify them to the
fullest extent permitted by law against losses arising from any claim against
them by reason of being or having been a director. In addition, the limited
liability provisions in our restated charter and the indemnification provisions
in our by-laws may discourage stockholders from bringing a lawsuit against
directors for breach of their fiduciary duty, including breaches resulting from
grossly negligent conduct, and may have the effect of reducing the likelihood
of derivative litigation against directors and officers, even though such an
action, if successful, might otherwise have benefitted Ziff-Davis Inc. and our
stockholders. Furthermore, a stockholder's investment in Ziff-Davis Inc. may be
adversely affected to the extent we pay the costs of settlement and damage
awards against directors and officers of Ziff-Davis Inc. pursuant to the
indemnification provisions in our by-laws. The limited liability provisions in
our restated charter will not limit the liability of directors under federal
securities laws.

Section 203 of the Delaware general corporation law, and the provisions of
our restated charter and by-laws described above, may make it more difficult
for a third party to acquire or discourage bids for Ziff-Davis Inc. Section 203
and these provisions could have the effect of inhibiting attempts to change the
membership of the board of directors.

Stock Transfer Agent and Registrar

The Bank of New York is the registrar and transfer agent for ZD Stock and
ZDNet Stock.

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SHARES ELIGIBLE FOR FUTURE SALE

Prior to the offering, there has been no public market for ZDNet Stock. We
cannot predict the effect, if any, that sales of shares or the availability of
shares for sale will have on the market price prevailing from time to time.
Future sales of substantial amounts of ZDNet Stock in the public market, or the
perception that such sales may occur, could adversely affect the prevailing
market price of ZDNet Stock. See "Risk Factors--Risk Factors Relating To ZDNet
Stock--The Market Price Of ZDNet Stock May Be Adversely Affected Due To Shares
Of ZDNet Stock Eligible For Future Sale".

Upon completion of the offering, Ziff-Davis Inc. expects to have 10,000,000
shares of ZDNet Stock outstanding or 11,500,000 shares if the underwriters
fully exercise their option to purchase additional shares. These shares will be
freely tradeable without restriction under the Securities Act, except for any
such shares which may be acquired by an "affiliate" of Ziff-Davis Inc. Rule 144
defines an affiliate of Ziff-Davis Inc. as a person that, directly or
indirectly, through one or more intermediaries, controls or is controlled by,
or is under common control with, Ziff-Davis Inc.

Softbank has indicated it will not purchase any shares of ZDNet Stock. Ziff-
Davis Inc. expects that certain directors and officers who may be considered to
be affiliates will acquire approximately . shares of ZDNet Stock in the
offering. These shares will be "restricted securities" (as that phrase is
defined in Rule 144) and may not be resold without registration under the
Securities Act unless exempted from such registration, including among others,
the exemption provided by Rule 144 under the Securities Act. One year after the
date of this prospectus these shares of ZDNet Stock will be eligible for sale
in the public market pursuant to Rule 144, subject to the volume limitations
and other restrictions described below.

In general, under Rule 144 if a period of at least one year has elapsed since
the later of the date the "restricted shares" were acquired from Ziff-Davis
Inc. and the date they were acquired from an affiliate, then the holder of such
restricted shares, including an affiliate, is entitled to sell a number of
shares within any three-month period that:

. does not exceed the greater of 1% of the then outstanding shares or

. the average weekly reported volume of trading of such shares on the NYSE
during the four calendar weeks preceding such sale.

The holder may only sell such shares through unsolicited brokers'
transactions. Sales under Rule 144 are also subject to certain requirements
pertaining to:

. the manner of such sales,

. notices of such sales and

. the availability of current public information concerning Ziff-Davis Inc.

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Under Rule 144 (k), a holder of restricted shares may sell shares immediately
without regard to the volume limitations and other restrictions described above
if:

. a period of at least two years has passed between the later of (1) the
date restricted securities were acquired from Ziff-Davis Inc. and (2) the
date they were acquired from an affiliate, as applicable,

. the holder is not an affiliate at the time of the sale and

. has not been an affiliate for at least three months prior to the sale.

After the offering is completed, members of Ziff-Davis Inc.'s management will
have the right to purchase approximately 10,200,000 additional shares of ZDNet
Stock under employee stock options. Also, assuming the underwriters do not
exercise their option to purchase additional shares, after the offering is
completed, Ziff-Davis Inc. will be entitled to issue up to 90,000,000 shares of
ZDNet Stock. Of these shares, up to 61,500,000 shares may be for the account of
ZD in respect of its Retained Interest in ZDNet.

Notwithstanding the information above, in connection with the offering, Ziff-
Davis Inc.

and the officers and directors referred to above have agreed that, during the
period ending 180 days after the date of the prospectus, they will not,
directly or indirectly:

. offer,

. pledge,

. sell,

. contract to sell,

. sell any option or contract to purchase,

. purchase any option or contract to sell,

. grant any option, right or warrant to purchase,

. lend or

. otherwise transfer or dispose of,

any shares of ZDNet Stock or any securities convertible into or exercisable or
exchangeable for ZDNet Stock, unless they obtain the prior written consent of
the representatives of the underwriters on behalf of the underwriters. This
restriction applies whether such shares or any such securities are owned by
such person at the time or are thereafter acquired directly from Ziff-Davis
Inc.

Ziff-Davis Inc. and the officers and directors referred to above have also
agreed that, during the period ending 180 days after the date of the
prospectus, they will not, directly or indirectly, enter into any swap or other
arrangement that transfers to another, in whole or in part, any of the economic
consequences of ownership of ZDNet Stock.

These restrictions apply whether any such transaction described above is to
be settled by delivery of ZDNet Stock or such other securities, in cash or
otherwise.

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<PAGE>

The restrictions described above do not apply to:

. the sale to the underwriters of the shares of ZDNet Stock under the
underwriting agreement,

. the issuance by Ziff-Davis Inc. of shares of ZDNet Stock upon the
exercise of an option or a warrant or the conversion of a security
outstanding on the date of this prospectus of which the underwriters have
been advised in writing,

. the grant of options under existing employee benefit plans or

. transactions by any person other than Ziff-Davis Inc. relating to shares
of ZDNet Stock or other securities acquired in open market transactions
after the offering is completed.

184
<PAGE>

ZIFF-DAVIS INC.'S DEBT

The following summaries highlight key provisions of Ziff-Davis Inc.'s 8 1/2%
senior subordinated notes and credit facility. These summaries are not
substitutes for the more detailed information contained in Ziff-Davis Inc.'s
indenture and credit facility, copies of which have been filed as exhibits to
this registration statement.

Notes

General

Concurrently with the initial public offering of our Ziff-Davis Inc. common
stock on April 28, 1998, Ziff-Davis Inc. sold $250 million in principal amount
of 8 1/2% senior subordinated notes due May 1, 2008. The notes are general
unsecured senior subordinated obligations of Ziff-Davis Inc. and rank on parity
with all other unsecured and subordinated indebtedness of Ziff-Davis Inc. The
notes are subordinated in right of payment to all Senior Indebtedness of Ziff-
Davis Inc., as defined in the indenture for the Notes.

The notes are redeemable, at Ziff-Davis Inc.'s option, in whole or in part,
at any time after May 1, 2003, at redemption prices starting at 104.250% of
their principal amount and declining to 100% of their principal amount on or
after May 1, 2006, plus accrued and unpaid interest. In addition, upon a Change
of Control of Ziff-Davis Inc., as defined in the indenture for the Notes, each
holder of notes will have the right to require Ziff-Davis Inc. to purchase such
holder's notes. Ziff-Davis Inc. will be permitted to redeem a portion of the
notes following one or more public equity offerings consummated prior to May 1,
2001.

Covenants

The indenture for the notes contains certain restrictive covenants, including
the following:

. a limitation on the ability of Ziff-Davis Inc. and its restricted
subsidiaries, as defined in the indenture, to incur any indebtedness
other than permitted indebtedness, as defined in the indenture, or to
incur senior subordinated indebtedness or certain indebtedness secured by
liens,

. a limitation on the ability of Ziff-Davis Inc. and its restricted
subsidiaries to, directly or indirectly, make any Restricted Payment, as
defined in the indenture, including payment of dividends, prepayment of
subordinated indebtedness and the repurchase of capital stock,

. a limitation on the ability of Ziff-Davis Inc. to suffer to exist certain
dividend and other payment restrictions affecting its restricted
subsidiaries,

. a limitation on the ability of Ziff-Davis Inc. to sell or to permit any
restricted subsidiary to issue or sell capital stock of a restricted
subsidiary,

185
<PAGE>

. a limitation on the ability of Ziff-Davis Inc. and its restricted
subsidiaries to consummate certain Asset Sales, as defined in the
indenture, unless certain conditions are fulfilled and

. limitations on any transaction with affiliates.

Certain of these covenants will terminate if and when the notes receive an
investment grade rating. In addition, the indenture limits the ability of Ziff-
Davis Inc. to merge with or to transfer all or substantially all of its assets
to another person. The notes provide for acceleration upon customary events of
default.

Credit Facility

Ziff-Davis Inc. is party to a secured guaranteed credit agreement with The
Bank of New York, Morgan Stanley Senior Funding, DLJ Capital Funding and The
Chase Manhattan Bank to provide a $1.35 billion term credit facility. The
amount outstanding under this facility at September 30, 1998 was $1.205
billion. The credit facility consists of:

. a seven-year $400 million reducing revolving credit facility, with $255
million drawn as of September 30, 1998,

. a seven-year $450 million term loan and

. an eight-year $500 million term loan.

There are various customary conditions to draw-downs under the revolving
commitments. The revolving credit commitments will be reduced and the $450
million term loan will be amortized, beginning in September 2000, by:

. 10% in 2000, in two equal quarterly installments,

. 20% in each of 2001, 2002, 2003 and 2004 in four equal quarterly
installments and

. 10% at final maturity in March 2005.

The $500 million term loan will be amortized, beginning in September 2000, by:

. $2 million in 2000, in two equal quarterly installments,

. $4 million in each of 2001, 2002, 2003, 2004 and 2005 in four equal
quarterly installments and

. $478 million at final maturity in March 2006.

The credit facility is secured, in part, by a first priority security
interest in capital stock of certain subsidiaries of Ziff-Davis Inc. and is
guaranteed by certain wholly owned domestic subsidiaries of Ziff-Davis Inc., in
each case, including ZD Inc. and ZD Events.

The credit facility contains certain customary affirmative and negative
covenants, including covenants with respect to:

186
<PAGE>

. the delivery of financial statements and other information,

. limitations on dispositions of assets,

. changes of business and ownership,

. mergers or acquisitions,

. restricted payments,

. indebtedness,

. loans and investments,

. transactions with affiliates,

. negative pledge of assets,

. maintenance of adequate and customary insurance coverage,

. compliance with all applicable laws and regulations and

. restriction on modifications of certain agreements, charter documents or
other material documents without the consent of the lenders.

The credit facility also contains certain financial covenants.

The failure to satisfy any of the covenants would constitute an event of
default under the credit facility. The credit facility also includes other
customary events of default, including, without limitation, nonpayment,
misrepresentation in a material respect, cross-default to other indebtedness,
bankruptcy, ERISA, judgments and change of control.

187
<PAGE>

CERTAIN UNITED STATES TAX CONSEQUENCES

The following discussion summarizes certain U.S. federal income tax
consequences of the ownership of ZDNet Stock, including certain anticipated
U.S. income and estate tax consequences of the ownership and disposition of
ZDNet Stock applicable to non-U.S. holders, as defined below, of such ZDNet
Stock. This discussion does not consider the specific facts and circumstances
that may be relevant to particular holders and does not address the treatment
of holders of common stock under the laws of any state, local or foreign taxing
jurisdiction. This discussion is based on the tax laws of the U.S., including
the Internal Revenue Code, as amended to the date hereof, existing and proposed
regulations thereunder, and administrative and judicial interpretation thereof,
as currently in effect. These laws are subject to change, possibly on a
retroactive basis.

You should consult your own tax advisors with regard to the application of
the federal income tax laws to your particular situation, as well as to
the applicability and effect of any state, local or foreign tax laws to
which you may be subject.

General

We believe that for federal income tax purposes ZDNet Stock will be
considered common stock of Ziff-Davis Inc. Accordingly, we believe that for
federal income tax purposes neither we nor any U.S. holder will recognize any
income, gain or loss as a result of the issuance of ZDNet Stock. You are a
"U.S. holder" for U.S. federal income tax purposes if you are a beneficial
owner of common stock and are:

. a citizen or resident of the U.S.,

. a corporation organized under the laws of the U.S. or any state,

. an estate, the income of which is subject to U.S. federal income tax
without regard to its source or

. a trust, if a court within the U.S. is able to exercise primary
supervision over the administration of the trust and one or more U.S.
persons have the authority to control all substantial decisions of the
trust.

There are, however, no court decisions or other authorities bearing directly
on the classification of instruments with characteristics similar to those of
ZDNet Stock. In addition, the IRS has announced that it will not issue advance
rulings on the classification of an instrument that has certain voting and
liquidation rights in an issuing corporation but whose dividend rights are
determined by reference to the earnings of a segregated portion of the issuing
corporation's assets, including assets held by a subsidiary.

The Administration's budget proposals released on February 1, 1999 would
require the recognition of gain on the issuance of certain tracking stock, such
as ZDNet Stock, and gives the Treasury Department the authority to treat
tracking stock as nonstock or as stock of another entity as appropriate to
prevent tax avoidance. Because the proposal would only

188
<PAGE>

be effective for tracking stock issued on or after the date of enactment, the
proposal will not affect the re-classification of existing common stock into ZD
Stock or the issuance of the ZDNet Stock in the offering. However, if the
proposal is enacted, it is possible thatZiff-Davis Inc. might determine to
exercise its right to exchange ZD Stock for ZDNet Stock in order to eliminate
any tracking stock from its capital structure. The Treasury Department's
explanation expresses the view that the use of tracking stock "is clearly
outside the contemplation of" the Code and that "no inference regarding the tax
treatment of [such stock] under current law is intended by [the] proposal".

Certain United States Tax Consequences to Non-U.S. Holders

The following discussion summarizes certain U.S. federal income and estate
tax consequences of the ownership and disposition of common stock by "Non-U.S.
Holders". You are a "non-U.S. holder" for U.S. federal income tax purposes if
you are:

. a non-resident alien individual,

. a foreign corporation,

. a foreign partnership or

. an estate or trust that in either case is not subject to U.S. federal
income tax on a net income basis on income or gain from common stock.

Dividends

If you are a non-U.S. holder of common stock, dividends paid to you are
subject to withholding of U.S. federal income tax at a 30% rate or at a lower
rate if so specified in an applicable income tax treaty. If, however, the
dividends are effectively connected with your conduct of a trade or business
within the U.S., and they are attributable to a permanent establishment that
you maintain in the U.S., if that is required by an applicable income tax
treaty as a condition for subjecting you to U.S. income tax on a net income
basis on such dividends, then such "effectively connected" dividends generally
are not subject to withholding tax. Instead, such effectively connected
dividends are taxed at rates applicable to U.S. citizens, resident aliens and
domestic U.S. corporations.

Effectively connected dividends received by a non-U.S. corporation may, under
certain circumstances, be subject to an additional "branch profits tax" at a
30% rate or at a lower rate if so specified in an applicable income tax treaty.

Under currently effective U.S. Treasury regulations, dividends paid to an
address in a foreign country are presumed to be paid to a resident of that
country, unless the payor has knowledge to the contrary, for purposes of the
30% withholding tax discussed above. Under current interpretations of U.S.
Treasury regulations, this presumption that dividends paid to an address in a
foreign country are paid to a resident of that country, unless the payor has
knowledge to the contrary, also applies for the purposes of determining whether
a lower tax treaty rate applies.

Under U.S. Treasury regulations, which will generally apply to dividends paid
after December 31, 1999 (the "Final Withholding Regulations"), if you claim the
benefit of a lower treaty rate, you must satisfy certain certification
requirements. In addition, in the case of common stock held by a foreign
partnership, the certification requirements generally will

189
<PAGE>

apply to the partners of the partnership and the partnership must provide
certain information, including a U.S. taxpayer identification number. The Final
Withholding Regulations also provide look-through rules for tiered
partnerships.

If you are eligible for a reduced rate of U.S. withholding tax under a tax
treaty, you may obtain a refund of any excess amounts withheld by filing a
refund claim with the Internal Revenue Service.

Gain on Disposition of Common Stock

If you are a non-U.S. holder you generally will not be subject to U.S.
federal income tax on gain recognized on a disposition of common stock unless:

. the gain is effectively connected to your conduct of a trade or business
in the U.S. (and the gain is attributable to a permanent establishment
that you maintain in the U.S., if that is required by an applicable income
tax treaty as a condition for subjecting you to U.S. taxation on a net
income basis on gain from the sale or other disposition of the common
stock),

. you are an individual, you hold the common stock as a capital asset and
you are present in the U.S. for 183 or more days in the taxable year of
the sale and certain other conditions exist or

. Ziff-Davis Inc. is or has been a "United States real property holding
corporation" for federal income tax purposes and you held, directly or
indirectly, at any time during the five-year period ending on the date of
disposition, more than 5% of the common stock of Ziff-Davis Inc. (and you
are not eligible for any treaty exemption).

Effectively connected gains recognized by a corporate non-U.S. holder may
also, under certain circumstances, be subject to an additional "branch profits
tax" at a 30% rate or at a lower rate if so specified in an applicable income
tax treaty.

Ziff-Davis Inc. has not been, is not, and does not anticipate becoming a
"United States real property holding corporation" for federal income tax
purposes.

Federal Estate Taxes

Common stock held by a non-U.S. holder at the time of death will be included
in the holder's gross estate for U.S. federal estate tax purposes, unless an
applicable estate tax treaty provides otherwise.

Information Reporting and Backup Withholding

In general, U.S. information reporting requirements and backup withholding
tax will not apply to dividends paid to you if you are either:

. subject to the 30% withholding tax discussed above or

. not subject to the 30% withholding tax because an applicable tax treaty
reduces or eliminates such withholding tax,

190
<PAGE>

although dividend payments to you will be reported for purposes of the
withholding tax (see "--Dividends" above). If you do not meet either of these
requirements for exemption and you fail to provide certain information
(including your U.S. taxpayer identification number) or otherwise establish
your status as an "exempt recipient", you may be subject to backup withholding
of U.S. federal income tax at a rate of 31% on dividends paid with respect to
common stock.

Under current law, the payor may generally treat dividends paid to a payee
with a foreign address as exempt from backup withholding and information
reporting unless the payor has definite knowledge that the payee is a U.S.
person. However, under the Final Withholding Regulations, dividend payments
generally will be subject to information reporting and backup withholding
unless certain certification requirements are met. (See the discussion under
"--Dividends" for the rules applicable to foreign partnerships under the Final
Withholding Regulations.)

U.S. information reporting and backup withholding requirements generally will
not apply to a payment of the proceeds of a sale of common stock made outside
the U.S. through an office outside the U.S. of a non-U.S. broker. However, U.S.
information reporting, but not backup withholding, will apply to a payment made
outside the U.S. of the proceeds of a sale of common stock through an office
outside the U.S. of a broker that:

. is a U.S. person,

. derives 50% or more of its gross income for certain periods from the
conduct of a trade or business in the U.S.,

. is a "controlled foreign corporation" as to the U.S. or

. with respect to payments made after December 31, 1999, is a foreign
partnership, if at any time during its tax year:

. one or more of its partners are U.S. persons, as defined in U.S.
Treasury regulations, who in the aggregate hold more than 50% of the
income or capital interest in the partnership or

. such foreign partnership is engaged in a U.S. trade or business,
unless the broker has documentary evidence in its records that the
holder or beneficial owner is a non-U.S. person or otherwise
establishes an exemption.

Payment of the proceeds of a sale of common stock to or through a U.S. office
of a broker is subject to both U.S. backup withholding and information
reporting unless the holder certifies its non-U.S. status under penalty of
perjury or otherwise establishes an exemption.

A non-U.S. holder generally may obtain a refund of any excess amounts
withheld under the backup withholding rules by filing a refund claim with the
IRS.

191
<PAGE>

VALIDITY OF ZDNET STOCK

The validity of ZDNet Stock offered hereby will be passed upon for Ziff-Davis
Inc. by Sullivan & Cromwell, New York, New York, U.S. counsel to Ziff-Davis
Inc., and for the underwriters by Hale and Dorr LLP, Boston, Massachusetts,
U.S. counsel to the underwriters.

EXPERTS

The combined financial statements of Ziff-Davis Inc. and ZD COMDEX and Forums
Inc. as of December 31, 1996 and 1997 and for the three years in the period
ended December 31, 1997, the consolidated financial statements of Ziff-Davis
Inc. as of December 31, 1995 and February 28, 1996 and for the year ended
December 31, 1995 and for the period from January 1, 1996 to February 28, 1996,
the combined financial statements of ZD as of December 31, 1996 and 1997 and
for the three years in the period ended December 31, 1997, the combined
financial statements of ZD Publishing as of December 31, 1995 and February 28,
1996 and for the year ended December 31, 1995 and for the period from January
1, 1996 to February 28, 1996, the combined financial statements of ZDNet as of
December 31, 1996 and 1997 and for the period from February 29, 1996 to
December 31, 1996 and for the year ended December 31, 1997, and the combined
financial statements of ZDNet as of December 31, 1995 and February 28, 1996 and
for the year ended December 31, 1995 and for the period from January 1, 1996 to
February 28, 1996, included in this prospectus have been so included in
reliance upon the reports of PricewaterhouseCoopers LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.

WHERE YOU CAN FIND MORE INFORMATION

Ziff-Davis Inc. has filed a registration statement under the Securities Act
that registers ZDNet Stock offered by this prospectus.

The registration statement (including the attached exhibits and schedules)
that we filed with the Securities and Exchange Commission contains additional
relevant information about Ziff-Davis Inc. and ZDNet Stock. The rules and
regulations of the Commission allow us to omit certain information included in
the Registration Statement from this prospectus.

In addition, we file reports, proxy statements and other information with the
Commission under the Exchange Act. You may read and copy this information at
the following locations of the Commission:

Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison Street
Washington, D.C. 20549 New York, New York 10048 Suite 1400
Chicago, Illinois 60661-
2511

192
<PAGE>

You may also obtain copies of this information by mail from the Public
Reference Section of the Commission, 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, at prescribed rates. Further information on the
operation of the Commission's Public Reference Room in Washington, D.C. can be
obtained by calling the Commission at 1-800-SEC-0330.

The Commission also maintains an Internet world wide web site that contains
reports, proxy statements and other information about issuers, such as Ziff-
Davis Inc., who file electronically with the Commission. The address of that
site is http://www.sec.gov.

Our existing common stock is listed on the NYSE. You may also obtain copies
of this information at the offices of the NYSE, 20 Broad Street, New York, New
York 10005.

You should rely only on the information contained in this prospectus. We have
not authorized anyone to give any information or make any representation about
us or this offering that is different from, or in addition to, that contained
in this prospectus or in any of the materials that we have incorporated into
this document. Therefore, if anyone does give you information of this sort, you
should not rely on it. If you are in a jurisdiction where offers to sell, or
solicitations of offers to buy, the securities offered by this document are
unlawful, or if you are a person to whom it is unlawful to direct these types
of activities, then the offer presented in this document does not extend to
you. The information contained in this document speaks only as of the date of
this document unless the information specifically indicates that another date
applies.

193
<PAGE>

INDEX OF CERTAIN TERMS

<TABLE>
<CAPTION>
Page on which
term is defined in the
Term Prospectus
- ---- ----------------------
<S> <C>
50% of Total Market Capitalization Threshold........... 168
65% of Total Market Capitalization Trigger............. 168
All or Substantially All of the Assets................. 163
Available Dividend Amount.............................. 161
Central Services....................................... 47
COMDEX................................................. 148
Disposition............................................ 162
Effective Date......................................... 166
Exempt Disposition..................................... 163
Fair Value............................................. 164
Group.................................................. 155
Incentive Plan......................................... 138
MAC Assets............................................. 148
Market Capitalization.................................. 164
Market Value........................................... 164
Number of Shares Issuable with Respect to ZD's Retained
Interest in ZDNet..................................... 157
Outstanding Interest Percentage........................ 172
Proportionate Interest................................. 165
Repriced Softbank Options.............................. 133
Retained Interest Percentage........................... 172
Shares................................................. U-1
Softbank............................................... 72
Softbank Options....................................... 133
Total Number of Notional ZDNet Shares Deemed
Outstanding........................................... 165
Trading Day............................................ 165
</TABLE>

194
<PAGE>

ANNEX I

ILLUSTRATION OF CERTAIN TERMS
The following illustrations show how to calculate the Retained Interest
Percentage, the Outstanding Interest Percentage, the Number of Shares Issuable
with Respect to ZD's Retained Interest in ZDNet and the Total Number of
Notional ZDNet Shares Deemed Outstanding after giving effect to certain
hypothetical dividends, issuances, repurchases and transfers, in each case
based on the assumptions set forth herein. In these illustrations, the Number
of Shares Issuable with Respect to ZD's Retained Interest in ZDNet is initially
assumed to be 100. Unless otherwise specified, each illustration below should
be read independently as if none of the other transactions referred to below
had occurred. Actual calculations may be slightly different due to rounding.

"Total Number of Notional ZDNet Shares Deemed Outstanding" means the number
of shares of ZDNet Stock outstanding plus the Number of Shares Issuable with
Respect to ZD's Retained Interest in ZDNet.

At any given time, the percentage interest in ZDNet intended to be
represented by the outstanding shares of ZDNet Stock (i.e., the Outstanding
Interest Percentage) is equal to:

Outstanding Shares of ZDNet Stock
----------------------------------------------------------
Total Number of Notional ZDNet Shares Deemed Outstanding

and the remaining percentage interest in ZDNet intended to be represented by
ZD's Retained Interest in ZDNet (i.e., the Retained Interest Percentage) is
equal to:

Number of Shares Issuable with Respect to ZD's Retained
Interest in ZDNet
----------------------------------------------------------
Total Number of Notional ZDNet Shares Deemed Outstanding

The sum of the Outstanding Interest Percentage and the Retained Interest
Percentage would always equal 100%. In our example, before the first issuance
the Number of Shares Issuable with Respect to ZD's Retained Interest in ZDNet
and the Total Number of Notional ZDNet Shares Deemed Outstanding are each equal
to 100, the Retained Interest Percentage is 100% and the Outstanding Interest
Percentage is 0%.

The Offering

The following illustrations reflect an assumed issuance by Ziff-Davis Inc. of
15 shares of ZDNet Stock in the offering.

Offering for Account of ZD

Assume the issuance is attributed to ZD in respect of its Retained Interest
(as currently planned), with the net proceeds credited solely to ZD.

I-1
<PAGE>

<TABLE>
<S> <C>
Shares previously issued and outstanding............................. 0
Newly issued shares for account of ZD................................ 15
---
Total issued and outstanding after the offering.................. 15
===

. The Number of Shares Issuable with Respect to ZD's Retained Interest in
ZDNet would decrease by the number of shares of ZDNet Stock sold for the
account of ZD.

Number of Shares Issuable with Respect to ZD's Retained Interest in
ZDNet prior to the offering......................................... 100
Shares issued in the offering........................................ 15
---
Number of Shares Issuable with Respect to ZD's Retained Interest
in ZDNet after the offering..................................... 85
===
</TABLE>
. As a result, the issued and outstanding shares (15) would represent an
Outstanding Interest Percentage of 15%, calculated as follows:

15
--------
15 + 85

The Retained Interest Percentage would accordingly be 85%.

. In this case, in the event of any dividend or other distribution paid on
the outstanding shares of ZDNet Stock (other than a dividend or other
distribution payable in shares of ZDNet Stock), ZD would be credited, and
ZDNet would be charged, with an amount equal to 567% (representing the
ratio of the Number of Shares Issuable with Respect to ZD's Retained
Interest in ZDNet (85) to the total number of shares of ZDNet Stock
issued and outstanding following the offering (15)) of the aggregate
amount of such dividend or distribution. If, for example, a dividend of
$1.00 per share were declared and paid on the 15 shares of ZDNet Stock
outstanding (an aggregate of $15), ZD would be credited with $85, and
ZDNet would be charged with that amount in addition to the $15 dividend
paid to the holders of ZDNet Stock (a total of $100).

Offering for Account of ZDNet

Assume the issuance is attributed to ZDNet as an increase in its equity, with
the net proceeds credited solely to ZDNet.

<TABLE>
<S> <C>
Shares previously issued and outstanding............................... 0
Newly issued shares for account of ZDNet............................... 15
---
Total issued and outstanding after the offering.................... 15
===
</TABLE>

. The Number of Shares Issuable with Respect to ZD's Retained Interest in
ZDNet (100) would remain unchanged.

I-2
<PAGE>

. As a result, the issued and outstanding shares (15) would represent an
Outstanding Interest Percentage of about 13%, calculated as follows:

15
--------
15 + 100

The Retained Interest Percentage would accordingly be about 87%.

Additional Offerings of ZDNet Stock

The following illustrations reflect an assumed issuance of an additional 15
shares of ZDNet Stock after the assumed initial issuance of 15 shares for the
account of ZD.

Additional Offering for Account of ZD

Assume the issuance is attributed to ZD in respect of its Retained Interest,
with the net proceeds credited solely to ZD.

<TABLE>
<S> <C>
Shares previously issued and outstanding............................... 15
Newly issued shares for account of ZD.................................. 15
---
Total issued and outstanding after additional offering............. 30
===
</TABLE>

. The Number of Shares Issuable with Respect to ZD's Retained Interest in
ZDNet would decrease by the number of shares of ZDNet Stock issued for
the account of ZD

<TABLE>
<S> <C>
Number of Shares Issuable with Respect to ZD's Retained Interest in
ZDNet prior to the additional offering............................. 85
Newly issued shares for account of ZD............................... 15
---
Number of Shares Issuable with Respect to ZD's Retained Interest
in ZDNet after the additional offering........................... 70
===
</TABLE>

. As a result, the total issued and outstanding shares (30) would in the
aggregate represent an Outstanding Interest Percentage of 30%, calculated
as follows:

30
--------
30 + 70

The Retained Interest Percentage would accordingly be reduced to 70%.

. In this case, in the event of any dividend or other distribution paid on
ZDNet Stock (other than a dividend or other distribution payable in
shares of ZDNet Stock), ZD

I-3
<PAGE>

would be credited, and ZDNet would be charged, with an amount equal to
233% (representing the ratio of the Number of Shares Issuable with Respect
to ZD's Retained Interest in ZDNet (70) to the total number of shares of
ZDNet Stock issued and outstanding following the additional offering (30))
of the aggregate amount of such dividend or distribution.

Additional Offering for Account of ZDNet

Assume the issuance is attributed to ZDNet as an increase in its equity, with
the net proceeds credited solely to ZDNet.

<TABLE>
<S> <C>
Shares previously issued and outstanding............................... 15
Newly issued shares for account of ZDNet............................... 15
---
Total issued and outstanding after the additional offering......... 30
===
</TABLE>

. The Number of Shares Issuable with Respect to ZD's Retained Interest in
ZDNet (85) would remain unchanged.

. As a result, the total issued and outstanding shares (30) would in the
aggregate represent an Outstanding Interest Percentage of about 26%,
calculated as follows:

30
--------
30 + 85

The Retained Interest Percentage would accordingly be reduced to about 74%.

. In this case, in the event of any dividend or other distribution paid on
ZDNet Stock (other than a dividend or other distribution payable in
shares of ZDNet Stock), ZD would be credited, and ZDNet would be charged,
with an amount equal to 283% (representing the ratio of the Number of
Shares Issuable with Respect to ZD's Retained Interest in ZDNet (85) to
the total number of shares of ZDNet Stock issued and outstanding
following the additional offering (30)) of the aggregate amount of such
dividend or distribution.

Offerings of Convertible Securities

If we were to issue any securities convertible into or exercisable for shares
of ZDNet Stock, the Outstanding Interest Percentage and the Retained Interest
Percentage would be unchanged at the time of such issuance. If any shares of
ZDNet Stock were issued upon conversion or exercise of such securities,
however, then the Outstanding Interest Percentage and the Retained Interest
Percentage would be affected as shown above under "Additional Offering for
Account of ZD", if such securities were attributed to ZD, or under "Additional
Offering for Account of ZDNet", if such securities were attributed to ZDNet.

Repurchases of ZDNet Stock

The following illustrations reflect an assumed repurchase by Ziff-Davis Inc.
of 5 shares of ZDNet Stock after the assumed initial issuance of 15 shares of
ZDNet Stock for the account of ZD.

I-4
<PAGE>

Repurchase for the Account of ZD

Assume the repurchase is attributed to ZD as an increase in its Retained
Interest in ZDNet, with the cost charged solely against ZD.

<TABLE>
<S> <C>
Shares previously issued and outstanding............................... 15
Shares repurchased for account of ZD................................... 5
---
Total issued and outstanding after repurchase...................... 10
===
</TABLE>

. The Number of Shares Issuable with Respect to ZD's Retained Interest in
ZDNet would be increased by the number of any shares of ZDNet Stock
repurchased for the account of ZD.

<TABLE>
<S> <C>
Number of Shares Issuable with Respect to ZD's Retained
Interest in ZDNet prior to repurchase.............................. 85
Number of shares repurchased for the account of ZD.................. 5
---
Number of Shares Issuable with Respect to ZD's Retained Interest
in ZDNet after repurchase...................................... 90
===
</TABLE>

. As a result, the total issued and outstanding shares (10) would in the
aggregate represent an Outstanding Interest Percentage of 10%, calculated
as follows:

10
--------
10 + 90

The Retained Interest Percentage would accordingly be increased to 90%.

Repurchase for Account of ZDNet without Participation by ZD

Assume the repurchase is attributed to ZDNet, with the cost being charged
solely against ZDNet. Further assume that the board of directors does not
determine to transfer assets from ZDNet to ZD to hold constant the Outstanding
Interest Percentage and Retained Interest Percentage.

<TABLE>
<S> <C>
Shares previously issued and outstanding............................... 15
Shares repurchased for account of ZDNet................................ 5
---
Total issued and outstanding after repurchase...................... 10
===
</TABLE>

. The Number of Shares Issuable with Respect to ZD's Retained Interest in
ZDNet (85) would remain unchanged.

. As a result, the total issued and outstanding shares (10) would in the
aggregate represent an Outstanding Interest Percentage of about 11%,
calculated as follows:

10
--------
10 + 85

The Retained Interest Percentage would accordingly be increased to about
89%.

I-5
<PAGE>

Repurchase for Account of ZDNet with Participation by ZD

Assume the repurchase is attributed to ZDNet, with the cost being charged
solely against ZDNet. Further assume that the repurchase is made in connection
with a tender offer for 5, or 33%, of the then outstanding shares at a price of
$20 per share, and that the board of directors determines to transfer cash or
other assets from ZDNet to ZD to hold constant the Outstanding Interest
Percentage and Retained Interest Percentage.

. In order to hold constant the Outstanding Interest Percentage and
Retained Interest Percentage, the board of directors determines that the
Market Value of a share of ZDNet Stock in this context is $20 and
transfer from ZDNet to ZD an amount of cash or other assets equal to 567%
(representing the ratio of the Number of Shares Issuable with Respect to
ZD's Retained Interest in ZDNet (85) to the total number of shares of
ZDNet Stock issued and outstanding (15), in each case immediately prior
to the repurchase) of the aggregate amount of the cash paid in the tender
offer to holders of outstanding shares of ZDNet Stock ($100), or a total
of $567.

. In that case, the Number of Shares Issuable with Respect to ZD's Retained
Interest in ZDNet (85) would decrease by the amount of cash so
transferred ($567) divided by the Market Value per share of ZDNet Stock
($20).

<TABLE>
<S> <C>
Number of Shares Issuable with Respect to ZD's Retained Interest in
ZDNet prior to transfer............................................. 85
Adjustment in respect of ZD's Retained Interest to reflect transfer
to ZD of funds theretofore allocated to ZDNet....................... 28
---
Number of Shares Issuable with Respect to ZD's Retained Interest
in ZDNet after transfer......................................... 57
===
</TABLE>

. As a result, the total issued and outstanding shares (10) would in the
aggregate continue to represent an Outstanding Interest Percentage of
15%, calculated as follows:
10
--------
10 + 57

The Retained Interest Percentage would accordingly continue to be 85%.

. Assuming that the board of directors transferred only half of the $567
amount, or $283.50, from ZDNet to ZD, the Number of Shares Issuable with
Respect to ZD's Retained Interest in ZDNet (85) would decrease by the
amount of cash so transferred ($283.50) divided by the Market Value per
share of ZDNet Stock ($20).

<TABLE>
<S> <C>
Number of Shares Issuable with Respect to ZD's Retained Interest in
ZDNet prior to transfer............................................ 85
Adjustment in respect of ZD's Retained Interest to reflect transfer
to ZD of cash theretofore allocated to ZDNet....................... 14
---
Number of Shares Issuable with Respect to ZD's Retained Interest in
ZDNet after transfer............................................... 71
===
</TABLE>

I-6
<PAGE>

. In that case, as a result, the total issued and outstanding shares (10)
would in the aggregate represent an Outstanding Interest Percentage of
about 12%, calculated as follows:

10
-------
10 + 71

The Retained Interest Percentage would accordingly be increased to about
88%.

ZDNet Stock Dividends

The following illustrations reflect assumed dividends of ZDNet Stock on
outstanding shares of ZD Stock and outstanding shares of ZDNet Stock,
respectively, after the assumed initial issuance of 15 shares of ZDNet Stock
for the account of ZD.

ZDNet Stock Dividend on ZD Stock

Assume 1,000 shares of ZD Stock are outstanding and Ziff-Davis Inc. declares
a dividend of 1/20 of a share of ZDNet Stock on each outstanding share of ZD
Stock.

<TABLE>
<S> <C>
Shares previously issued and outstanding.............................. 15
Newly issued shares for account of ZD................................. 50
---
Total issued and outstanding after dividend......................... 65
===
</TABLE>

. Any dividend of shares of ZDNet Stock to the holders of shares of ZD
Stock would be treated as a reduction in the Number of Shares Issuable
with Respect to ZD's Retained Interest in ZDNet.

<TABLE>
<S> <C>
Number of Shares Issuable with Respect to ZD's Retained Interest in
ZDNet prior to dividend........................................... 85
Number of shares distributed on outstanding shares of ZD Stock for
account of ZD..................................................... 50
---
Number of Shares Issuable with Respect to ZD's Retained Interest
in ZDNet after dividend......................................... 35
===
</TABLE>

. As a result, the total issued and outstanding shares (65) would in the
aggregate represent an Outstanding Interest Percentage of 65%, calculated
as follows:

65
-------
65 + 35

The Retained Interest Percentage would accordingly be reduced to 35%.
Note, however, that after the dividend, the holders of ZD Stock would also
hold 50 shares of ZDNet Stock, which would be intended to represent a 50%
interest in the value attributable to ZDNet.

I-7
<PAGE>

ZDNet Stock Dividend on ZDNet Stock

Assume Ziff-Davis Inc. declares a dividend of 1/5 of a share of ZDNet Stock
on each outstanding share of ZDNet Stock.

<TABLE>
<S> <C>
Shares previously issued and outstanding............................... 15
Newly issued shares for account of ZDNet............................... 3
---
Total issued and outstanding after dividend........................ 18
===
</TABLE>

. The Number of Shares Issuable with Respect to ZD's Retained Interest in
ZDNet would be increased proportionately to reflect the stock dividend
payable in shares of ZDNet Stock to holders of shares of ZDNet Stock.
That is, the Number of Shares Issuable with Respect to ZD's Retained
Interest in ZDNet would be increased by a number equal to 567%
(representing the ratio of the Number of Shares Issuable with Respect to
ZD's Retained Interest in ZDNet (85) to the number of shares of ZDNet
Stock issued and outstanding (15), in each case immediately prior to such
dividend) of the aggregate number of shares issued in connection with
such dividend (3), or 17.

<TABLE>
<S> <C>
Number of Shares Issuable with Respect to ZD's Retained Interest in
ZDNet prior to dividend.............................................. 85
Adjustment in respect of ZD's Retained Interest to reflect shares
distributed on outstanding shares of ZDNet Stock..................... 17
---
Number of Shares Issuable with Respect to ZD's Retained Interest in
ZDNet after dividend............................................... 102
===
</TABLE>

. As a result, the total issued and outstanding shares (18) would in the
aggregate continue to represent an Outstanding Interest Percentage of
15%, calculated as follows:

18
---------
18 + 102

The Retained Interest Percentage would accordingly continue to be 85%.

Capital Transfers of Cash or Other Assets between ZD and ZDNet

Capital Contribution of Cash or Other Assets from ZD to ZDNet

The following illustration reflects the assumed contribution by ZD to ZDNet,
after the assumed initial issuance of 15 shares of ZDNet Stock for the account
of ZD, of $40 of assets allocated to ZD at a time when the Market Value of the
ZDNet Stock is $20 per share.

<TABLE>
<S> <C>
Shares previously issued and outstanding............................... 15
Newly issued shares.................................................... 0
---
Total issued and outstanding after contribution.................... 15
===
</TABLE>

I-8
<PAGE>

. The Number of Shares Issuable with Respect to ZD's Retained Interest in
ZDNet would be increased to reflect the contribution to ZDNet of assets
theretofore allocated to ZD by a number equal to the value of the assets
contributed ($40) divided by the Market Value of ZDNet Stock at that time
($20), or 2 shares.

<TABLE>
<S> <C>
Number of Shares Issuable with Respect to ZD's Retained Interest in
ZDNet prior to contribution........................................ 85
Increase to reflect contribution to ZDNet of assets allocated to
ZD................................................................. 2
---
Number of Shares Issuable with Respect to ZD's Retained Interest
in ZDNet after contribution.................................... 87
===
</TABLE>

. As a result, the total issued and outstanding shares (15) would in the
aggregate represent an Outstanding Interest Percentage of a little less
than 15%, calculated as follows:

15
--------
15 + 87

The Retained Interest Percentage would accordingly be increased to a little
more than 85%.

Return of Capital Transfer of Cash or Other Assets from ZDNet to ZD

The following illustration reflects the assumed transfer by ZDNet to ZD,
after the assumed initial issuance of 15 shares of ZDNet Stock for the account
of ZD, of $40 of assets allocated to ZDNet on a date on which the Market Value
of ZDNet Stock is $20 per share.

<TABLE>
<S> <C>
Shares previously issued and outstanding............................. 15
Newly issued shares.................................................. 0
---
Total issued and outstanding after contribution.................. 15
===

. The Number of Shares Issuable with Respect to ZD's Retained Interest in
ZDNet would be decreased to reflect the transfer to ZD of assets
theretofore allocated to ZDNet by a number equal to the value of the
assets transferred ($40) divided by the Market Value of ZDNet Stock at
that time ($20), or 2 shares.

Number of Shares Issuable with Respect to ZD's Retained Interest in
ZDNet prior to contribution......................................... 85
Decrease to reflect transfer to ZD of assets allocated to ZDNet...... 2
---
Number of Shares Issuable with Respect to ZD's Retained Interest
in ZDNet after contribution..................................... 83
===
</TABLE>

. As a result, the total issued and outstanding shares (15) would in the
aggregate represent an Outstanding Interest Percentage of a little more
than 15%, calculated as follows:
15
--------
15 + 83

The Retained Interest Percentage would accordingly be decreased to a little
less than 85%.

I-9
<PAGE>

INDEX TO FINANCIAL STATEMENTS

Ziff-Davis Inc. is offering shares of ZDNet Stock by this prospectus. In
order to prepare separate financial statements for ZD and ZDNet, we have
separated ZDNet, our online business division, from ZD, which includes the rest
of our businesses and a Retained Interest in ZDNet, and we have allocated all
of our consolidated assets, liabilities, revenue, expenses and cash flow
between ZD and ZDNet. Thus, the financial statements of ZD and ZDNet, taken
together, comprise all of the accounts included in the corresponding combined
financial statements of Ziff-Davis Inc. Because ZD currently has a 100%
Retained Interest in ZDNet, the financials of ZD reflect a 100% equity interest
in ZDNet in a manner similar to the equity method of accounting provided by APB
No. 18, "The Equity Method of Accounting for Investments in Common Stock".

F-1
<PAGE>

ZDNET
(a division of Ziff-Davis Inc.)

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
ZDNet
Report of independent accountants....................................... F-5
Combined balance sheets as of December 31, 1996 and 1997 and September
30, 1998 (unaudited)................................................... F-6
Combined statements of operations for the period from February 29, 1996
to December 31, 1996, for the year ended December 31, 1997 and for the
nine months ended September 30, 1997 and 1998 (unaudited).............. F-7
Combined statements of cash flows for the period from February 29, 1996
to December 31, 1996, for the year ended December 31, 1997 and for the
nine months ended September 30, 1997 and 1998 (unaudited).............. F-8
Combined statements of changes in division equity for the period from
February 29, 1996 to December 31, 1996, for the year ended December 31,
1997 and for the nine months ended September 30, 1998 (unaudited)...... F-9
Notes to combined financial statements.................................. F-10
ZDNet (predecessor)
Report of independent accountants....................................... F-30
Combined balance sheets as of December 31, 1995 and February 28, 1996... F-31
Combined statements of operations for the year ended December 31, 1995
and for the period from January 1, 1996 to February 28, 1996........... F-32
Combined statements of cash flows for the year ended December 31, 1995
and for the period from January 1, 1996 to February 28, 1996........... F-33
Combined statements of changes in division equity for the year ended
December 31, 1995 and for the period from January 1, 1996 to February
28, 1996............................................................... F-34
Notes to combined financial statements.................................. F-35
</TABLE>

F-2
<PAGE>

ZD
(a division of Ziff-Davis Inc.)

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
ZD
Report of independent accountants....................................... F-44
Combined balance sheets as of December 31, 1996 and 1997 and September
30, 1998 (unaudited)................................................... F-45
Combined statements of operations for the years ended December 31, 1995,
December 31, 1996, and December 31, 1997 and the nine months ended
September 30, 1997 and 1998 (unaudited)................................ F-46
Combined statements of cash flows for the years ended December 31, 1995,
December 31, 1996 and 1997 and the nine months ended September 30, 1997
and 1998 (unaudited)................................................... F-47
Combined statements of changes in division equity for the years ended
December 31, 1995, December 31, 1996 and 1997 and the nine months ended
September 30, 1998 (unaudited)......................................... F-48
Notes to combined financial statements.................................. F-49
ZD Publishing (a predecessor of ZD)
Report of independent accountants....................................... F-81
Combined balance sheets as of December 31, 1995 and February 28, 1996... F-82
Combined statements of operations for the year ended December 31, 1995
and for the period from January 1, 1996 to February 28, 1996........... F-83
Combined statements of cash flows for the year ended December 31, 1995
and for the period from January 1, 1996 to February 28, 1996........... F-84
Combined statements of changes in division equity for the year ended
December 31, 1995 and for the period ended February 28, 1996........... F-85
Notes to combined financial statements.................................. F-86
</TABLE>

F-3
<PAGE>

ZIFF-DAVIS INC.

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
Page
-----
<S> <C>
Ziff-Davis Inc.
Report of independent accountants...................................... F-100
Combined balance sheets as of December 31, 1996 and 1997 and September
30, 1998 (unaudited).................................................. F-101
Combined statements of operations for the years ended December 31,
1995, December 31, 1996, and December 31, 1997 and the nine months
ended September 30, 1997 and 1998 (unaudited)......................... F-102
Combined statements of cash flows for the years ended December 31,
1995, December 31, 1996 and 1997 and the nine months ended September
30, 1997 and 1998 (unaudited)......................................... F-103
Combined statements of changes in stockholders' equity for the years
ended December 31, 1995, December 31, 1996 and 1997 and the nine
months ended September 30, 1998 (unaudited)........................... F-104
Notes to combined financial statements................................. F-105
ZDI (Formerly Ziff-Davis Publishing Company)
Report of independent accountants...................................... F-134
Consolidated balance sheets as of December 31, 1995 and February 28,
1996.................................................................. F-135
Consolidated statements of operations for the year ended December 31,
1995 and for the period from January 1, 1996 to February 28, 1996..... F-136
Consolidated statements of cash flows for the year ended December 31,
1995 and for the period from January 1, 1996 to February 28, 1996..... F-137
Consolidated statements of changes in stockholders' equity for the year
ended December 31, 1995 and for the period ended February 28, 1996.... F-138
Notes to combined financial statements................................. F-139
</TABLE>

F-4
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of
Ziff-Davis Inc.

In our opinion, the accompanying combined balance sheets and the related
combined statements of operations, cash flows and changes in division equity,
present fairly, in all material respects, the financial position of ZDNet (a
division of Ziff-Davis Inc., the "Company") at December 31, 1996 and 1997, and
the results of its operations and its cash flows for the period from February
29, 1996 to December 31, 1996 and for the year ended December 31, 1997, in
conformity with generally accepted accounting principles. 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 of these statements in accordance with
generally accepted auditing standards which 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, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for the
opinion expressed above.

As described in Note 1 to the financial statements, ZDNet is a division of
Ziff-Davis Inc.; accordingly, the financial statements of ZDNet should be read
in conjunction with the audited financial statements of Ziff-Davis Inc.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP
New York, NY
December 17, 1998

F-5
<PAGE>

ZDNET
(a division of Ziff-Davis Inc.)

COMBINED BALANCE SHEETS

(dollars in thousands)

<TABLE>
<CAPTION>
December 31,
--------------- September 30,
1996 1997 1998
------- ------- -------------
(unaudited)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents...................... $ -- $ 28 $ 425
Accounts receivable, net of allowance for
doubtful accounts of $201, $522 and $802, for
1996, 1997 and September 30, 1998,
respectively.................................. 6,600 11,396 15,024
Deferred taxes................................. -- 69 242
Other current assets........................... 1,252 28 53
------- ------- -------
Total current assets......................... 7,852 11,521 15,744
Property and equipment, net...................... 2,070 3,145 4,964
Investment, at cost.............................. -- -- 5,000
Deferred taxes................................... 4,722 5,496 5,639
Intangible assets, net........................... 67,863 67,164 63,746
------- ------- -------
Total assets................................. $82,507 $87,326 $95,093
======= ======= =======
LIABILITIES AND DIVISION EQUITY
Current liabilities:
Accounts payable............................... $ 2,715 $ 645 $ 2,744
Accrued expenses............................... 1,124 2,208 3,063
Unearned income................................ 93 -- 734
------- ------- -------
Total current liabilities.................... 3,932 2,853 6,541
Non-current liabilities.......................... -- 1,181 817
------- ------- -------
Total liabilities............................ 3,932 4,034 7,358
------- ------- -------
Commitments and contingencies (Notes 12, 13 and
14)
Division equity.................................. 78,575 83,292 87,735
------- ------- -------
Total liabilities and division equity........ $82,507 $87,326 $95,093
======= ======= =======
</TABLE>

The accompanying notes are an integral part of the combined financial
statements.

F-6
<PAGE>

ZDNET
(a division of Ziff-Davis Inc.)

COMBINED STATEMENTS OF OPERATIONS

(dollars in thousands)

<TABLE>
<CAPTION>
Nine months
Period from ended
February 29, 1996 Year ended September 30,
to December 31, December 31, -----------------
1996 1997 1997 1998
----------------- ------------ -------- -------
(unaudited)
<S> <C> <C> <C> <C>
Revenue, net................. $ 16,215 $ 32,218 $ 21,277 $36,466
Cost of operations:
Production and content..... 14,863 23,543 17,638 18,970
Selling, general and
administrative expenses... 13,280 23,475 17,757 22,049
Depreciation and
amortization of property
and equipment............. 656 1,495 896 1,362
Amortization of intangible
assets.................... 4,829 6,186 4,628 3,418
-------- -------- -------- -------
Total operating
expenses................ 33,628 54,699 40,919 45,799
-------- -------- -------- -------
Loss from operations......... (17,413) (22,481) (19,642) (9,333)
Minority interest............ -- 400 436 330
-------- -------- -------- -------
Loss before income taxes..... (17,413) (22,081) (19,206) (9,003)
Income tax benefit........... (488) (843) (743) (312)
-------- -------- -------- -------
Net loss..................... $(16,925) $(21,238) $(18,463) $(8,691)
======== ======== ======== =======
</TABLE>

The accompanying notes are an integral part of the combined financial
statements.

F-7
<PAGE>

ZDNET
(a division of Ziff-Davis Inc.)

COMBINED STATEMENTS OF CASH FLOWS

(dollars in thousands)

<TABLE>
<CAPTION>
Nine months
Period from ended
February 29, 1996 Year ended September 30,
to December 31, December 31, -----------------
1996 1997 1997 1998
----------------- ------------ -------- -------
(unaudited)
<S> <C> <C> <C> <C>
Cash flows from operating
activities:
Net loss.................... $(16,925) $(21,238) $(18,463) $(8,691)
Adjustments to reconcile net
loss to net cash used in
operating activities:
Depreciation and
amortization............. 656 1,495 896 1,362
Amortization of intangible
assets................... 4,829 6,186 4,628 3,418
Deferred tax benefit...... (488) (843) (743) (312)
Changes in operating
assets and liabilities:
Accounts receivable..... (1,901) (4,629) (3,829) (3,712)
Other current assets.... (1,217) 4,093 4,053 (1)
Accounts payable and
accrued expenses....... 2,333 (1,416) 824 2,867
Unearned income......... 93 (93) 95 734
Other, net.............. -- 1,181 1,153 (329)
-------- -------- -------- -------
Net cash used in operating
activities................. (12,620) (15,264) (11,386) (4,664)
-------- -------- -------- -------
Cash flows from investing
activities:
Capital expenditures...... (1,010) (2,374) (1,345) (3,181)
Investments and
acquisitions, net of cash
acquired................. -- (2,998) (2,998) (5,000)
-------- -------- -------- -------
Net cash used in investing
activities................. (1,010) (5,372) (4,343) (8,181)
-------- -------- -------- -------
Cash flows from financing
activities:
Capital contributions from
ZD....................... 13,630 20,664 15,799 13,242
-------- -------- -------- -------
Net cash provided by
financing activities....... 13,630 20,664 15,799 13,242
-------- -------- -------- -------
Net increase in cash and
cash equivalents........... -- 28 70 397
Cash and cash equivalents at
beginning of period........ -- -- -- 28
-------- -------- -------- -------
Cash and cash equivalents at
end of period.............. $ -- $ 28 $ 70 $ 425
======== ======== ======== =======
</TABLE>

The accompanying notes are an integral part of the combined financial
statements.

F-8
<PAGE>

ZDNET
(a division of Ziff-Davis Inc.)

COMBINED STATEMENTS OF CHANGES IN DIVISION EQUITY

(dollars in thousands)

<TABLE>
<CAPTION>
Cumulative Total
Paid-in Accumulated translation division
capital deficit adjustment equity
-------- ----------- ----------- --------
<S> <C> <C> <C> <C>
Balance at February 29, 1996....... $ 81,900 $ -- $ -- $ 81,900
Capital contribution from ZD....... 13,630 -- -- 13,630
Net loss........................... -- (16,925) -- (16,925)
Foreign currency translation
adjustment........................ -- -- (30) (30)
-------- -------- ----- --------
Balance at December 31, 1996....... 95,530 (16,925) (30) 78,575
Capital contribution from ZD....... 25,831 -- -- 25,831
Net loss........................... -- (21,238) -- (21,238)
Foreign currency translation
adjustment........................ -- -- 124 124
-------- -------- ----- --------
Balance at December 31, 1997....... 121,361 (38,163) 94 83,292
Capital contribution from ZD....... 13,242 -- -- 13,242
Net loss........................... -- (8,691) -- (8,691)
Foreign currency translation
adjustment........................ -- -- (108) (108)
-------- -------- ----- --------
Balance at September 30, 1998
(unaudited)....................... $134,603 $(46,854) $ (14) $ 87,735
======== ======== ===== ========
</TABLE>

The accompanying notes are an integral part of the combined financial
statements.

F-9
<PAGE>

ZDNET
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS

(numbers rounded to the nearest thousand)

1. Organization and Basis of Presentation

ZDNet is the online business division of Ziff-Davis Inc.

In order to prepare separate financial statements for ZD (as defined below)
and ZDNet, Ziff-Davis Inc. has allocated all of its consolidated assets,
liabilities, revenues, expenses and cash flow between ZD and ZDNet. Thus, the
financial statements of ZD and ZDNet, taken together, comprise all of the
accounts included in the corresponding combined financial statements of Ziff-
Davis Inc.

ZDNet's financial statements reflect the application of certain cash
management and allocation policies adopted by the board of directors of Ziff-
Davis Inc. (the "Board"). These policies are summarized under "Certain Cash
Management and Allocation Policies" below.

Even though Ziff-Davis Inc. has allocated all of its consolidated assets,
liabilities, revenue, expenses and cash flow between ZD and ZDNet, that
allocation and the division of Ziff-Davis Inc.'s common stock will not change
the legal title to any assets or responsibility for any liabilities and will
not affect the rights of any creditors. Holders of ZDNet Stock (as described
below) will continue to be common stockholders of Ziff-Davis Inc. and, as such,
will be subject to all risks associated with an investment in Ziff-Davis Inc.
and all of its businesses, assets and liabilities.

Financial events which occur at ZD that affect Ziff-Davis Inc.'s consolidated
results of operations or financial position could affect the results of
operations or financial condition of ZDNet. Accordingly, financial information
for ZDNet should be read in conjunction with financial information for ZD and
financial information for Ziff-Davis Inc.

Acquisition of ZDNet

In February 1996, SOFTBANK Corp. (SOFTBANK Corp. and its affiliates
hereinafter referred to as "Softbank") acquired the stock of Ziff-Davis
Holdings Corp. ("Holdings") for an aggregate purchase price of approximately
$1,800,000,000 plus transaction costs. Softbank is a Japanese corporation which
as of December 31, 1997 was 50.2% owned by Mr. Son, its president, including
43.4% directly owned by his wholly owned holding company, MAC Inc. (MAC Inc.
and affiliates hereinafter referred to as "MAC"). Concurrent with the
acquisition, in a separate agreement, MAC, directly or through wholly owned
affiliates, acquired certain assets and assumed certain liabilities of ZD Inc.
(the "MAC Assets"), a wholly owned subsidiary of Holdings (formerly Ziff-Davis
Inc.), for an aggregate purchase price of approximately $302,000,000. ZDNet
comprised a portion of the MAC Assets.

These acquisitions have been accounted for as of February 29, 1996 using the
purchase method of accounting. The excess of the purchase price over the fair
value of the assets acquired and liabilities assumed relating to ZDNet was
$72,692,000.

F-10
<PAGE>

ZDNET
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

Acquisition of GameSpot, Inc.

In January 1997, Ziff-Davis Inc.'s parent company (SOFTBANK Holdings Inc.)
acquired 70% of GameSpot, Inc. ("GameSpot", formerly SpotMedia Communications,
Inc.) for approximately $3,000,000. Funds for this acquisition were provided by
Ziff-Davis Inc. to the parent. As part of the reorganization and initial public
offering on May 4, 1998 (described below), GameSpot was contributed to ZDNet.
Because GameSpot and Ziff-Davis Inc. were under common control at the time of
the transaction, the GameSpot acquisition has been accounted for in a manner
similar to a pooling of interests and GameSpot's results have been included in
ZDNet's results since the point of common ownership (January 1997). The
"pooling" of GameSpot results in a non-cash capital contribution of $5,167,000
for the year ended December 31, 1997.

Reorganization and Initial Public Offering

On May 4, 1998, Softbank, through its wholly owned subsidiary SOFTBANK
Holdings Inc. ("SBH"), completed a reorganization whereby the common stock of
ZD Inc. and ZD Events Inc. were contributed to Ziff-Davis Inc. in exchange for
73,619,355 shares of Ziff-Davis Inc.'s common stock. Concurrently with the
reorganization, Ziff-Davis Inc. (1) completed an initial public offering of
25,800,000 shares at an initial public offering purchase price of $15.50 per
share, (2) issued $250,000,000 of 8 1/2% subordinated notes due 2008, (3)
entered into a $1,350,000,000 credit facility with a group of banks under which
$1,250,000,000 was borrowed and (4) converted $908,673,000 of intercompany
indebtedness to equity. In addition, Ziff-Davis Inc. received approximately
$9,100,000 of fixed assets from Kingston Technology Company ("Kingston") in
exchange for 580,645 shares of ZDI common stock. These assets have been
subsequently leased back to Kingston. Total shares of common stock issued to
Softbank and its affiliates were 74,200,000. The transactions described above
are herein referred to as the "Reorganization".

Proceeds, net of transaction costs, from the initial public offering and
funding transactions in the Reorganization of $1,863,260,000 were used to
complete the purchase of certain assets from MAC for $370,000,000, and repay
intercompany indebtedness. The ZDNet business was a portion of the MAC Assets
acquired at that time.

On May 14, 1998, an affiliate of Softbank sold 50,000 shares of Ziff-Davis
Inc.'s common stock to an unrelated third party. On May 28, 1998, Ziff-Davis
Inc.'s U.S. underwriters exercised their option to purchase 2.0 million
additional shares of common stock to cover over-allotments. Ziff-Davis Inc.
purchased the additional shares from SBH resulting in no change to the total
number of shares outstanding.

F-11
<PAGE>

ZDNET
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

Unaudited interim financial information

The unaudited, combined financial statements for ZDNet at September 30, 1998
and for the nine months ended September 30, 1997 and September 30, 1998 have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring adjustments) considered necessary
to present fairly the combined financial position of ZDNet at September 30,
1998 and the results of its combined operations and cash flows for the nine
months ended September 30, 1997 and 1998 have been included. Operating results
for the periods presented are not necessarily indicative of the results that
may be expected for the year ended December 31, 1998.

2. ZDNet Stock Proposal (unaudited)

The stockholders of Ziff-Davis Inc. are scheduled to vote on a proposal (the
"Tracking Stock Proposal") to authorize the issuance of a new series of common
stock, to be designated as Ziff-Davis Inc. --ZDNet Common Stock ("ZDNet
Stock"), intended to reflect the performance of Ziff-Davis Inc.'s online
business division ("ZDNet"). The majority owner of the common stock of Ziff-
Davis Inc. has agreed to vote for the Tracking Stock Proposal. Before the ZDNet
Stock is first issued, Ziff-Davis Inc.'s existing common stock will be
re-classified as Ziff-Davis Inc.--ZD Common Stock ("ZD Stock"), and that stock
will be intended to reflect the performance of Ziff-Davis Inc.'s other
businesses and a "Retained Interest" in ZDNet (i.e., Ziff-Davis Inc.'s interest
in ZDNet excluding the interest intended to be represented by outstanding
shares of ZDNet Stock)(collectively, "ZD"). (Each of ZDNet and ZD is sometimes
referred to herein as a "Group").

ZD currently has a 100% Retained Interest in ZDNet. Following approval of the
Tracking Stock Proposal, Ziff-Davis Inc. currently plans to offer to the
public, for cash, shares of ZDNet Stock intended to represent 15% to 20% of the
equity value attributed to ZDNet. Ziff-Davis Inc. expects to offer ZDNet Stock
to the public sometime in the first quarter of 1999. However, Ziff-Davis Inc.
could choose to conduct the offering at a later time, or not to make the
offering at all, depending on the circumstances at the time. In addition to or
instead of the offering, Ziff-Davis Inc. reserves the right to distribute ZDNet
Stock to stockholders of Ziff-Davis Inc.

Currently, Ziff-Davis Inc. provides all funding for ZD and ZDNet as described
in Note 4 (Certain Cash Management and Allocation Policies). Ziff-Davis Inc.
intends to continue these practices until ZDNet Stock is first issued.
Accordingly, no interest expense or income

F-12
<PAGE>

ZDNET
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

to or from ZD has been reflected in the financial statements of ZDNet for any
period prior to the date on which ZDNet Stock is first issued.

After the date on which ZDNet Stock is first issued, for financial statement
purposes the following policies will apply, except to the extent the Board
rescinds, modifies or adds to them:

(a) Ziff-Davis Inc. will attribute each future incurrence or issuance of
external debt or preferred stock (and the proceeds thereof) to ZD, except
in cases where the Board determines otherwise. The Board may determine from
time to time to attribute an incurrence or issuance of debt or preferred
stock (and the proceeds thereof) to ZDNet to the extent that Ziff-Davis
Inc. incurs or issues the debt or preferred stock for the benefit of ZDNet,
but the Board will not be required to do so.

(b) Ziff-Davis Inc. will attribute each future issuance of ZD Stock (and
the proceeds thereof) to ZD. Ziff-Davis Inc. may attribute any future
issuance of ZDNet Stock (and the proceeds thereof) to ZD in respect of its
Retained Interest in ZDNet (in a manner analogous to a secondary offering
of common stock of a subsidiary owned by a corporate parent) or to ZDNet
(in a manner analogous to a primary offering of common stock). Dividends on
and repurchases of ZD Stock will be charged against ZD, and dividends on
and repurchases of ZDNet Stock will be charged against ZDNet. In addition,
at the time of any dividend on ZDNet Stock, Ziff-Davis Inc. will credit to
ZD, and charge against ZDNet, a corresponding amount in respect of ZD's
Retained Interest in ZDNet.

(c) Whenever ZDNet holds cash (other than cash of ZDNet's foreign
operations or cash of ZDNet's operations that are not wholly owned), ZDNet
will normally transfer that cash to ZD. Conversely, whenever ZDNet has a
cash need (other than cash needs of ZDNet's foreign operations or cash
needs of ZDNet's operations that are not wholly owned), ZD will normally
fund that cash need. However, the Board will determine, in its sole
discretion, whether to provide any particular funds to either Group. The
Board is not obligated to cause either Group to provide funds to the other
Group if the Board determines it is not in the best interest of Ziff-Davis
Inc. to do so.

F-13
<PAGE>

ZDNET
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

(3) the Board determines that a given transfer (or type of transfer) should
be accounted for as a return of capital reducing ZD's Retained Interest in
ZDNet. There are no specific criteria to determine when Ziff-Davis Inc.
will account for a cash transfer as a long-term loan, a capital
contribution or a return of capital rather than an inter-Group revolving
credit advance. The Board would make such a determination in the exercise
of its business judgment at the time of such transfer (or the first of such
type of transfer) based upon all relevant circumstances. Factors the Board
would consider include (1) the current and projected capital structure of
each Group, (2) the relative levels of internally generated funds of each
Group, (3) the financing needs and objectives of the recipient Group, (4)
the investment objectives of the transferring Group, (5) the availability,
cost and time associated with alternative financing sources and (6)
prevailing interest rates and general economic conditions.

(e) Any cash transfer accounted for as an inter-Group revolving credit
advance will bear interest at the rate at which Ziff-Davis Inc. could
borrow such funds on a revolving credit basis (as the Board determines in
its sole discretion). Any cash transfer accounted for as a long-term loan
will have interest rate, amortization, maturity, redemption and other terms
that generally reflect the then prevailing terms on which Ziff-Davis Inc.
could borrow such funds (as the Board determines in its sole discretion).

(f) Any cash transfer from ZD to ZDNet (or for its account) accounted for
as a capital contribution will correspondingly increase ZDNet's division
equity and ZD's Retained Interest in ZDNet. As a result, the number of
shares of ZDNet Stock that could be issued by Ziff-Davis Inc. for the
account of ZD in respect of its Retained Interest in ZDNet (the "Number of
Shares Issuable with Respect to ZD's Retained Interest in ZDNet") will
increase by (1) the amount of such capital contribution divided by (2) the
Market Value of ZDNet Stock on the date of transfer.

(g) Any cash transfer from ZDNet to ZD (or for its account) accounted for
as a return of capital will correspondingly reduce ZDNet's division equity
and ZD's Retained Interest in ZDNet. As a result, the Number of Shares
Issuable with Respect to ZD's Retained Interest in ZDNet will decrease by
(1) the amount of such return of capital divided by (2) the Market Value of
ZDNet Stock on the date of transfer.

3. Summary of Significant Accounting Policies

Principles of combination

The combined financial statements include the accounts of ZDNet. All
significant transactions within the ZDNet division have been eliminated on
combination.

F-14
<PAGE>

ZDNET
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

Cash and cash equivalents

ZDNet considers all highly liquid investments with an original maturity of
three months or less to be cash equivalents.

Concentration of credit risk

ZDNet places its temporary cash investments with high credit quality
financial institutions. At times, such investments may be in excess of
federally insured limits. ZDNet has not experienced losses in such accounts.

ZDNet's customers represent a variety of technology companies in the United
States and other countries. ZDNet extends credit to its customers and
historically has not experienced significant losses relating to receivables
from individual customers or groups of customers.

Property and equipment

Property and equipment have been recorded at cost or estimates of fair value
at the date of acquisition. Depreciation is computed using the straight-line
method over the estimated useful lives of the assets which range from three to
eight years. Leasehold improvements are amortized using the straight-line
method over the service life of the improvement or the life of the related
lease, whichever is shorter. Maintenance and repair costs are charged to
expense as incurred.

Intangible assets

Intangible assets consist principally of advertising lists, subscriber lists
and goodwill. Amortization of these assets is computed on a straight-line basis
over their estimated useful lives. Identifiable intangible assets are amortized
over a period of 2 to 9 years and goodwill, which represents the excess of the
purchase price over the estimated fair values of net assets acquired, is
amortized over a period of 10 to 20 years. (See Note 6.) ZDNet assesses the
recoverability of its intangible assets whenever adverse events or changes in
circumstances indicate that expected future cash flows (undiscounted and
without interest charges) may not be sufficient to support the carrying amount
of intangible assets. If undiscounted cash flows are not sufficient to support
the recorded assets, an impairment loss is recognized to reduce the carrying
value of the intangibles to its estimated recoverable value. ZDNet has not
experienced any impairment of its intangible assets.

Revenue recognition

ZDNet's revenue is derived principally from the sale of advertisements on
short-term contracts. Advertising revenue is recognized ratably in the period
in which the advertisement is displayed, provided that no significant
obligations remain and collection of

F-15
<PAGE>

ZDNET
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

the resulting receivable is probable. ZDNet's obligations typically include
guarantees of a minimum number of "impressions", or times that an advertisement
appears in pages viewed by users of ZDNet's online properties. To the extent
minimum guaranteed impressions are not met, ZDNet defers recognition of the
corresponding revenue until the remaining guaranteed impression levels are
achieved.

Revenue from subscription based fees and services is recognized evenly over
the term of the contract.

Revenue from barter transactions is recognized during the period in which the
advertisements are displayed. Barter transactions are recorded at the lower of
estimated fair value of the goods or services received or the estimated fair
value of the advertisements given. To date, barter transactions have been
insignificant.

Foreign currency

The effect of translating foreign currency financial statements into U.S.
dollars is included in the cumulative translation adjustment account in
division equity. Gains and losses on foreign currency transactions, which are
not significant to operations, have been included in selling, general and
administrative expenses. ZDNet has not historically entered into forward
currency contracts.

Income taxes

ZDNet uses the asset and liability approach for financial accounting and
reporting of deferred taxes.

Use of estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the amounts reported in the financial statements. Actual results
may differ from these estimates.

Fair value of financial instruments

All current assets and liabilities are carried at cost, which approximates
fair value because of the short-term maturity of those instruments.

Stock-based compensation

ZDNet has elected to follow Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" ("APB 25"), to account for stock
options. Effective January 1, 1996, ZDNet adopted the disclosure only
provisions of Statement of Financial Accounting Standards ("SFAS") No. 123,
"Accounting for Stock-based Compensation".

F-16
<PAGE>

ZDNET
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

Comprehensive Income

ZDNet implemented SFAS No. 130 "Reporting Comprehensive Income", effective
January 1, 1998. This standard requires ZDNet to report the total changes in
division equity that do not result directly from transactions with
stockholders, including those which do not affect retained earnings. These
changes are not material to ZDNet's combined financial statements.

New Accounting Pronouncements

SFAS No. 132, "Employer's Disclosure about Pensions and Other Post-Retirement
Benefits", is effective for the year ended December 31, 1998. This standard
revises the disclosure requirements for employers' pension and other retiree
benefits.

ZDNet will adopt the above statements beginning with their 1998 financial
statements.

In June 1998, the Financial Accounting Standards Board issued SFAS 133
"Accounting for Derivative Instruments and Hedging Activities". SFAS 133
establishes accounting and reporting standards for derivative instruments and
for hedging activities and is effective for all fiscal quarters of fiscal years
beginning after June 15, 1999. ZDNet does not expect the adoption of SFAS 133
to have a material impact on ZDNet's results of operations.

4. Certain Cash Management and Allocation Policies

ZDNet's financial statements reflect the application of certain cash
management and allocation policies summarized below. The Board may rescind,
modify or add to any of these policies.

Treasury Activities

F-17
<PAGE>

ZDNET
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

foreign operations or operations that are not wholly owned) to Ziff-Davis Inc.,
and Ziff-Davis Inc. generally funds ZDNet's cash disbursements (other than
disbursements of foreign operations or operations that are not wholly owned),
on a daily basis.

In the financial statements of ZD and ZDNet, (1) all external debt and equity
transactions (and the proceeds thereof) were attributed to ZD, (2) whenever
ZDNet held cash (other than cash of ZDNet's foreign operations or cash of
ZDNet's operations that are not wholly owned), that cash was transferred to ZD
and accounted for as a return of capital (i.e., as a reduction in ZDNet's
division equity and ZD's Retained Interest in ZDNet) and (3) whenever ZDNet had
a cash need (other than cash needs of ZDNet's foreign operations or cash needs
of ZDNet's operations that are not wholly owned), that cash need was funded by
ZD and accounted for as a capital contribution (i.e., as an increase in ZDNet's
division equity and ZD's Retained Interest in ZDNet). Accordingly, no interest
expense or income to or from ZD has been reflected in the financial statements
of ZDNet.

Corporate General and Administrative Expenses

Ziff-Davis Inc. allocates the cost of certain corporate general and
administrative services and shared services (including certain legal,
accounting (tax and financial), information systems, telecommunications,
purchasing, marketing, intellectual property, public relations, corporate
office and travel expenses) (collectively, "Central Services") to ZDNet based
on utilization. Where determinations based on utilization alone are
impracticable, Ziff-Davis Inc. uses other methods and criteria that management
believes to be equitable and to provide a reasonable estimate of the cost
attributable to ZDNet.

Taxes

Federal income taxes, which are determined on a consolidated basis, except
for GameSpot, are allocated to ZDNet (and reflected in its financial
statements) in accordance with Ziff-Davis Inc.'s tax allocation policy. In
general, this policy provides that the consolidated tax provision (and related
tax payments or refunds) are allocated between the Groups based principally
upon the financial income, taxable income, credits and other amounts directly
related to the respective Groups. Tax benefits that cannot be used by the Group
generating such attributes, but can be utilized on a consolidated basis, are
allocated to the Group that generated such benefits. As a result, the allocated
Group amounts of taxes payable or refundable are not necessarily comparable to
those that would have resulted if the Groups had filed separate tax returns.
State income taxes generally are computed on a separate company basis.

Royalty Charges

ZD charges ZDNet an annual fee for the use of various brands and editorial
content. The current annual fee, which is reflected in ZDNet's financial
statements as part of its

F-18
<PAGE>

ZDNET
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

production and content costs, is equal to 5% of the first $100,000,000 of
ZDNet's revenue for the year, 4% of the next $50,000,000 of ZDNet's revenue for
that year and 3% of any incremental revenue over $150,000,000 for that year.
The Board may at some point in the future change this fee as it, in its sole
discretion, deems appropriate in light of the circumstances from time to time.

5. Property and equipment, net

Property and equipment, net consists of following:

<TABLE>
<CAPTION>
December 31,
--------------
1996 1997
------ ------
(dollars in
thousands)
<S> <C> <C>
Computers and equipment.................................... $1,800 $4,274
Furniture and fixtures..................................... 717 708
Leasehold improvements..................................... 209 314
------ ------
2,726 5,296
Accumulated depreciation and amortization.................. (656) (2,151)
------ ------
$2,070 $3,145
====== ======
</TABLE>

6. Intangible assets, net

Intangible assets, net consists of the following:

<TABLE>
<CAPTION>
December 31,
-----------------
1996 1997
------- --------
(dollars in
thousands)
<S> <C> <C>
Subscription lists...................................... $ 4,300 $ 4,300
Advertising lists....................................... 2,400 2,400
Goodwill................................................ 65,992 71,479
------- --------
72,692 78,179
Accumulated amortization................................ (4,829) (11,015)
------- --------
$67,863 $ 67,164
======= ========
</TABLE>

Intangible assets primarily relate to the acquisitions of the MAC Assets. As
discussed in Note 1, the acquisitions were accounted for under the purchase
method of accounting. As such, purchase price was allocated to tangible and
identifiable intangible assets with the remaining amount being allocated to
goodwill.

Advertising lists, exhibitor relationships and subscriber lists were recorded
at their estimated fair value as determined by an income approach.
Trademarks/trade names were recorded at their estimated fair value using a
relief from royalty approach.

F-19
<PAGE>

ZDNET
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

All intangible assets are being amortized using the straight-line method over
their estimated useful lives, up to 20 years. In determining the estimated
useful lives, ZDNet considered its competitive position in the markets in which
they operate, the historical attrition rates of advertisers, subscribes and
exhibitors, legal and contractual obligations and other factors.

Recoverability of goodwill and intangible assets is assessed at a minimum on
an annual basis. Impairments would be recognized in operating results if a
permanent diminution in value were to occur based upon an undiscounted cash
flow analysis.

7. Accrued Expenses

Accrued expenses consist of the following:

<TABLE>
<CAPTION>
December 31,
-----------------------
1996 1997
----------- -----------
(dollars in thousands)
<S> <C> <C>
Payroll and related employee benefits............. $ 852 $ 1,440
Licenses.......................................... -- 108
Other taxes....................................... 119 189
Other............................................. 153 471
----------- -----------
$ 1,124 $ 2,208
=========== ===========
</TABLE>

8. Income Taxes

Income tax benefits and related assets and liabilities attributed to ZDNet
are determined in accordance with Ziff-Davis Inc.'s tax allocation policy (Note
4).

ZDNet has been included in a consolidated federal income tax return, except
for the periods in which ZDNet was owned by MAC Inc. (described in Note 1),
which were assets of a separate taxpayer, and GameSpot, which is a 70% owned
subsidiary and files separate federal and state income tax returns on a stand-
alone basis.

Loss before income taxes is attributable to the following jurisdictions:

<TABLE>
<CAPTION>
December 31,
------------------
1996 1997
-------- --------
(dollars in
thousands)
<S> <C> <C>
United States.......................................... $(15,263) $(18,853)
Foreign................................................ (2,150) (3,228)
-------- --------
Total.................................................. $(17,413) $(22,081)
======== ========
</TABLE>

F-20
<PAGE>

ZDNET
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

Components of the income tax benefit are as follows:

<TABLE>
<CAPTION>
December
31,
------------
1996 1997
----- -----
(dollars in
thousands)
<S> <C> <C>
U.S. federal income taxes:
Current................................................... $ -- $ --
Deferred.................................................. (378) (653)
State and local income taxes:
Current................................................... -- --
Deferred.................................................. (110) (190)
Foreign income taxes........................................ -- --
----- -----
Total income tax benefit................................ $(488) $(843)
===== =====
</TABLE>

A reconciliation of the U.S. federal statutory tax rate to ZDNet's effective
tax rate on loss before income taxes is as follows:

<TABLE>
<CAPTION>
December
31,
------------
1996 1997
----- -----
<S> <C> <C>
Federal statutory tax rate................................... 35.0% 35.0%
State and local taxes (net of federal tax benefit)........... 6.0 6.0
Nonrecognition of combined losses of MAC Assets.............. (33.3) (27.7)
Change in valuation allowance................................ (4.9) (9.5)
----- -----
Effective tax rate........................................... 2.8% 3.8%
===== =====
</TABLE>

The effective tax rate differs from the federal statutory tax rate primarily
as a result of ZDNet's inability to deduct losses incurred by ZDNet while owned
by MAC. In addition, tax benefits attributable to losses in foreign
jurisdictions and certain U.S. losses are subject to the establishment of a
valuation allowance in as much as such loss carryforwards are not expected to
be utilized.

F-21
<PAGE>

ZDNET
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

Following is a summary of the components of the deferred tax accounts at
December 31, 1996 and 1997:

<TABLE>
<CAPTION>
December 31,
------------------------
1996 1997
----------- -----------
(dollars in thousands)
<S> <C> <C>
Current deferred tax assets........................ $ -- $ 69
----------- -----------
Noncurrent deferred tax assets
Net operating loss and other carryforwards........ 6,146 9,081
Other............................................. -- 10
----------- -----------
Gross noncurrent deferred tax assets.............. 6,146 9,091
Valuation allowance................................ (1,424) (3,595)
----------- -----------
Net noncurrent deferred tax assets................ 4,722 5,496
----------- -----------
Total net deferred tax assets................... $ 4,722 $ 5,565
=========== ===========
</TABLE>

The valuation allowance primarily relates to tax benefits of foreign net
operating loss carryforwards acquired in the MAC Asset purchase which are not
expected to be realized. No deferred tax asset has been established for the
U.S. losses generated by ZDNet while owned by MAC Inc. since these losses will
not be available to Ziff-Davis Inc. as a deduction.

ZDNet has U.S. and foreign net operating loss carryforwards at December 31,
1997 of approximately $25,000,000, which will begin to expire in 2000. The
utilization of certain net operating loss carryforwards of approximately
$10,000,000 is subject to limitations primarily due to the change of ownership
resulting from Softbank's acquisition of Ziff-Davis Inc.'s stock. Management
believes that such limitations will not significantly affect Ziff-Davis Inc.'s
ability to recognize the deferred tax asset relating to the carryforwards.
Accordingly, no valuation allowance to reduce the deferred tax asset relating
to the carryforwards has been established.

9. Related Party Transactions

ZDNet transacts business with a group of companies affiliated through common
majority ownership with Softbank, and has various transactions and
relationships with members of the group. Due to these relationships, it is
possible that the terms of these transactions are not the same as those that
would result from transactions among unrelated parties.

ZD provides all necessary funding for the operations and investments of
ZDNet; this funding is accounted for as capital contributions. (See Note 4.)
For the period from February 29, 1996 to December 31, 1996 and the year ended
December 31, 1997, such capital contributions were $13,630,000 and $20,664,000,
respectively.

F-22
<PAGE>

ZDNET
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

The amounts receivable or payable to affiliated companies are included in
accounts receivable, net or accounts payable in the accompanying balance
sheets, with the exception of $1,250,000 prepaid advertising commissions to
Softbank Interactive Marketing ("SIM") which is included in other current
assets at December 31, 1996. Details of these amounts are:

<TABLE>
<CAPTION>
December 31, December 31,
1996 1997
------------ ------------
(dollars in thousands)
<S> <C> <C>
Accounts receivable:
Softbank Kingston................................... $ 29 $ 60
US Web.............................................. 30 7
Asia Communications Global Limited.................. -- 61
Inquiry.com, Inc. .................................. 7 50
Trend Micro, Inc. .................................. 24 10
Sega Entertainment.................................. 1 32
---- ----
Total............................................. $ 91 $220
==== ====
Accounts payable:
SIM................................................. $585 $ 2
Yahoo!.............................................. 27 --
PointCast........................................... -- 42
---- ----
Total............................................. $612 $ 44
==== ====
</TABLE>

ZDNet purchases advertising in ZD's publications at discounts to market
rates. Had ZD charged market rates for such advertising, ZDNet's operating
expenses would have increased by $2,235,000, and $2,671,000 for the period from
February 29, 1996 to December 31, 1996 and for the year ended December 31,
1997, respectively.

F-23
<PAGE>

ZDNET
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

Related party transactions included in the accompanying combined statements
of operations include the following:
<TABLE>
<CAPTION>
Period from
February 29, 1996 Year ending
to December 31, December 31,
1996 1997
----------------- ------------
(dollars in thousands)
<S> <C> <C>
Revenue, net
ZD............................................. $ -- $ 76
ZDTV........................................... -- 11
GeoCities...................................... -- 30
Kingston Technology Company.................... 88 353
US Web......................................... 93 75
Asia Communications Global Limited............. -- 61
Electric Minds, Inc. .......................... -- 15
Inquiry.com, Inc. ............................. 29 149
Trend Micro, Inc. ............................. 28 77
Sega Entertainment............................. 4 248
------ ------
Total........................................ $ 242 $1,095
====== ======
Expenses
ZD............................................. $1,294 $2,842
ZDTV........................................... -- (120)
SIM............................................ 585 1,613
Yahoo!......................................... 27 --
PointCast...................................... -- 42
------ ------
Total.......................................... $1,906 $4,377
====== ======
</TABLE>

Included in selling, general and administrative expenses is an allocation for
Ziff-Davis Inc.'s Central Services amounting to $2,391,000 and $3,877,000 for
the ten month period ended December 31, 1996 and the year ended December 31,
1997, respectively. Also included in selling, general and administrative
expenses is a royalty charge to ZD amounting to $811,000 and $1,611,000 for the
ten month period ending December 31, 1996 and the year ended December 31, 1997,
respectively. (See Note 4.)

ZDNet is reimbursed by certain affiliates for pre-determined costs incurred
by ZDNet on the affiliates' behalf. These reimbursements are reflected as a
reduction of expenses in the accompanying statements of operations.

10. Employee Benefit Plans

Ziff-Davis Inc. maintains various defined contribution retirement plans.
Substantially, all of ZDNet's employees are eligible to participate in one of
the plans under which annual contributions may be made by Ziff-Davis Inc. for
the benefit of all eligible employees. In certain cases, employees may also
make contributions to the plan in which they participate which, and subject to
certain limitations, may be matched by ZDNet up to certain specified
percentages. Employees are generally eligible to participate in a plan upon
joining Ziff-Davis

F-24
<PAGE>

ZDNET
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

Inc. and receive matching contributions after one year of employment. ZDNet
made contributions to the plan totaling $447,000 and $751,000 for the period
from February 29, 1996 to December 31, 1996 and the year ended December 31,
1997, respectively.

11. Employee Stock Option Plan

Certain employees of ZDNet participate in the Softbank 1996 and 1997
Executive Stock Option Plans which provides for the granting of nonqualified
stock options to purchase the common stock of Softbank to officers, directors
and key employees of Ziff-Davis Inc. Softbank is Ziff-Davis Inc.'s major
stockholder and is a publicly traded company in Japan. Under the plans, options
have been granted at exercise prices equal to the closing market price in
Japan's public equities market (market price denominated in Japanese yen) on
the date of grant. As of December 31, 1997, substantially all options granted
become exercisable in various installments over the first six anniversaries of
the date of grant and expire ten years after the date of grant.

Information relating to stock options during 1995, 1996 and 1997 is as
follows:

<TABLE>
<CAPTION>
Weighted Average
Number of Option Price
Shares Per Share(1)
--------- ----------------
<S> <C> <C>
Shares outstanding under options at
December 31, 1995......................... -- --
Granted.................................. 24,716(2) $87.15
Exercised................................ -- --
Forfeited................................ -- --
------
Shares outstanding under options at
December 31, 1996......................... 24,716 87.15
Granted.................................. 17,800 64.50
Exercised................................ -- --
Forfeited................................ (8,096) 78.76
------
Shares outstanding under options at
December 31, 1997......................... 34,420 $77.41
======
Shares exercisable.........................
December 31, 1996........................ -- --
December 31, 1997........................ 5,120 $78.97
</TABLE>
- --------
(1) The exercise price of the stock options is set in Japanese yen. The
exercise prices as shown above have been converted to U.S. dollars based
upon the exchange rate as of the date of grant for the respective options.
(2) Adjusted for a 1.4:1 stock split during 1996 and a 1.3:1 stock split during
1997.

As permitted by SFAS 123, ZDNet has chosen to continue to account for stock
options in accordance with the provisions of APB 25 and accordingly, no
compensation expense related to stock option grants was recorded in 1996 or
1997. Pro forma information regarding net income is required by SFAS 123 and
has been determined as if ZDNet had accounted for stock options under the fair
value method. The fair value of the option grants

F-25
<PAGE>

ZDNET
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

was estimated at the date of grant using the Black-Scholes option-pricing model
with the following assumptions for 1996 and 1997:
<TABLE>
<CAPTION>
1996 1997
------- -------
<S> <C> <C>
Risk-free interest rate.................................. 5.89% 6.35%
Dividend yield........................................... 0.26% 0.22%
Volatility factor........................................ 54.03% 51.35%
Expected life............................................ 6 years 6 years
</TABLE>

The weighted average fair value of options granted in 1996 and 1997 was
$64.30 and $34.05, respectively. For purposes of the pro forma disclosures, the
estimated fair value of the options is amortized to expense over the options'
vesting period. Had compensation cost for the stock option plans been
determined based upon the fair value at the grant date for awards during 1996
and 1997, consistent with the provisions of SFAS 123, ZDNet's net loss would
have increased by approximately $156,000 and $167,000, respectively. On
January 23, 1998, the exercise price of all of the shares outstanding under
option agreements were reset to an exercise price equal to the closing market
price on Japan's Tokyo Stock Exchange First section at that date. In
conjunction with the repricing, those options previously exercisable at
December 31, 1997 may now by exercised only after July 19, 1998. Repricing the
stock options did not result in compensation expense to ZDNet.

12. Operating Lease Commitments

ZDNet utilizes equipment and space under lease to Ziff-Davis Inc. ZDNet's
allocation of the minimum lease payments are as follows:
<TABLE>
<CAPTION>
(dollars in thousands)
<S> <C>
1998.................. $ 1,087
1999.................. 1,343
2000.................. 1,498
2001.................. 1,510
2002.................. 1,059
Thereafter............ 8,085
-------
Total minimum
payments........... $14,582
=======
</TABLE>

Rental expense from operating leases amounted to $668,000 and $1,348,000, for
the period February 29, 1996 to December 31, 1996, and the year ended December
31, 1997, respectively.

13. Contingencies

ZDNet and Ziff-Davis Inc. are subject to various legal proceedings arising in
the normal course of business.

Legal Proceeding

F-26
<PAGE>

ZDNET
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

alleges, among other things, that SBH, SIM's majority shareholder, acting with
Ziff-Davis Inc. and two of its senior officers and directors who were directors
of SIM (and who were also named as defendants), had conflicts of interest
between SIM and other Softbank investments (including investments in Ziff-Davis
Inc.) and failed to act in the best interests of SIM and the minority
shareholders by taking actions which benefited Ziff-Davis Inc. The complaint
states claims based on common law fraud, breach of fiduciary duty and aiding
and abetting theories and seeks in excess of $200,000,000 in damages. Ziff-
Davis Inc. and the other defendants have moved to dismiss all of the claims
against them other than a breach of contract claim which is solely against SBH.

Although the outcome of this case cannot be predicted, Ziff-Davis Inc.
believes that there are substantial defenses to the claims and intends to
defend vigorously.

Class Action and Derivative Litigations

Following a decline in the price per share of Ziff-Davis Inc.'s common stock
after the October 8, 1998 announcement, eight securities class action suits
were filed against Ziff-Davis Inc. and certain of its directors and officers in
the United States District Court for the Southern District of New York.

The complaints allege that defendants violated Sections 11, 12(a) (2) and 15
of the Securities Act of 1933 in connection with the registration statement
filed by Ziff-Davis Inc. with the Securities and Exchange Commission relating
to the initial public offering of the Ziff-Davis Inc. common stock on April 29,
1997 (the "IPO"). More particularly, the complaints allege that the
registration statement contained false and misleading statements and failed to
disclose facts that could have indicated an impending decline in Ziff-Davis
Inc.'s revenue. The complaints seek on behalf of a class of purchasers of Ziff-
Davis Inc.'s common stock from the date of the IPO through October 8, 1998
unspecified damages, interest, fees and costs, recission and injunctive relief
such as the imposition of a constructive trust upon the proceeds of the IPO.

The complaints are as follows: Napoli v. Ziff-Davis Inc., et al., No. 98 Civ.
7158 (filed Oct. 9, 1998); Steinberg, et al. v. Ziff-Davis Inc., et al., No. 98
Civ. 7205 (filed Oct. 13, 1998); Flinker v. Ziff-Davis Inc., et al., No. 98
Civ. 7231 (filed Oct. 14, 1998); Koenig v. Ziff-Davis Inc., et al., No. 98 Civ.
7260 (filed Oct. 15, 1987); Schindler v. Ziff-Davis Inc., et al., No. 98 Civ.
7418 (filed Oct. 19, 1998); Miller v. Ziff-Davis Inc., et al., No. 98 Civ. 7541
(filed Oct. 23, 1998); Felgoise v. Ziff-Davis Inc., et al., No. 98 Civ. 8045
(filed Nov. 9, 1998); and Javier v. Ziff-Davis Inc., et al., No. 98 Civ. 8201
(filed Nov. 17, 1998). On January 28, 1999, the court entered an order
consolidating the actions, appointing lead plaintiff's counsel and requiring
the filing of a consolidated amended complaint within 45 days. Thereafter,
Ziff-Davis Inc. will have 45 days to respond to the consolidated amended
complaint.

F-27
<PAGE>

ZDNET
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

Although the outcome of the foregoing cases cannot be predicted, Ziff-Davis
Inc. believes that there are substantial defenses to these claims.

14. Subsequent Events (unaudited)

Investment

On July 22, 1998, ZDNet purchased $5,000,000 in Series C, convertible, non-
voting preferred shares of Deja News Inc., an Internet discussion network. This
investment is being accounted for on a cost basis.

1998 Incentive Compensation Plan

Ziff-Davis Inc. adopted the 1998 Incentive Compensation Plan (the "Plan") to
provide long-term incentives for its key employees and enhance shareholder
value. The Plan provides for the grant of options, stock appreciation rights,
stock awards and other interests in Ziff-Davis Inc.'s common stock. Ziff-Davis
Inc. has reserved 17,827,400 shares of common stock (regardless of series) for
issuance under the Plan. On February 13, 1998, Ziff-Davis Inc. granted options
to purchase 5,254,700 shares with an exercise price of $16.00 per share
representing the fair value of such options at that date. Such options vest
ratably over five years.

On September 23, 1998, the Board approved the reduction of the exercise price
of all options outstanding under the Plan from $16.00 to $6.00, the closing
market price of Ziff-Davis Inc.'s common stock on that date. In addition, the
vesting period of the options was extended by three months. The repricing of
the stock options did not result in compensation expense to ZDNet or Ziff-Davis
Inc.

F-28
<PAGE>

ZDNET
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

grant, except that, upon the completion of an initial public offering of ZDNet
Stock, these options will vest and become exercisable with respect to 25% of
the shares on December 31, 1999 and an additional 6.25% of the shares at the
end of each three-month period thereafter.

The terms of the options described in the preceding paragraph require an
adjustment in the number of shares of ZDNet Stock that holders may purchase and
the per share purchase price thereof if the initial Number of Shares Issuable
with Respect to ZD's Retained Interest in ZDNet is different from 40,000,000.
This adjustment is similar to the adjustment that would be made to the terms of
options to purchase conventional common stock in the event of a stock split.
Ziff-Davis Inc. currently expects that the initial Number of Shares Issuable
with Respect to ZD's Retained Interest in ZDNet will be 70,000,000. Assuming
that this is so, the total number of shares of ZDNet Stock that holders may
purchase upon exercise of these options will increase to approximately
10,200,000 and the per share purchase price thereof will decrease to
approximately $4.29.

On January 29, 1999, Ziff-Davis Inc. granted options to a number of employees
in connection with the cancellation of corresponding options to purchase stock
of SOFTBANK Corp. In connection with these grants, Softbank has agreed with
Ziff-Davis Inc. that, if and when any of these options are exercised, (a)
Softbank will deliver to Ziff-Davis Inc., out of the shares of Ziff-Davis Inc.
common stock then held by Softbank, a number of shares of common stock equal to
the number then issuable upon such exercise and (b) Ziff-Davis will deliver to
Softbank the exercise price paid upon such exercise. Thus, the exercise of
these options will not increase the number of shares of Ziff-Davis Inc. common
stock (or ZDNet Stock) outstanding or ZDNet's division equity. However, ZDNet
expects to recognize compensation expense for accounting purpose of
approximately $75,800 over three years as a result of these grants. Softbank
has agreed that, if and when Ziff-Davis Inc. recognizes any compensation or
other expense for accounting purposes that results from such grants, Softbank
will pay to Ziff-Davis Inc. the amount thereof.

Employee Stock Purchase Plan

Ziff-Davis Inc. adopted the Employee Stock Purchase Plan (the "Stock Purchase
Plan") whereby eligible employees may purchase Ziff-Davis Inc. common stock
with after tax payroll deductions of 1% to 10% of their base pay. The price at
which shares of common stock will be purchased is the lesser of 85% of the fair
market value of a share of common stock on (1) the first business day of a
purchase period or (2) the last business day of a purchase period. Ziff-Davis
Inc. has reserved 2,500,000 shares of common stock (regardless of series) for
issuance under the Stock Purchase Plan.

Other

On December 31, 1998, SBH contributed 71,619,355 shares of Ziff-Davis Inc.'s
common stock to SOFTBANK America Inc., an affiliate of Softbank.

F-29
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of
Ziff-Davis Inc.

In our opinion, the accompanying combined balance sheets and the related
combined statements of operations, cash flows and changes in division equity,
present fairly, in all material respects, the financial position of ZDNet (a
division of Ziff-Davis Inc., the "Company") at December 31, 1995 and February
28, 1996, and the results of its operations and its cash flows for the year
ended December 31, 1995 and for the period from January 1, 1996 to February 28,
1996, in conformity with generally accepted accounting principles. 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 of these statements in accordance with
generally accepted auditing standards which 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, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for the
opinion expressed above.

As discussed in Note 11 to the financial statements, the Company was acquired
by SOFTBANK Holdings Inc. on February 29, 1996. As described in Note 1 to the
financial statements, ZDNet is a division of Ziff-Davis Inc.; accordingly, the
financial statements of ZDNet should be read in conjunction with the audited
financial statements of Ziff-Davis Inc.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP
New York, NY
December 17, 1998

F-30
<PAGE>

ZDNET
(a division of Ziff-Davis Inc.)

COMBINED BALANCE SHEETS
(dollars in thousands)

<TABLE>
<CAPTION>
December 31, February 28,
1995 1996
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Accounts receivable................................. $ 3,773 $ 4,707
Other current assets................................ 51 35
Deferred taxes...................................... 168 209
------- -------
Total current assets.............................. 3,992 4,951
Property and equipment, net........................... 1,585 1,716
Deferred taxes........................................ 3,610 4,025
Intangible assets, net................................ 82,585 82,025
------- -------
Total assets...................................... $91,772 $92,717
======= =======
LIABILITIES AND DIVISION EQUITY
Current liabilities:
Accounts payable.................................... $ 1,385 $ 698
Accrued expenses.................................... 705 794
------- -------
Total current liabilities......................... 2,090 1,492
------- -------
Commitments and contingencies (Notes 9 and 10)
Division equity....................................... 89,682 91,225
------- -------
Total liabilities and division equity............. $91,772 $92,717
======= =======
</TABLE>

The accompanying notes are an integral part of the combined financial
statements.

F-31
<PAGE>

ZDNET
(a division of Ziff-Davis Inc.)

COMBINED STATEMENTS OF OPERATIONS
(dollars in thousands)

<TABLE>
<CAPTION>
Year ended January 1, 1996
December 31, to February 28,
1995 1996
------------ ---------------
<S> <C> <C>
Revenue, net...................................... $13,576 $ 2,903
Cost of operations:
Production and content.......................... 10,709 1,802
Selling, general and administrative expenses.... 8,360 1,774
Depreciation and amortization of property and
equipment...................................... 678 37
Amortization of intangible assets............... 3,362 560
------- -------
Total operating expenses...................... 23,109 4,173
------- -------
Loss before income taxes.......................... (9,533) (1,270)
Income tax benefit................................ (3,778) (456)
------- -------
Net loss.......................................... $(5,755) $ (814)
======= =======
</TABLE>

The accompanying notes are an integral part of the combined financial
statements.

F-32
<PAGE>

ZDNET
(a division of Ziff-Davis Inc.)

COMBINED STATEMENTS OF CASH FLOWS
(dollars in thousands)

<TABLE>
<CAPTION>
Year ended January 1, 1996
December 31, to February 28,
1995 1996
------------ ---------------
<S> <C> <C>
Cash flows from operating activities:
Net loss......................................... $(5,755) $ (814)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization.................. 678 37
Amortization of intangible assets.............. 3,362 560
Deferred tax benefit........................... (3,778) (456)
Changes in operating assets and liabilities:
Accounts receivable.......................... (1,684) (938)
Other current assets......................... 321 16
Accounts payable and accrued expenses........ 1,063 (587)
------- -------
Net cash used in operating activities............ (5,793) (2,182)
------- -------
Cash flows from investing activities:
Capital expenditures........................... (1,590) (168)
------- -------
Net cash used in investing activities............ (1,590) (168)
------- -------
Cash flows from financing activities:
Capital contributions from ZD Publishing....... 7,106 2,350
------- -------
Net cash provided by financing activities........ 7,106 2,350
------- -------
Net decrease in cash and cash equivalents........ (277) --
Cash and cash equivalents at beginning of
period.......................................... 277 --
------- -------
Cash and cash equivalents at end of period....... $ -- $ --
======= =======
</TABLE>

The accompanying notes are an integral part of the combined financial
statements.

F-33
<PAGE>

ZDNET
(a division of Ziff-Davis Inc.)

COMBINED STATEMENTS OF CHANGES IN DIVISION EQUITY
(dollars in thousands)

<TABLE>
<CAPTION>
Cumulative Total
Paid-in Accumulated translation division
capital deficit adjustment equity
------- ----------- ----------- --------
<S> <C> <C> <C> <C>
Balance at January 1, 1995........... $88,329 $ -- $-- $88,329
Capital contributions from ZD
Publishing.......................... 7,106 -- -- 7,106
Net loss............................. -- (5,755) -- (5,755)
Foreign currency translation
adjustment.......................... -- -- 2 2
------- ------- ---- -------
Balance at December 31, 1995......... 95,435 (5,755) 2 89,682
Capital contributions from ZD
Publishing.......................... 2,350 -- -- 2,350
Net loss............................. -- (814) -- (814)
Foreign currency translation
adjustment.......................... -- -- 7 7
------- ------- ---- -------
Balance at February 28, 1996......... $97,785 $(6,569) $ 9 $91,225
======= ======= ==== =======
</TABLE>

The accompanying notes are an integral part of the combined financial
statements.

F-34
<PAGE>

ZDNET
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS

(numbers rounded to the nearest thousand)

1. Organization and Basis of Presentation

The combined financial statements include the accounts of the online business
division ("ZDNet") of Ziff-Davis Inc. All significant transactions within the
ZDNet division have been eliminated in combination.

Ziff-Davis Inc., formerly Ziff-Davis Publishing Company, was a wholly owned
subsidiary of Ziff-Davis Holdings Corp. ("Holdings"). ZD Publishing (or "ZD")
and ZDNet are divisions of Ziff-Davis Inc.

In order to prepare separate financial statements for ZD Publishing and
ZDNet, Ziff-Davis Inc. has allocated all of its consolidated assets,
liabilities, revenues, expenses and cash flow between ZD and ZDNet. ZDNet
comprises Ziff-Davis Inc.'s online business division, and ZD comprises Ziff-
Davis Inc.'s other businesses and a 100% "Retained Interest" in ZDNet. Thus,
the financial statements of ZD and ZDNet, taken together, comprise all of the
accounts included in the corresponding consolidated financial statements of
Ziff-Davis Inc. Each of ZDNet and ZD is sometimes referred to herein as a
"Group".

ZDNet's financial statements reflect the application of certain cash
management and allocation policies adopted by the Board of Directors of Ziff-
Davis Inc. (the "Board"). These policies are summarized under "Certain Cash
Management and Allocation Policies" below.

Even though Ziff-Davis Inc. has allocated all of its consolidated assets,
liabilities, revenues, expenses and cash flow between ZD and ZDNet, that
allocation will not change the legal title to any assets or responsibility for
any liabilities and will not affect the rights of any creditors. Holders of
common stock of Ziff-Davis Inc. are subject to all risks associated with an
investment in Ziff-Davis Inc. and all of its businesses, assets and
liabilities.

Financial events arising from ZD that affect Ziff-Davis Inc.'s consolidated
results of operations or financial position could affect the results of
operations or financial condition of ZDNet. Accordingly, financial information
for ZDNet should be read in conjunction with financial information for ZD and
financial information for Ziff-Davis Inc.

Acquisition

Effective January 1, 1995, Holdings, through Ziff-Davis Inc., directly and
indirectly acquired certain assets and assumed certain liabilities of the Ziff-
Davis publishing business and related businesses (the "Acquisition" or the
"Acquired Businesses") from Ziff Communications Company, L.P., a limited
partnership ("LLC") and other persons and entities (collectively referred to as
the "Sellers"), for an aggregate purchase price of approximately $1,400,000,000
plus transaction costs. Ziff-Davis Inc. funded the Acquisition through the
issuance of common stock, bank borrowings and a subordinated note payable to
Holdings.

F-35
<PAGE>

ZDNET
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

The acquisition has been accounted for using the purchase method of
accounting.

2. Summary of Significant Accounting Policies

Cash and cash equivalents

ZDNet considers all highly liquid investments with an original maturity of
three months or less to be cash equivalents.

Concentration of credit risk

One customer accounted for approximately 80% of net revenue for the year
ended December 31, 1995 and the period from January 1, 1996 to February 28,
1996.

Property and equipment

Property and equipment have been recorded at cost or estimates of fair value
at the date of acquisition. Depreciation is computed using the straight-line
method over the estimated useful lives of the assets which range from two to
eight years. Leasehold improvements are amortized using the straight-line
method over the service life of the improvement or the life of the related
lease, whichever is shorter. Maintenance and repair costs are charged to
expense as incurred.

Intangible assets

Intangible assets consist principally of advertising lists, subscriber lists
and goodwill. Amortization of these assets is computed on a straight-line basis
over their estimated useful lives. Identifiable intangible assets are amortized
over a period of 4 years and goodwill, which represents the excess of the
purchase price over the estimated fair values of net assets acquired, is
amortized over a period of 40 years (refer to Note 5). ZDNet assesses the
recoverability of its intangible assets whenever adverse events or changes in
circumstances indicate that expected future cash flows (undiscounted and
without interest charges) may not be sufficient to support the carrying amount
of intangible assets. If undiscounted cash flows are not sufficient to support
the recorded assets, an impairment loss is recognized to reduce the carrying
value of the intangibles to its estimated recoverable value.

F-36
<PAGE>

ZDNET
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

Revenue recognition

ZDNet's revenue is derived principally from subscription based fees and
services. This revenue is generated primarily by charging monthly membership
fees to provide access to product reviews, software reviews and shareware.
Advertising revenue is recognized ratably in the period in which the
advertisement is displayed, provided that no significant obligations remain and
collection of the resulting receivable is probable. ZDNet's obligations
typically include guarantees of minimum number of "impressions", or times that
an advertisement appears in pages viewed by users of ZDNet's online properties.
To the extent minimum guaranteed impressions are not met, ZDNet defers
recognition of the corresponding revenues until the remaining guaranteed
impression levels are achieved.

Foreign currency

Income taxes

ZDNet uses the assets and liability approach for financial accounting and
reporting of deferred taxes.

Use of estimates

Fair value of financial instruments

All current assets and liabilities are carried at cost, which approximates
fair value because of the short-term maturity of those instruments.

Impairment of long-lived assets

In 1995, the Financial Accounting Standards Board issued SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed of" ("SFAS 121"). ZDNet adopted SFAS 121 in fiscal 1996 with no
effect on operations.

3. Certain Cash Management and Allocation Policies

ZDNet's financial statements reflect the application of certain cash
management and allocation policies summarized below.

F-37
<PAGE>

ZDNET
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

Treasury activities

Ziff-Davis Inc. manages most treasury activities on a centralized,
consolidated basis. These activities include the investment of surplus cash,
the issuance, repayment and repurchase of short-term and long-term debt, and
the issuance and repurchase of common stock and preferred stock. ZDNet
generally remits its cash receipts (other than receipts of foreign operations
or operations that are not wholly owned) to Ziff-Davis Inc., and Ziff-Davis
Inc. generally funds ZDNet's cash disbursements (other than disbursements of
foreign operations or operations that are not wholly owned), on a daily basis.

In the historical financial statements of ZD and ZDNet, (1) all external debt
and equity transactions (and the proceeds thereof) were attributed to ZD, (2)
whenever ZDNet held cash (other than cash of ZDNet's foreign operations or cash
of ZDNet's operations that are not wholly owned), that cash was transferred to
ZD and accounted for as a return of capital (i.e., as a reduction in ZDNet's
division equity and ZD's Retained Interest in ZDNet) and (3) whenever ZDNet had
a cash need (other than cash needs of ZDNet's foreign operations or cash needs
of ZDNet's operations that are not wholly owned), that cash need was funded by
ZD and accounted for as a capital contribution (i.e., as an increase in ZDNet's
division equity and ZD's Retained Interest in ZDNet). Accordingly, no interest
expense or income to or from ZD has been reflected in the financial statements
of ZDNet.

Corporate General and Administrative Expenses

Ziff-Davis Inc. allocates the cost of certain corporate general and
administrative services and shared services (including certain legal,
accounting (tax and financial), information systems, telecommunications,
purchasing, marketing, intellectual property, public relations, corporate
office and travel expenses (collectively, "Central Services"), to ZDNet based
on utilization. Where determinations based on utilization alone are
impracticable, Ziff-Davis Inc. uses other methods and criteria that management
believes to be equitable and to provide a reasonable estimate of the cost
attributable to ZDNet.

Taxes

Federal income taxes, which are determined on a consolidated basis, are
allocated to ZDNet (and reflected in its financial statements) in accordance
with Ziff-Davis Inc.'s tax allocation policy. In general, this policy provides
that the consolidated tax provision (and related tax payments or refunds) are
allocated between the Groups based principally upon the financial income,
taxable income, credits and other amounts directly related to the respective
Groups. Tax benefits that cannot be used by the Group generating such
attributes, but can be utilized on a consolidated basis, are allocated to the
Group that generated such benefits. As a result, the allocated Group amounts of
taxes payable or

F-38
<PAGE>

ZDNET
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

refundable are not necessarily comparable to those that would have resulted if
the Groups had filed separate tax returns. State income taxes generally are
computed on a separate company basis.

Royalty Charges

ZD charges ZDNet an annual fee for the use of various brands and editorial
content. The current annual fee, which is reflected in ZDNet's financial
statements as part of its production and content costs, is equal to 5% of the
first $100,000,000 of ZDNet's revenue for the year, 4% of the next $50,000,000
of ZDNet's revenue for that year and 3% of any incremental revenue over
$150,000,000 for that year. The Board may at some point in the future change
this fee as it, in its sole discretion, deems appropriate in light of the
circumstances from time to time.

4. Property and equipment, net

Property and equipment, net consists of the following:

<TABLE>
<CAPTION>
December 31, February 28,
1995 1996
------------ ------------
(dollars in thousands)
<S> <C> <C> <C>
Computers and equipment..................... $1,391 $1,561
Furniture and fixtures...................... 596 596
Leasehold improvements...................... 168 168
------ ------
2,155 2,325
Accumulated depreciation and amortization... (570) (609)
------ ------
$1,585 $1,716
====== ======
</TABLE>

5. Intangible assets, net

Intangible assets, net consist of the following:

<TABLE>
<CAPTION>
December 31, February 28,
1995 1996
------------ ------------
(dollars in thousands)
<S> <C> <C> <C>
Subscriber lists............................. $ 4,300 $ 4,300
Advertising lists............................ 2,400 2,400
Goodwill..................................... 79,247 79,247
------- -------
85,947 85,947
Accumulated amortization..................... (3,362) (3,922)
------- -------
$82,585 $82,025
======= =======
</TABLE>

Intangible assets primarily related to the acquisition of the Ziff-Davis
publishing business. As discussed in Note 1, the acquisition was accounted for
under the purchase method of accounting. As such the purchase price was
allocated to tangible and identifiable intangible assets with the remaining
amount allocated to goodwill.

F-39
<PAGE>

ZDNET
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

Advertising and subscriber lists were recorded at their estimated fair value
as determined by an "income" approach.

All intangible assets are being amortized using the straight-line method over
their estimated useful lives, up to 40 years. In determining the estimated
useful lives, ZDNet considers its competitive position in the markets in which
it operates, the historical attrition rates of advertisers, exhibitors and
subscribers, legal and contractual obligations, and other factors.

6. Income Taxes

Income tax benefits and related assets and liabilities attributed to ZDNet
are determined in accordance with Ziff-Davis Inc.'s tax allocation policy (Note
3).

Loss before income taxes is attributable to the following jurisdictions:

<TABLE>
<CAPTION>
Year ended January 1, 1996
December 31, to February 28,
1995 1996
------------ ---------------
(dollars in thousands)
<S> <C> <C>
United States................................. $(8,810) $ (923)
Foreign....................................... (723) (347)
------- -------
Total....................................... $(9,533) $(1,270)
======= =======
</TABLE>

Components of the income tax benefit are as follows:

<TABLE>
<CAPTION>
Year ended January 1, 1996
December 31, to February 28,
1995 1996
------------ ---------------
(dollars in thousands)
<S> <C> <C>
U.S. federal income taxes:
Current..................................... $ -- $ --
Deferred.................................... (2,927) (353)
State and local income taxes:
Current..................................... -- --
Deferred.................................... (851) (103)
Foreign income taxes.......................... -- --
------- -----
Total income tax benefit.................. $(3,778) $(456)
======= =====
</TABLE>

F-40
<PAGE>

ZDNET
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

A reconciliation of the U.S. federal statutory tax rate to ZDNet's effective
tax rate on loss before income taxes is as follows:

<TABLE>
<CAPTION>
Year ended January 1, 1996
December 31, to February 28,
1995 1996
------------ ---------------
<S> <C> <C>
Federal statutory tax rate.................. 35.0% 35.0%
State and local taxes (net of federal tax
benefit)................................... 6.0 6.0
Foreign losses.............................. (0.7) (5.0)
Other nondeductible expenses................ (0.7) (0.1)
---- ----
Effective tax rate........................ 39.6% 35.9%
==== ====
</TABLE>

Following is a summary of the components of the deferred tax accounts at
December 31, 1995 and February 28, 1996:

<TABLE>
<CAPTION>
December 31, February 28,
1995 1996
------------ ------------
(dollars in thousands)
<S> <C> <C>
Current deferred tax assets:
Allowance for doubtful accounts.............. $ 103 $ 103
Employee compensation, bonus and vacation.... 65 106
------- -------
Current deferred tax assets................ 168 209
Noncurrent deferred tax assets and
(liabilities):
Basis difference in intangible assets........ (1,047) (1,187)
Basis difference in property and equipment... 23 13
Net operating loss carryforwards............. 4,969 5,696
------- -------
Gross noncurrent deferred tax assets....... 3,945 4,522
Valuation allowance.......................... (335) (497)
------- -------
Net noncurrent deferred tax assets......... 3,610 4,025
------- -------
Total net deferred tax assets.................. $ 3,778 $ 4,234
======= =======
</TABLE>

As of December 31, 1995 and February 28, 1996, ZDNet had total deferred tax
assets of $4,825,000 and $5,421,000, respectively, and total deferred tax
liabilities of $1,047,000 and $1,187,000, respectively.

As of February 28, 1996, ZDNet has U.S. and foreign net operating loss
carryforwards of approximately $14,000,000 which will begin to expire on
December 31, 2000. The December 31, 1995 and February 28, 1996 net deferred tax
asset is reduced by a valuation allowance of $335,000 and $497,000,
respectively, relating to tax benefits of foreign net operating loss
carryforwards which are not expected to be realized.

7. Related Party Transactions

ZD provides all necessary funding for the operations and investments of
ZDNet; this funding is accounted for as capital contributions. (See Note 3.)
For the year ended

F-41
<PAGE>

ZDNET
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

December 31, 1995 and for the period January 1, 1996 to February 28, 1996 such
capital contributions were $7,106,000 and $2,350,000, respectively.

Included in selling, general and administrative expenses is an allocation
from Ziff-Davis Inc.'s Central Services amounting to $2,017,000 and $356,000
for the year ended December 31, 1995 and for the period January 1, 1996 to
February 28, 1996. Also included in selling, general and administrative
expenses is a royalty charge to ZD amounting to $679,000 and $145,000 for the
year ended December 31, 1995 and the period January 1, 1996 to February 28,
1996, respectively. (See Note 3.)

As ZDNet and ZD are affiliated through common ownership, it is possible that
the terms of these transactions are not the same as those that would result
from transactions among unrelated parties.

ZDNet purchases advertising in the ZD publications at a discount to market
rates. Had ZD charged market rates for such advertising, ZDNet's net loss would
have increased by $178,000, and $57,000 for the year ended December 31, 1995
and the period from January 1, 1996 to February 28, 1996, respectively.

8. Employee Benefit Plans

Ziff-Davis Inc. maintains various defined contribution retirement plans.
Substantially all of the ZDNet's employees are eligible to participate in one
of the plans under which annual contributions may be made by the ZDNet for the
benefit of all eligible employees. In certain cases, employees may also make
contributions to the plan in which they participate and subject to certain
limitations, may be matched by the ZDNet up to certain specified percentages.
Employees are generally eligible to participate in a plan upon joining the
ZDNet and receive matching contributions after one year of employment. ZDNet
made contributions to the plans totaling $335,000 and $16,000 in 1995 and the
two months ended February 28, 1996, respectively.

F-42
<PAGE>

ZDNET
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

9. Operating Lease Commitments

ZDNet utilizes equipment and space under lease to Ziff-Davis Inc. ZDNet's
portion of the minimum lease payments based on square feet utilized are as
follows:

<TABLE>
<CAPTION>
Operating
Year ending December 31, Leases
------------------------ ----------
(dollars
in
thousands)
<S> <C>
1996 (ten-month period)........... $ 520
1997.............................. 971
1998.............................. 1,087
1999.............................. 1,343
2000.............................. 1,498
Thereafter........................ 10,653
-------
Total minimum lease payments.... $16,072
=======
</TABLE>

Rental expense from operating leases amount to $783,000 and $111,000 for the
year ended December 31, 1995 and for the period from January 1, 1996 to
February 28, 1996, respectively.

10. Contingencies

ZDNet and Ziff-Davis Inc. are subject to various legal proceedings arising in
the normal course of business. Management believes that the ultimate liability,
if any, in the aggregate will not be material to the combined balance sheet,
future operations or cash flows of ZDNet.

11. Subsequent Event

Acquisition of the Company

In February 1996, Softbank Corp. entered into an agreement to acquire the
stock of Ziff-Davis Inc. for an aggregate purchase price of approximately
$1,800,000,000, plus acquisition costs. In a separate agreement, MAC Inc. Ltd.,
an affiliated company of Softbank Corp., acquired directly and through
affiliates, certain of the assets and assumed certain liabilities of Ziff-Davis
Inc. for an aggregate purchase price of approximately $302,000,000.

F-43
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of
Ziff-Davis Inc.

In our opinion, the accompanying combined balance sheets and the related
combined statements of operations, cash flows and changes in division equity,
present fairly, in all material respects, the financial position of ZD (a
division of Ziff-Davis Inc., the "Company") at December 31, 1996 and 1997, and
the results of its operations and cash flows for each of the three years in the
period ended December 31, 1997, in conformity with generally accepted
accounting principles. 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 of these
statements in accordance with generally accepted auditing standards which
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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.

As described in Note 1 to the financial statements, ZD is a division of Ziff-
Davis Inc.; accordingly the financial statements of ZD should be read in
conjunction with the audited financial statements of Ziff-Davis Inc.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP
New York, NY
December 17, 1998

F-44
<PAGE>

ZD
(a division of Ziff-Davis Inc.)

COMBINED BALANCE SHEETS
(dollars in thousands)

<TABLE>
<CAPTION>
December 31, September
--------------------- 1998
1996 1997 Consolidated
---------- ---------- ------------
(unaudited)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................ $ 29,915 $ 30,273 $ 26,728
Accounts receivable, net................. 197,263 209,914 180,306
Inventories.............................. 16,804 17,853 19,065
Prepaid expenses and other current
assets.................................. 33,938 37,872 45,353
Due from affiliates...................... 77,208 131,290 46,472
Deferred taxes........................... 8,674 8,725 8,552
---------- ---------- ----------
Total current assets....................... 363,802 435,927 326,476
Property and equipment, net................ 51,491 50,391 63,185
Retained interest in ZDNet................. 78,575 83,292 87,735
Intangible assets, net..................... 3,080,470 2,963,169 2,884,167
Other assets............................... 10,625 15,329 49,419
---------- ---------- ----------
Total assets............................... $3,584,963 $3,548,108 $3,410,982
========== ========== ==========
LIABILITIES AND DIVISION EQUITY
Current liabilities:
Accounts payable......................... $ 54,390 $ 54,823 $ 41,499
Accrued expenses......................... 78,797 77,886 101,607
Unearned income, net..................... 174,783 154,682 220,138
Due to affiliates and management......... 69,416 398,332 --
Current portion of notes payable to
affiliates.............................. 33,198 125,790 7,692
Other current liabilities................ 3,890 4,222 6,323
---------- ---------- ----------
Total current liabilities.................. 414,474 815,735 377,259
Notes payable to affiliates................ 2,522,252 2,408,240 71,924
Notes payable, net of amortized discount... -- -- 1,454,123
Deferred taxes............................. 186,031 185,613 152,636
Other liabilities.......................... 14,450 12,390 10,992
---------- ---------- ----------
Total liabilities.......................... 3,137,207 3,421,978 2,066,934
---------- ---------- ----------
Commitments and contingencies (Notes 17, 19
and 20)
Division equity............................ 447,756 126,130 1,344,048
---------- ---------- ----------
Total liabilities and division equity...... $3,584,963 $3,548,108 $3,410,982
========== ========== ==========
</TABLE>

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

F-45
<PAGE>

ZD
(a division of Ziff-Davis Inc.)

COMBINED STATEMENTS OF OPERATIONS
(dollars in thousands)

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

F-46
<PAGE>

ZD
(a division of Ziff-Davis Inc.)

COMBINED STATEMENTS OF CASH FLOWS
(dollars in thousands)

<TABLE>
<CAPTION>
Nine months ended
Years ended December 31, September 30,
------------------------------ -----------------------
1998
1995 1996 1997 1997 Consolidated
-------- ---------- -------- --------- ------------
(unaudited)
<S> <C> <C> <C> <C> <C>
Cash flows from operat-
ing activities:
Net income (loss)....... $ 10,945 $ (52,081) $(71,179) $(143,810) $ (86,179)
Adjustments to reconcile
net loss to net cash
provided (used) by
operating activities:
Depreciation and amor-
tization............. 24,305 134,251 147,259 112,173 109,814
Amortization of debt
discount............. -- -- -- -- 1,313
Loss from retained in-
terest in ZDNet...... -- 16,925 21,238 18,463 8,691
Income from equity in-
vestments............ -- (115) (2,030) (252) (4,688)
Deferred tax provision
(benefit)............ 11,924 25,445 (469) (241) (33,277)
Changes in operating
assets and liabili-
ties:
Accounts receiv-
able............... (25,379) (36,185) (14,270) 27,224 32,334
Inventories......... -- 7,788 (853) (1,631) (591)
Accounts payable and
accrued expenses... 9,516 10,517 (5,960) (29,707) 3,836
Unearned income..... (3,153) 1,299 (20,101) 80,023 62,036
Due to affiliates
and management..... (7,460) (29,303) (38,543) (50,666) 10,707
Other, net.......... 5,470 (4,377) (3,192) (20,840) (16,541)
-------- ---------- -------- --------- ----------
Net cash provided (used)
by operating activi-
ties................... 26,168 74,164 11,900 (9,264) 87,455
-------- ---------- -------- --------- ----------
Cash flows from invest-
ing activities:
Capital expenditures.. (3,367) (21,355) (27,822) (17,291) (24,218)
Capital contributions
to ZDNet............. -- (13,630) (20,664) (15,799) (13,242)
Investment in joint
ventures............. -- -- -- (60) (1,193)
Acquisitions, net of
cash acquired........ (814,520) (2,124,823) (11,002) -- (6,999)
-------- ---------- -------- --------- ----------
Net cash used by invest-
ing activities......... (817,887) (2,159,808) (59,488) (33,150) (45,652)
-------- ---------- -------- --------- ----------
Cash flows from financ-
ing activities:
Proceeds from equity
offering............. -- -- -- -- 380,337
Proceeds from issuance
of notes payable..... -- -- -- -- 242,723
Proceeds from issuance
of bank debt......... -- -- -- -- 1,240,200
Proceeds from notes
payable to affili-
ates................. 575,450 1,080,000 10,000 -- --
Payments of amounts
due to affiliates.... -- -- -- -- (314,798)
Payments of bank
debt................. -- -- -- (19,162) (45,000)
Payments of notes pay-
able to affiliates... (77,450) -- (31,420) -- (1,569,532)
Purchase of treasury
shares............... -- -- -- -- (29,500)
Sale of treasury
shares............... -- -- -- -- 29,500
Advance from majority
shareholder.......... -- -- -- -- 20,377
Contributed capital... 317,408 1,015,651 69,366 69,366 345
Payment of dividends.. -- (8,000) -- -- --
-------- ---------- -------- --------- ----------
Net cash provided (used)
by financing activi-
ties................... 815,408 2,087,651 47,946 50,204 (45,348)
-------- ---------- -------- --------- ----------
Net increase (decrease)
in cash and cash equiv-
alents................. 23,689 2,007 358 7,790 (3,545)
Cash and cash
equivalents at
beginning of period.... 4,219 27,908 29,915 29,915 30,273
-------- ---------- -------- --------- ----------
Cash and cash equiva-
lents at end of peri-
od..................... $ 27,908 $ 29,915 $ 30,273 $ 37,705 $ 26,728
======== ========== ======== ========= ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.

F-47
<PAGE>

ZD
(a division of Ziff-Davis Inc.)

COMBINED STATEMENTS OF CASH FLOWS
(dollars in thousands)

<TABLE>
<CAPTION>
Retained Cumulative Total
Paid-in earnings Deferred translation division
capital (deficit) compensation adjustment equity
---------- --------- ------------ ----------- ----------
<S> <C> <C> <C> <C> <C>
Balance at January 1,
1995................... $ 62,178 $ 886 $ -- $ -- $ 63,064
Capital contribution
from Softbank.......... 317,408 317,408
Net income.............. 10,945 10,945
Foreign currency
translation
adjustment............. 111 111
---------- --------- ------ ------ ----------
Balance at December 31,
1995................... 379,586 11,831 -- 111 391,528
Acquisition of Ziff-
Davis Inc.............. 1,014,178 1,014,178
Return of capital....... (899,948) (899,948)
Capital contribution.... 1,474 1,474
Dividend paid........... (8,000) (8,000)
Shares contributed to
restricted stock plan.. 3,528 (3,528) --
Compensation earned on
restricted stock....... 1,080 1,080
Net loss................ (52,081) (52,081)
Foreign currency
translation
adjustment............. (475) (475)
---------- --------- ------ ------ ----------
Balance at December 31,
1996................... 498,818 (48,250) (2,448) (364) 447,756
Return of capital....... (381,434) (381,434)
Capital contribution.... 128,482 128,482
Shares contributed to
restricted stock plan.. 2,464 (2,464) --
Compensation earned on
restricted stock....... 3,916 3,916
Net loss................ (71,179) (71,179)
Foreign currency
translation
adjustment............. (1,411) (1,411)
---------- --------- ------ ------ ----------
Balance at December 31,
1997................... 248,330 (119,429) (996) (1,775) 126,130
Capital contribution.... 9,007 9,007
Capitalization of
amounts due to
affiliates............. 908,673 908,673
Contribution of
subsidiaries from SBH
to Ziff-Davis Inc...... 736 736
Initial public
offering............... 375,493 375,493
Acquisition of fixed
assets from an
affiliate.............. 9,000 9,000
Purchase of treasury
shares from SBH........ (29,500) (29,500)
Sale of treasury shares
to the public.......... 29,500 29,500
Net loss................ (86,179) (86,179)
Compensation earned on
restricted stock....... 189 189
Foreign currency
translation
adjustment............. 999 999
---------- --------- ------ ------ ----------
Balance at September 30,
1998 (unaudited)....... $1,551,239 $(205,608) $ (807) $ (776) $1,344,048
========== ========= ====== ====== ==========
</TABLE>

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

F-48
<PAGE>

ZD
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS

(numbers rounded to the nearest thousand)

1. Organization and Basis of Presentation

ZD is the division of Ziff-Davis Inc. (formerly ZD Inc.) focused on the
business of print publishing, trade shows and conferences, market research and
education.

In order to prepare separate financial statements for ZD and ZDNet (as
defined below), Ziff-Davis Inc. has allocated all of its consolidated assets,
liabilities, revenues, expenses and cash flow between ZD and ZDNet. Thus, the
financial statements of ZD and ZDNet, taken together, comprise all of the
accounts included in the corresponding combined financial statements of Ziff-
Davis Inc.

ZD's financial statements reflect the application of certain cash management
and allocation policies adopted by the Board of Directors of Ziff-Davis Inc.
(the "Board"). These policies are summarized in Note 5 "Certain Cash Management
and Allocation Policies" below.

Even though Ziff-Davis Inc. has allocated all of its consolidated assets,
liabilities, revenues, expenses and cash flow between ZD and ZDNet, that
allocation and the division of Ziff-Davis Inc.'s common stock will not change
the legal title to any assets or responsibility for any liabilities and will
not affect the rights of any creditors. Holders of ZD Stock (as defined below)
will continue to be common stockholders of Ziff-Davis Inc. and, as such, will
be subject to all risks associated with an investment in Ziff-Davis Inc. and
all of its businesses, assets and liabilities.

Financial events arising from ZDNet that affect Ziff-Davis Inc.'s
consolidated results of operations or financial position could affect the
results of operations or financial condition of ZD or the market price of ZD
Stock. In addition, net losses of ZDNet, and any dividends or distributions on,
or repurchases of, ZDNet Stock will reduce the assets of Ziff-Davis Inc.
legally available for dividends on ZD Stock. Accordingly, financial information
for ZD should be read in conjunction with financial information for ZDNet and
financial information for Ziff-Davis Inc.

ZD operates in two business segments: (1) publishing and (2) events.

Publishing

The publishing segment is engaged in publishing magazines, journals,
newsletters, electronic information products, training manuals and providing
market research about the computer industry. The publishing segment's principal
operations are in the United States and Europe, although it also licenses or
syndicates its editorial content to over 50 other publications distributed
worldwide. The publishing segment includes a 100% retained interest in ZDNet.
ZDNet is the online business division of Ziff-Davis Inc. Each of ZD and ZDNet
is sometimes referred to herein as a "Group".

F-49
<PAGE>

ZD
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

Events

The events segment is engaged in the organization, production and management
of trade shows, conferences and seminars for the computer industry. The events
segment's principal operations are in the United States and to a lesser extent
in Europe and Asia.

As further described below, the combined financial statements include the
accounts of COMDEX (formerly Softbank COMDEX, Inc.) and ZDI as of their
respective acquisition dates and Forums (formerly Softbank Forums Inc.) for all
periods presented. Effective December 31, 1997, COMDEX and Forums merged and
the surviving company was renamed ZD COMDEX and Forums Inc. ("ZDCF"). During
1998, ZDCF was renamed ZD Events Inc.

Acquisition of ZDI (formerly Ziff-Davis Publishing Company and Ziff-Davis
Holdings Corp.)

In February 1996, SOFTBANK Corp. (SOFTBANK Corp. and its affiliates
hereinafter referred to as "Softbank") acquired the stock of Ziff-Davis
Holdings Corp. ("Holdings") for an aggregate purchase price of approximately
$1,800,000,000, plus transaction costs. Softbank is a Japanese corporation
which, as of December 31, 1997, was 50.2% owned by Mr. Son, its president,
including 43.4% directly owned by his wholly owned holding company, MAC Inc.
(MAC Inc. and affiliates hereinafter referred to as "MAC"), also a Japanese
corporation. Concurrent with the acquisition, in a separate agreement, MAC,
directly or through wholly owned affiliates, acquired certain of the assets and
assumed certain of the liabilities of ZDI (the "MAC Assets") for an aggregate
purchase price of approximately $302,000,000.

Subsequent to the acquisition, Holdings and ZDI were merged with ZDI being
the surviving corporation.

Unaudited summarized pro forma financial information

The following unaudited summarized pro forma financial information presents
the results of operations of ZD as if the acquisition of ZDI had taken place on
January 1, 1995:

<TABLE>
<CAPTION>
Years ended
December 31,
--------------------
1995 1996
-------- ----------
(dollars in
thousands)
<S> <C> <C>
Revenue, net........................................ $958,148 $1,061,486
Income from operations.............................. $ 91,996 $ 107,070
Net loss............................................ $(61,816) $ (67,011)
</TABLE>

F-50
<PAGE>

ZD
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

The pro forma results include amortization of intangible assets and interest
expense on debt assumed issued to finance the purchase. The pro forma results
are not necessarily indicative of what actually would have occurred if the
acquisition had been completed as of the beginning of the year, nor are they
necessarily indicative of future combined results.

Purchase of MAC Assets

In 1997, ZD agreed to purchase certain of the MAC Assets for $370,000,000.
The acquisition was effected in two tranches; the first of which closed on
October 31, 1997 and the second, closed upon completion of the initial public
offering of Ziff-Davis Inc.'s common stock (further described below). At
December 31, 1997, ZD has accrued the $370,000,000 purchase price which has
been recorded as a return of capital.

The acquisitions from MAC described above have been accounted for in a manner
similar to a pooling of interests as all entities involved are under common
control. Accordingly, the accompanying combined financial statements include
the results of operations of the MAC Assets from February 29, 1996. Throughout
these financial statements any reference to ZD includes ZDI, ZD Events and the
MAC Assets, (including ZD's 100% retained interest in ZDNet) from February 29,
1996.

Acquisition of Sendai

On May 8, 1996, ZD acquired substantially all of the assets and liabilities
of Sendai Publishing Group, Inc., a publisher and distributor of magazines,
books, products and computer services related to the electronic gaming
industry, for approximately $27,500,000, plus transaction costs. The
acquisition was accounted for as a purchase and accordingly, Sendai's results
are included in the combined financial statements since the date of
acquisition. The excess of the purchase price over assets acquired approximated
$33,378,000. The operations of Sendai did not have a material effect on the
combined results of operations for the year ended December 31, 1996.

Acquisition of COMDEX

Effective April 1, 1995, Softbank acquired the assets of the COMDEX trade
show business, now part of ZD Events, for approximately $803,000,000, plus
transaction costs. The acquisition has been accounted for as of April 1, 1995
using the purchase method of accounting and accordingly COMDEX's results are
included in the combined financial statements since the date of acquisition.
The excess of the purchase price over the fair value of the assets acquired and
liabilities assumed was $849,000,000.

F-51
<PAGE>

ZD
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

Unaudited interim financial information

The unaudited, combined financial statements for the nine months ended
September 30, 1997 and 1998 and as of September 30, 1998 have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of normal
recurring adjustments) considered necessary to present fairly the financial
position of ZD at September 30, 1998 and the results of its operations and cash
flows for the nine months ended September 30, 1998 and 1997 have been included.
Operating results for the periods presented are not necessarily indicative of
the results that may be expected for the year ended December 31, 1998.

2. Reorganization and Initial Public Offering

On May 4, 1998, Softbank, through its wholly owned subsidiary SOFTBANK
Holdings Inc. ("SBH"), completed a reorganization whereby the common stock of
ZD Inc. and ZD Events Inc. were contributed to Ziff-Davis Inc. in exchange for
73,619,355 shares of Ziff-Davis Inc.'s common stock. Concurrently with the
reorganization, Ziff-Davis Inc. (1) completed an initial public offering of
25,800,000 shares at an initial public offering price of $15.50 per share, (2)
issued $250,000,000 of 8 1/2% subordinated notes due 2008, (3) entered into a
$1,350,000,000 credit facility with a group of banks under which $1,250,000,000
was borrowed and (4) converted $908,673,000 of intercompany indebtedness to
equity. In addition, Ziff-Davis Inc. received approximately $9,100,000 of fixed
assets from Kingston Technology Company ("Kingston") in exchange for 580,645
shares of Ziff-Davis Inc.'s common stock. These assets have been subsequently
leased back to Kingston. Total shares of common stock issued to Softbank and
its affiliates were 74,200,000. The transactions described above are herein
referred to as the "Reorganization".

On May 14, 1998 an affiliate of Softbank sold 50,000 shares of Ziff-Davis
Inc.'s common stock to an unrelated third party. On May 28, 1998, Ziff-Davis
Inc.'s U.S. underwriters exercised their option to purchase 2.0 million
additional shares of common stock to cover over-allotments. ZD purchased the
additional shares from SBH resulting in no change to the total number of shares
outstanding.

F-52
<PAGE>

ZD
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

Unaudited Pro Forma Financial Information

The following summary pro forma information has been prepared as if the
reorganization and initial public offering, described above, had been
consummated on January 1, 1998. The pro forma adjustments for the nine month
period include a $5,219,000 reduction of interest expense, a $900,000 increase
in depreciation expense and a $900,000 reduction of selling, general and
administrative expenses, as well as the tax effect of these items recorded at
the combined federal and state statutory rate of 41%.

<TABLE>
<CAPTION>
Nine Months ended
September 30, 1998
------------------
(dollars in
thousands)
<S> <C>
Revenue, net........................................... $ 692,981
Depreciation and amortization.......................... 110,714
Loss from operations................................... (9,107)
Interest expense, net.................................. 105,966
Loss before income taxes............................... (114,246)
Income tax benefit..................................... 31,146
Net loss............................................... $ (83,100)
Pro forma net loss per basic common share.............. $ (0.83)
Pro forma weighted average common shares outstanding... 100,000,000
</TABLE>

3. ZDNet Stock Proposal (unaudited)

The stockholders of Ziff-Davis Inc. are scheduled to vote on a proposal (the
"Tracking Stock Proposal") to authorize the issuance of a new series of common
stock, to be designated as Ziff-Davis Inc.--ZDNet Common Stock ("ZDNet Stock"),
intended to reflect the performance of Ziff-Davis Inc.'s online business
division ("ZDNet"). The majority owner of the common stock of Ziff-Davis Inc.
has agreed to vote for the Tracking Stock Proposal. Before the ZDNet Stock is
first issued, Ziff-Davis Inc.'s existing common stock will be re-classified as
Ziff-Davis Inc.--ZD Common Stock ("ZD Stock"), and that stock will be intended
to reflect the performance of Ziff-Davis Inc.'s other businesses and a
"Retained Interest" in ZDNet (i.e., Ziff-Davis Inc.'s interest in ZDNet
excluding the interest intended to be represented by outstanding shares of
ZDNet Stock) (collectively, "ZD").

F-53
<PAGE>

ZD
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

The book value associated with ZD's Retained Interest in ZDNet will be
increased proportionately for net income (or decreased proportionately for net
loss) of ZDNet. In addition, that book value will be adjusted from time to time
as set forth below.

Currently, Ziff-Davis Inc. provides all funding for ZD and ZDNet as described
in Note 5 (Certain Cash Management and Allocation Policies). Ziff-Davis Inc.
intends to continue these practices until ZDNet Stock is first issued.
Accordingly, no interest income or expense from or to ZDNet has been reflected
in the financial statements of ZD for any period prior to the date on which
ZDNet Stock is first issued.

After the date on which ZDNet Stock is first issued, for financial statement
purposes, the following policies will apply except to the extent the Board
rescinds, modifies or adds to them:

F-54
<PAGE>

ZD
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

(d) Ziff-Davis Inc. will account for all cash transfers from one Group to
or for the account of the other Group (other than transfers in return for
assets or services rendered or transfers in respect of ZD's Retained
Interest that correspond to dividends paid on ZDNet Stock) as inter-Group
revolving credit advances unless (1) the Board determines that a given
transfer (or type of transfer) should be accounted for as a long-term loan,
(2) the Board determines that a given transfer (or type of transfer) should
be accounted for as a capital contribution increasing ZD's Retained
Interest in ZDNet or (3) the Board determines that a given transfer (or
type of transfer) should be accounted for as a return of capital reducing
ZD's Retained Interest in ZDNet. There are no specific criteria to
determine when Ziff-Davis Inc. will account for a cash transfer as a long-
term loan, a capital contribution or a return of capital rather than

an inter-Group revolving credit advance. The Board would make such a
determination in the exercise of its business judgment at the time of such
transfer (or the first of such type of transfer) based upon all relevant
circumstances. Factors the Board would consider include (1) the current and
projected capital structure of each Group, (2) the relative levels of
internally generated funds of each Group, (3) the financing needs and
objectives of the recipient Group, (4) the investment objectives of the
transferring Group, (5) the availability, cost and time associated with
alternative financing sources and (6) prevailing interest rates and general
economic conditions.

F-55
<PAGE>

ZD
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

4. Summary of Significant Accounting Policies

Principles of Consolidation and Combination

The combined financial statements include the accounts of ZD. All significant
transactions within ZD have been eliminated in combination and consolidation.
The financial statements of ZD prepared subsequent to the Reorganization
described above have been prepared on a consolidated basis.

Investments in which ZD's ownership interests range from 20 to 50 percent and
in which ZD has the ability to exercise significant influence over the
operating and financial policies of such company are accounted for under the
equity method.

Cash and cash equivalents

ZD considers all highly liquid investments with an original maturity of three
months or less to be cash equivalents.

Concentration of credit risk

ZD places its temporary cash investments with high credit quality financial
institutions. At times, such investments may be in excess of federally insured
limits. ZD Group has not experienced losses in such accounts.

ZD's advertisers and exhibitors include principally customers who represent a
variety of technology companies in the U.S. and other countries. ZD extends
credit to their customers and distributors and historically have not
experienced significant losses relating to receivables from individual
customers or groups of customers.

Property and equipment

Property and equipment have been recorded at cost or estimated fair value at
the date of acquisition. Depreciation is computed using the straight-line
method over the estimated useful lives of the assets which range from 3 to 30
years. Leasehold improvements are amortized using the straight-line method over
the service life of the improvement or the life of the related lease, whichever
is shorter. Maintenance and repair costs are charged to expense as incurred.

Inventories

Inventories, which consist principally of paper, are stated at the lower of
cost or market. Cost is determined on a first-in, first-out basis.

F-56
<PAGE>

ZD
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

Investment in ZDNet

ZD's Retained Interest in 100% of the division equity of ZDNet is reflected
as "Retained Interest in ZDNet" in ZD's historical balance sheets. Similarly,
ZD's Retained Interest in 100% of the division net losses of ZDNet is reflected
as "Net loss related to retained interest in ZDNet".

Ziff-Davis Inc. accounts for ZD's retained interest in ZDNet in a manner
similar to the method prescribed under APB No. 18, "The Equity Method of
Accounting for Investments in Common Stock".

Intangible assets

Intangible assets consist principally of advertising lists, exhibitor
relationships, trademarks and trade names, and goodwill. Amortization of these
assets is computed on a straight-line basis over their estimated useful lives.
Identifiable intangible assets are amortized over a period of 2 to 40 years and
goodwill, which represents the excess of the purchase price over the estimated
fair values of net assets acquired, is amortized over a period of 5 to 40 years
(refer to Note 8). ZD assesses the recoverability of their intangible assets
whenever adverse events or changes in circumstances indicate that expected
future cash flows (undiscounted and without interest charges) may not be
sufficient to support the carrying amount of intangible assets. If undiscounted
cash flows are not sufficient to support the recorded assets, an impairment
loss is recognized to reduce the carrying value of the intangibles to its
estimated recoverable value.

Revenue recognition

Advertising revenue for ZD's publications, less agency commissions, is
recognized as income in the month that the related publications are sent to
subscribers or become available for sale at newsstands.

Circulation revenue consists of both subscription revenue and single copy
newsstand sales. Subscription revenue, less estimated cancellations, is
deferred and recognized as income in the month that the related publications
are sent to subscribers. Newsstand sales, less estimated returns, are
recognized in the month that the related publications become available for sale
at newsstands.

Payments received in advance of trade shows, conferences and seminars are
initially reported on the balance sheet as deferred revenue and are recognized
as income when the events take place.

F-57
<PAGE>

ZD
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

Revenue generated by market research is recognized when the service is
provided.

Operating costs and expenses

Cost of production includes the direct costs of producing magazines,
newsletters and training materials, primarily paper, printing and distribution,
and the direct costs associated with organizing, producing and managing trade
shows, seminars, conferences and expositions. Selling, general and
administrative costs include subscriber acquisition costs which are expensed as
incurred. Editorial and product development costs are expensed as incurred.
Product development costs include the cost of artwork, graphics, prepress,
plates and photography for new products.

Foreign currency

The effect of translating foreign currency financial statements into U.S.
dollars is included in the cumulative translation adjustments account in
division equity. Gains and losses on foreign currency transactions, which are
not significant to operations, have been included in selling, general and
administrative expenses. Ziff-Davis Inc. has not historically entered into
forward currency contracts.

Other non-operating income

Other non-operating income includes management fee income and ZD's equity
share of income or loss from joint ventures.

Income taxes

ZD uses the asset and liability approach for financial accounting and
reporting of deferred taxes.

Use of estimates

Fair value of financial instruments

All current assets and liabilities are carried at cost, which approximates
fair value because of the short-term maturity of those instruments. The
recorded amounts of ZD's long-term debt payable to affiliates also approximate
fair value based upon the current rates available to ZD for debt with similar
remaining maturities.

F-58
<PAGE>

ZD
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

Stock-based compensation

ZD has elected to follow Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" ("APB 25"), to account for stock
options. Effective January 1, 1996, ZD adopted the disclosure-only provisions
of Statement of Financial Accounting Standard ("SFAS") No. 123, "Accounting for
Stock-Based Compensation".

Comprehensive Income

The company implemented SFAS No. 130 "Reporting Comprehensive Income",
effective January 1, 1998. This standard requires ZD to report the total
changes in division equity that do not result directly from transactions with
stockholders, including those which do not affect retained earnings. These
changes are not material to ZD's combined financial statements.

New Accounting Pronouncements

ZD will adopt the above statements beginning with their December 31, 1998
financial statements.

In June 1998, the Financial Accounting Standards Board issued SFAS 133
"Accounting for Derivative Instruments and Hedging Activities". SFAS 133
establishes accounting and reporting standards for derivative instruments and
for hedging activities and is effective for all fiscal quarters of fiscal years
beginning after June 15, 1999. ZD does not expect the adoption of SFAS 133 to
have a material impact on the ZD's results of operations.

5. Certain Cash Management and Allocation Policies

ZD's financial statements reflect the application of certain cash management
and allocation policies summarized below. The Board may rescind, modify or add
to any of these policies.

F-59
<PAGE>

ZD
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

Treasury Activities

Ziff-Davis Inc. manages most treasury activities on a centralized,
consolidated basis. These activities include the investment of surplus cash,
the issuance, repayment and repurchase of short-term and long-term debt, and
the issuance and repurchase of common stock and preferred stock. Each of ZD and
ZDNet generally remits its cash receipts (other than receipts of foreign
operations or operations that are not wholly owned) to Ziff-Davis Inc., and
Ziff-Davis Inc. generally funds ZD's and ZDNet's cash disbursements (other than
disbursements of foreign operations or operations that are not wholly owned),
on a daily basis.

Corporate General and Administrative Expenses

Ziff-Davis Inc. allocates the cost of certain corporate general and
administrative services and shared services (including certain legal,
accounting (tax and financial), information systems, telecommunications,
purchasing, marketing, intellectual property, public relations, corporate
office and travel expenses) (collectively, "Central Services") to ZD based on
utilization. Where determinations based on utilization alone are impracticable,
Ziff-Davis Inc. uses other methods and criteria that management believes to be
equitable and to provide a reasonable estimate of the cost attributable to ZD.

Taxes

Federal income taxes, which are determined on a consolidated basis, are
allocated to ZD (and reflected in its financial statements) in accordance with
Ziff-Davis Inc.'s tax allocation policy. In general, this policy provides that
the consolidated tax provision (and related tax payments or refunds) are
allocated between the Groups based principally upon the financial income,
taxable income, credits and other amounts directly related to the respective
Groups. Tax benefits that cannot be used by the Group generating such
attributes, but can be utilized on a consolidated basis, are allocated to the
Group that generated such benefits. As a result, the allocated Group amounts of
taxes payable or

F-60
<PAGE>

ZD
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

refundable are not necessarily comparable to those that would have resulted if
the Groups had filed separate tax returns. State income taxes generally are
computed on a separate company basis.

Royalty Charges

ZD charges ZDNet an annual fee for the use of various brands and editorial
content. The current annual fee, which is reflected in ZD's financial
statements as a reduction of its selling, general and administrative costs, is
equal to 5% of the first $100,000,000 of ZDNet's revenue for the year, 4% of
the next $50,000,000 of ZDNet's revenue for that year and 3% of any incremental
revenue over $150,000,000 for that year. The Board may at some point in the
future change this fee as it, in its sole discretion, deems appropriate in
light of the circumstances from time to time.

6. Accounts Receivable, Net

Accounts receivable, net consist of the following:

<TABLE>
<CAPTION>
December 31,
------------------
1996 1997
-------- --------
(dollars in
thousands)
<S> <C> <C>
Accounts receivable.................................. $278,028 $297,647
Allowance for doubtful accounts, returns and
cancellations....................................... (80,765) (87,733)
-------- --------
$197,263 $209,914
======== ========
</TABLE>

7. Property and Equipment, Net

Property and equipment, net, consist of the following:

<TABLE>
<CAPTION>
December 31,
----------------
1996 1997
------- -------
(dollars in
thousands)
<S> <C> <C>
Computers and equipment.................................. $28,713 $45,896
Leasehold improvements................................... 38,230 39,719
Furniture and fixtures................................... 17,685 16,911
------- -------
84,628 102,526
Accumulated depreciation and amortization................ (33,137) (52,135)
------- -------
$51,491 $50,391
======= =======
</TABLE>

F-61
<PAGE>

ZD
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

8. Intangible Assets, Net

Intangible assets, net, consist of the following:

<TABLE>
<CAPTION>
Range of December 31,
Useful Lives ----------------------
(years) 1996 1997
------------ ---------- ----------
(dollars in
thousands)
<S> <C> <C> <C>
Advertising lists.................... 7-34 $ 885,700 $ 885,700
Exhibitor relationships.............. 4-27 154,070 154,070
Trademarks/trade names............... 30-40 735,595 735,595
License agreements................... 6-14 11,212 11,212
Subscriber lists..................... 3-10 47,175 47,175
Other................................ 2-20 57,599 57,599
Goodwill............................. 5-40 1,315,001 1,316,077
---------- ----------
3,206,352 3,207,428
Accumulated amortization............. (125,882) (244,259)
---------- ----------
$3,080,470 $2,963,169
========== ==========
</TABLE>

Intangible assets primarily relate to the acquisitions of ZDI, COMDEX and the
MAC Assets. As discussed in Note 1, the acquisitions were accounted for under
the purchase method of accounting. As such, purchase price was allocated to
tangible and identifiable intangible assets with the remaining amount being
allocated to goodwill.

All intangible assets are being amortized using the straight-line method over
their estimated useful lives, up to 40 years. In determining the estimated
useful lives, ZD considered its competitive position in the markets in which it
operates the historical attrition rates of advertisers, subscribers and
exhibitors, legal and contractual obligations, and other factors.

F-62
<PAGE>

ZD
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

9. Accrued Expenses

Accrued expenses consist of the following:

<TABLE>
<CAPTION>
December 31,
------------------
1996 1997
-------- --------
(dollars in
thousands)
<S> <C> <C>
Payroll and related employee benefits.................. $ 24,126 $ 27,672
Accrued interest-related party......................... 4,449 6,226
Other taxes payable.................................... 6,191 2,633
Other.................................................. 44,031 41,355
-------- --------
$ 78,797 $ 77,886
======== ========

10. Unearned Income

Unearned income consists of the following:

<CAPTION>
December 31,
------------------
1996 1997
-------- --------
(dollars in
thousands)
<S> <C> <C>
Unexpired subscriptions................................ $100,294 $ 82,167
Prepaid conference fees................................ 91,776 80,706
Reserve for cancellations.............................. (17,287) (8,191)
-------- --------
$174,783 $154,682
======== ========
</TABLE>

11. Income Taxes

Income tax benefits and related assets and liabilities attributed to ZD are
determined in accordance with Ziff-Davis Inc.'s tax allocation policy (Note 5).

ZD has been included in consolidated U.S. federal income tax returns filed by
Softbank, except for operations relating to the MAC Assets (described in Note
1), which were assets of a separate taxpayer. The tax expense reflected in the
consolidated statements of operations and tax liabilities reflected in the
consolidated balance sheet have been prepared on a separate return basis as
though Ziff-Davis Inc. filed stand-alone income tax returns. No tax benefit has
been recorded for the losses related to the MAC Assets, as such losses are not
available to Ziff-Davis Inc.

ZD and Softbank do not have a tax sharing agreement. Therefore, no
intercompany tax payments have been made and no related intercompany receivable
or payable has been recorded.

F-63
<PAGE>

ZD
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

Income (loss) before income taxes is attributable to the following
jurisdictions:

<TABLE>
<CAPTION>
December 31,
----------------------------
1995 1996 1997
------- -------- --------
(dollars in thousands)
<S> <C> <C> <C>
United States............................... $25,094 $(23,757) $(77,023)
Foreign..................................... (2,225) (2,879) 5,375
------- -------- --------
Total....................................... $22,869 $(26,636) $(71,648)
======= ======== ========

Components of the provision (benefit) for income taxes are as follows:

<CAPTION>
December 31,
----------------------------
1995 1996 1997
------- -------- --------
(dollars in thousands)
<S> <C> <C> <C>
U.S. federal income taxes:
Current................................... $ -- $ -- $ --
Deferred.................................. 9,240 19,716 (364)
State and local income taxes:
Current................................... -- -- --
Deferred.................................. 2,684 5,729 (105)
Foreign income taxes........................ -- -- --
------- -------- --------
Total provision (benefit) for income
taxes.................................. $11,924 $ 25,445 $ (469)
======= ======== ========

A reconciliation of the U.S. federal statutory tax rate to ZD's effective tax
rate on income (loss) before income taxes is as follows:

<CAPTION>
December 31,
----------------------------
1995 1996 1997
------- -------- --------
<S> <C> <C> <C>
Federal statutory tax rate.................. 35.0% 35.0% 35.0%
State and local taxes (net of federal tax
benefit)................................... 6.0 6.0 6.0
Loss related to retained interest in ZDNet.. -- (26.1) (12.2)
Non-recognition of combined losses of MAC
Assets..................................... 9.9 (96.9) (24.0)
Amortization of non-deductible goodwill..... 1.0 (13.3) (5.8)
Other....................................... 0.2 (0.2) 1.7
------- -------- --------
Effective tax rate.......................... 52.1% (95.5)% 0.7%
======= ======== ========
</TABLE>

The effective tax rate differs from the federal statutory tax rate primarily
as a result of ZD's inability to deduct losses of the MAC Assets prior to May
4, 1998, and ZD's policy of recording the losses related to its 100% retained
interest in ZDNet on a net of tax basis. The amortization of nondeductible
goodwill resulted primarily from the stock acquisition of 100% of the stock of
ZDI in 1996.

F-64
<PAGE>

ZD
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

Following is a summary of the components of the deferred tax accounts at
December 31, 1996 and 1997:

<TABLE>
<CAPTION>
December 31,
--------------------
1996 1997
--------- ---------
(dollars in
thousands)
<S> <C> <C>
Current deferred tax assets and (liabilities):
Allowance for doubtful accounts................... $ 8,825 $ 8,713
Other............................................. (151) 12
--------- ---------
Current deferred net tax assets................. 8,674 8,725
--------- ---------
Noncurrent deferred tax assets and (liabilities):
Basis difference in intangible assets............. (273,375) (288,286)
Net operating loss and other carryforwards........ 123,652 124,233
Other............................................. 11,603 13,701
--------- ---------
Noncurrent deferred tax liabilities............. (138,120) (150,352)
Valuation allowance................................. (47,911) (35,261)
--------- ---------
Net noncurrent deferred tax liabilities......... (186,031) (185,613)
--------- ---------
Total net deferred tax liabilities.................. $(177,357) $(176,888)
========= =========
</TABLE>

As of December 31, 1996 and 1997 ZD had total deferred tax assets of
$96,169,000 and $111,398,000, respectively, and total deferred tax liabilities
of $273,526,000 and $288,286,000, respectively. The December 31, 1996 and 1997
net deferred tax assets are reduced by a valuation allowance of $47,911,000 and
$35,261,000, respectively, primarily relating to tax benefits of foreign net
operating loss carryforwards which are not expected to be realized. The
decrease in the valuation allowance in 1997 is primarily related to the
expiration of foreign net operating loss carryforwards. No deferred tax asset
has been established for the losses associated with the MAC Assets, which will
not be available to ZD as a deduction.

ZD has U.S. and foreign net operating loss carryforwards of approximately
$261,000,000, which will begin to expire in 1998. ZD's utilization of certain
net operating loss carryforwards, of approximately $113,000,000, is subject to
limitations, due to the change of ownership resulting from the Softbank
acquisition of the ZDI stock on February 29, 1996. Management believes that
such limitations will not significantly affect ZD's ability to recognize the
deferred tax assets relating to the carryforward. Accordingly, no valuation
allowance to reduce the deferred tax asset relating to the carryforward has
been established. In addition, ZD has alternative minimum tax credit
carryforwards of $385,000 which may be carried forward indefinitely until used.

ZD's foreign subsidiaries have no undistributed earnings for remittance to
the U.S. and, therefore, no U.S. or foreign tax provision on remittances has
been recorded.

F-65
<PAGE>

ZD
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

12. Related Party Transactions

ZD transacts business with a group of companies affiliated through common
majority ownership with Softbank, and has various transactions and
relationships with members of the group. Due to these relationships, it is
possible that the terms of those transactions are not the same as those that
would result from transactions among unrelated parties.

Receivables/payables

Receivables from affiliates consist of the following:

<TABLE>
<CAPTION>
December 31,
----------------
1996 1997
------- --------
(dollars in
thousands)
<S> <C> <C>
Receivable from:
MAC and subsidiaries.................................... $ 7,140 $ 42,687
Softbank................................................ 67,451 84,365
Other affiliates........................................ 2,617 4,238
------- --------
$77,208 $131,290
======= ========

Payables to management and affiliates consist of the following:

<CAPTION>
December 31,
----------------
1996 1997
------- --------
(dollars in
thousands)
<S> <C> <C>
Payable to:
Management.............................................. $29,834 $ --
MAC and subsidiaries.................................... -- 270,000
Softbank................................................ 39,582 126,371
Other affiliates........................................ -- 1,961
------- --------
$69,416 $398,332
======= ========
</TABLE>

As part of the 1996 acquisition of ZDI, ZD agreed to assume certain
obligations to management arising out of prior employment arrangements with
previous owners. In January 1997, ZD paid all amounts due, including accrued
interest, through the payment date.

Prior to the Reorganization and initial public offering, ZD was a member of
Softbank's central cash management system. Under this system, ZD would
periodically transfer excess cash to Softbank for cash management purposes and
in turn receive cash advances from Softbank to fund ZD's short-term working
capital requirements. Interest is accrued based on the net balance outstanding
at the end of each month. Interest income is earned at the 30-day LIBOR rate
for the applicable month. Interest expense is incurred at the 30-day LIBOR rate
plus 0.5%.

F-66
<PAGE>

ZD
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

Other affiliated arrangements

During the years ended December 31, 1996, and 1997, ZD incurred $2,000,000
and $1,631,000 advertising expense with Yahoo!, Inc. (Yahoo!), an affiliated
company. No advertising expense with Yahoo! was incurred in 1995.

ZD sells advertising space and exhibition services to Kingston, an affiliated
company. During the years ended December 31, 1995, 1996 and 1997, ZD recorded
revenues of $0, $882,000 and $2,667,000, respectively, from sales to Kingston.
These services were provided under terms consistent with those provided to
unaffiliated customers.

ZD has entered into an agreement to manage certain trade shows and
expositions owned by Softbank and its affiliates, whereby ZD earns management
and licensing fees. The fees earned by ZD for the years ended December 31,
1995, 1996 and 1997 were $1,979,000, $3,394,000 and $4,057,000, respectively.

ZD has an arrangement with SOFTBANK Services, an affiliated company, whereby
ZD is charged for administrative services provided plus a management fee. For
the years ended December 31, 1995, 1996, and 1997 ZD incurred service fees of
$0, $359,000, and $1,259,000, respectively, in relation to this agreement.

ZD has entered into certain licensing agreements with Softbank for the
publishing and distribution of Japanese language editions of certain
publications. The fees earned by ZD for the years ended December 31, 1996 and
1997 were approximately $964,000, and $1,818,000, respectively.

Included in selling, general and administrative expenses is an allocation for
Ziff-Davis Inc.'s Central Services amounting to $61,359,000 and $85,739,000 for
the years ended December 31, 1996 and 1997, respectively. Also included as a
reduction in selling, general and administrative expenses is a royalty charge
from ZDNet amounting to $0, $811,000 and $1,611,000 for the years ended
December 31, 1995, 1996 and 1997, respectively. (See Note 5.)

ZD's publications sell advertising to ZDNet at discounts to market rates. Had
ZD charged market rates for such advertising, ZD's revenue would have increased
by $0, $2,235,000 and $2,671,000 for the years ended December 31, 1995, 1996
and 1997 respectively.

In July 1997, Ziff-Davis Inc. entered into a license and services agreement
to develop ZDTV for MAC Holdings (America) Inc. ("MHA"), a company that is
wholly owned by Mr. Masayoshi Son, a director of Ziff-Davis Inc. Under this
agreement, Ziff-Davis Inc. agreed to fund ZDTV's operations through unsecured
advances and was granted an option to

F-67
<PAGE>

ZD
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

purchase ZDTV for a price equal to MHA's) investment plus 10% per annum for the
period of investment. The cumulative advances, which totaled $14,400,000 net of
$10,100,000 in repayments through December 31, 1997, were repaid concurrently
with the Reorganization. (See Notes 2 and 20.)

Ziff-Davis Inc. has entered into operating leases for television production
equipment and has sublet such equipment to ZDTV. The terms of the subleases are
substantially identical to the terms of the leases which provide for annual
lease payments totaling approximately $610,000 through 2003.

Notes payable to affiliates

ZD's long-term debt is payable to Softbank and consists of the following:

<TABLE>
<CAPTION>
December 31,
----------------------
1996 1997
---------- ----------
(dollars in
thousands)
<S> <C> <C>
Notes payable to affiliate(1)...................... $1,080,000 $1,080,000
Notes payable to affiliate(2)...................... 900,000 900,000
Notes payable to affiliate(3)...................... 398,000 375,027
Note payable to affiliate(4)....................... 100,000 94,231
Note payable to affiliate(5)....................... 77,450 74,772
Note payable to affiliate(6)....................... -- 10,000
---------- ----------
Total............................................ 2,555,450 2,534,030
Less--Current portion.............................. (33,198) (125,790)
---------- ----------
$2,522,252 $2,408,240
========== ==========
</TABLE>
- --------
(1) Principal and interest payments are due in 53 consecutive quarterly
installments on the last business day of each calendar quarter beginning
March 31, 1998 through March 31, 2011. The notes bear interest at a rate of
7.8% per annum.

(2) These notes mature on December 31, 2001 and bear an interest rate of 6.5%
per annum, payable on the last business day of each quarter beginning March
31, 1997.

(3) Notes mature on February 28, 2010. The notes bear interest at a rate of
8.0% per annum.

(4) Notes mature on February 28, 2009. The notes bear interest at 9.9% per
annum.

(5) Note is payable in 52 equal quarterly installments commencing March 31,
1997. The note bears interest at a rate of 8.0% per annum.

(6) Note is payable on January 1, 2007. The note bears interest at a rate of
8.0% per annum.

F-68
<PAGE>

ZD
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

Scheduled principal payments due on long-term debt outstanding at December
31, 1997 are as follows:

<TABLE>
<CAPTION>
(dollars
in
thousands)
<S> <C>
1998................................................................. $ 125,790
1999................................................................. 125,790
2000................................................................. 125,790
2001................................................................. 1,025,790
2002................................................................. 125,790
Thereafter........................................................... 1,005,080
----------
Total.............................................................. $2,534,030
==========
</TABLE>

See Note 2 for a discussion of the reorganization and initial public offering
which restructured ZD's debt and equity structures.

During 1995, 1996 and 1997 ZD incurred $44,005,000, $120,646,000 and
$190,445,000, respectively of interest expense due to Softbank related to the
above notes payable.

Guarantee of Softbank's U.S. debt

In April 1996, Softbank signed a line of credit agreement totaling
$50,000,000 with an independent lender for which ZD, along with certain other
Softbank affiliates, are guarantors. In January 1997 and October 1997, this
line of credit was increased to $75,000,000 and $150,000,000, respectively. At
December 31, 1997, $102,500,000 was outstanding under the line of credit. In
March 1998, ZD increased its guarantee of Softbank's U.S. debt from
$150,000,000 to $450,000,000. On May 4, 1998, ZD was released from this
guarantee.

Return of capital and dividends

On December 15, 1996, ZD declared a return of capital of approximately
$900,000,000 paid through the issuance of a note payable to a subsidiary of
Softbank and a cash dividend of $8,000,000 to Softbank. In 1997, ZD recorded a
return of capital of $381,434,000 in connection with the purchase of companies
under common control.

13. Employee Stock Compensation Plans

Executive stock option plan

The Softbank 1996 and 1997 Executive Stock Option Plans provide for the
granting of nonqualified stock options to purchase the common stock of Softbank
to officers, directors and key employees of ZD. Under the plans, options have
been granted at exercise prices

F-69
<PAGE>

ZD
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

equal to the closing market price in Japan's public equities market (market
price denominated in Japanese yen) on the date of grant. As of December 31,
1997, substantially all options granted become exercisable in various
installments over the first six anniversaries of the date of grant and expire
ten years after the date of grant.

Information relating to stock options during 1995, 1996 and 1997 is as
follows:

<TABLE>
<CAPTION>
Weighted Average
Number Option Price
of Shares Per Share(1)
--------- ----------------
<S> <C> <C>
Shares outstanding under options at
December 31, 1995......................... -- --
Granted.................................... 714,777(2) $87.15
Exercised.................................. -- --
Forfeited.................................. 12,740(2) 87.15
-------
Shares outstanding under options at
December 31, 1996......................... 702,037 87.15
Granted.................................... 368,563 61.25
Exercised.................................. -- --
Forfeited.................................. 138,034 78.89
-------
Shares outstanding under options at
December 31, 1997......................... 932,566 $78.14
=======
Shares exercisable
At December 31, 1996..................... -- --
At December 31, 1997 (price range $44.26-
$87.15)................................. 102,510 $82.21
</TABLE>
--------
(1) The exercise price of the stock options is set in Japanese yen. The
exercise prices as shown above have been converted to U.S. dollars
based upon the exchange rate as of the date of grant for the
respective options.

(2) Adjusted for a 1.4:1 stock split during 1996 and a 1.3:1 stock
split during 1997.

As permitted by SFAS 123, ZD has chosen to continue to account for stock
options in accordance with the provisions of APB 25 and, accordingly, no
compensation expense related to stock option grants was recorded in 1996 or
1997. Pro forma information regarding net income is required by SFAS 123 and
has been determined as if ZD had accounted for stock options under the fair
value method. The fair value of the option grants was estimated at the date of
grant using the Black-Scholes option-pricing model with the following
assumptions for 1996 and 1997:

<TABLE>
<CAPTION>
1996 1997
------- -------
<S> <C> <C>
Risk-free interest rate.................................... 5.89% 6.35%
Dividend yield............................................. 0.26% 0.22%
Volatility factor.......................................... 54.03% 51.35%
Expected life.............................................. 6 years 6 years
</TABLE>

F-70
<PAGE>

ZD
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

The weighted average fair value of options granted in 1996 and 1997 was
$64.30 and $34.05, respectively. For purposes of the pro forma disclosures, the
estimated fair value of the options is amortized to expense over the options'
vesting period. Had compensation cost for the stock option plans been
determined based upon the fair value at the grant date for awards during 1996
and 1997, consistent with the provisions of SFAS 123, ZD's net loss would have
been increased by approximately $3,000,000 and $4,000,000, respectively. On
January 23, 1998, the exercise price of all of the shares outstanding under
option agreements were reset to an exercise price equal to the closing market
price on Japan's Tokyo Stock Exchange First Section at that date. In
conjunction with the repricing, those options previously exercisable on
December 31, 1997 may now be exercised only after July 19, 1998. Repricing of
the stock options will not result in compensation expense to ZD.

Other stock compensation plans

During 1996 and 1997, ZD granted 45,760 and 61,940 shares of common stock of
Softbank, respectively, (adjusted for a 1.4:1 stock split during 1996 and a
1.3:1 stock split during 1997) to certain key employees, subject to
restrictions as to continuous employment which expire over a three to five-year
period from the date of grant. The granting of the shares to ZD's employees has
been recorded as additional paid-in capital offset by a reduction to
stockholder's equity as deferred compensation. Such amounts were recorded at
the fair value, as established by market price of the shares on the date of
grant. The unearned compensation is being amortized ratably over the restricted
periods. During 1996, restrictions on 13,790 shares expired, 2,160 shares were
forfeited and $1,080,000 was charged to expense related to the restricted stock
awards. During 1997, restrictions on 75,210 shares expired, 2,150 shares were
forfeited and $3,916,000 was charged to expense related to these restricted
stock awards.

14. Employee Benefit Plans

Pension plan

Certain employees of ZD who have met eligibility requirements are covered by
a noncontributory defined benefit pension plan. The benefits are based on years
of service and average compensation at the time of retirement. ZD's funding
policy is to contribute amounts sufficient to meet the minimum funding
requirements as set forth in the Employee Retirement Income Security Act of
1974 ("ERISA"). Contributions to the plan are determined in accordance with the
projected unit credit cost method. Plan assets consist of U.S. equity
securities, high grade corporate bonds and commercial paper, and U.S. treasury
notes.

F-71
<PAGE>

ZD
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

The weighted average assumed discount rate of 7% and rate of increase in
future compensation levels of 6% was used in the determination of the actuarial
present value of the projected benefit obligation at December 31, 1996 and
1997. The weighted average expected long-term rate of return on plan assets at
December 31, 1996 and 1997 was 7%.

Net periodic pension cost includes the following components:

<TABLE>
<CAPTION>
1995 1996 1997
----- ------ -----
(dollars in
thousands)
<S> <C> <C> <C>
Service cost......................................... $ 472 $ 700 $ 391
Interest cost........................................ 363 472 456
Expected return on plan assets....................... (172) (300) (445)
Amortization of transition obligation................ 149 199 75
----- ------ -----
Net periodic pension cost............................ $ 812 $1,071 $ 477
===== ====== =====
</TABLE>
The following table sets forth the funded status and amounts recognized in
the balance sheet:

<TABLE>
<CAPTION>
1996 1997
----------- -----------
(dollars in thousands)
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation.................... $ 4,132 $ 5,721
=========== ===========
Accumulated benefit obligations.............. 4,224 5,721
=========== ===========
Projected benefit obligations.................. 7,967 5,721
Plan assets at fair value...................... (4,467) (6,004)
=========== ===========
Projected benefit obligation in excess (less
than) of plan assets.......................... 3,500 (283)
Unrecognized net transition asset (liability).. (2,297) 1,279
----------- -----------
Pension liability included in balance sheet.... $ 1,203 $ 996
=========== ===========
</TABLE>

During 1997, ZD decided to terminate the defined benefit pension plan and
pursuant to this decision, all accrued benefits became fully vested as of
August 31, 1997. The above amounts reflect the effects of such termination. All
accrued plan obligations will be settled during 1998. There was no significant
gain or loss recognized in connection with the termination.

Retirement plans

Ziff-Davis Inc. maintains various defined contribution retirement plans.
Substantially all of ZD's employees are eligible to participate in one of the
plans under which annual contributions may be made by Ziff-Davis Inc. for the
benefit of all eligible employees. In certain cases, employees may also make
contributions to the plan in which they participate

F-72
<PAGE>

ZD
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

which, and subject to certain limitations, may be matched by Ziff-Davis Inc. up
to certain specified percentages. Employees are generally eligible to
participate in a plan upon joining Ziff-Davis Inc. and receive matching
contributions after one year of employment. ZD made contributions to the plans
totaling $2,115,000, $10,023,000 and $12,974,000 in 1995, 1996 and 1997,
respectively.

15. Investments in and Advances to Unconsolidated Affiliates

ZD has investments in the following companies/joint ventures/divisions:

<TABLE>
<CAPTION>
Carrying value at
December 31,
Ownership -----------------------
Company/Joint Venture/Division Percentage 1996 1997
------------------------------ ---------- ----------- -----------
(dollars in thousands)
<S> <C> <C> <C>
Mac Publishing LLC................... 50% $ -- $ 16,244
ExpoComm LLC......................... 50% $ 7,698 $ 7,758
Family PC G.P........................ 50% $ 10,138 $ 9,342
ZDNet................................ 100% $ 78,575 $ 83,292
</TABLE>

The entities listed above are engaged primarily in the publication or
distribution of print media, the organization, production and management of
trade shows and providing interactive information and programming to
technology-oriented Internet users. Other investments and joint ventures are
not material to ZD's financial statements. ZD has equity income (loss) from
joint ventures of $(796,000) and $335,000 in 1996 and 1997, respectively. In
addition, ZD had equity losses of $16,925,000 and $21,238,000 in 1996 and 1997,
respectively, from its 100% Retained Interest in ZDNet Group.

16. Supplemental Cash Flow Information

<TABLE>
<CAPTION>
Year ended December 31,
----------------------------
1995 1996 1997
-------- ---------- --------
(dollars in thousands)
<S> <C> <C> <C>
Cash paid during the year for:
Interest to related parties................ $ 8,390 $ 99,509 $185,447
Income taxes............................... -- 360 4
Noncash investing and financing activities:
Fair value of assets acquired.............. $836,479 $2,508,603 $ 14,000
Liabilities assumed........................ 21,959 370,518 --
-------- ---------- --------
Cash paid.................................. 814,520 2,138,085 14,000
Less--Cash acquired........................ -- 13,262 --
Net cash paid for acquisitions............. $814,520 $2,124,823 $ 14,000
======== ========== ========
Return of capital dividends................ $ -- $ 899,948 $381,434
======== ========== ========
Capital contributions...................... $ -- $ 5,002 $ 61,580
======== ========== ========
</TABLE>

F-73
<PAGE>

ZD
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

17. Operating Lease Commitments

ZD utilizes equipment and space under lease to Ziff-Davis Inc. ZD's portion
of the minimum lease payments based on square feet utilized are as follows:

<TABLE>
<CAPTION>
(dollars
in
thousands)
<S> <C>
1998................................................................. $ 33,825
1999................................................................. 31,359
2000................................................................. 27,377
2001................................................................. 24,381
2002................................................................. 23,873
Thereafter........................................................... 240,322
--------
Total.............................................................. $381,137
========
</TABLE>

Netted in the above totals is approximately $5,000,000 for which
noncancelable subleases are in place. Total sublease income approximates ZD's
required payments under the related leases. Rent expense amounted to
approximately $2,492,000, $22,347,000, and $28,646,000 for the years ended
December 31, 1995, 1996 and 1997, respectively.

18. Segment Information

Business segment information

ZD's operations have been classified into two business segments: (1)
publishing, and (2) events.

Publishing

The publishing segment is engaged in publishing magazines, journals,
newsletters, online content, training manuals and providing market research
about the computer industry. The publishing segment's principal operations are
in the United States and Europe, although it also licenses or syndicates its
editorial content to over 50 other publications distributed worldwide. The
publishing segment includes a 100% Retained Interest in ZDNet.

Events

The events segment is engaged in the organization, production and management
of trade shows, conferences and seminars for the computer industry. The events
segment's principal operations are in North America and to a lesser extent in
Europe, Asia and Latin America.

F-74
<PAGE>

ZD
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

Summarized financial information by business segment as of December 31, 1995,
1996 and 1997 for each of the periods then ended is set forth below:

<TABLE>
<CAPTION>
1995 1996 1997
---------- ---------- ----------
(dollars in thousands)
<S> <C> <C> <C>
Revenue, net:
Publishing............................. $ -- $ 674,040 $ 834,015
Events................................. 202,729 264,884 287,528
---------- ---------- ----------
$ 202,729 $ 938,924 $1,121,543
========== ========== ==========
Income from operations:
Publishing............................. $ -- $ 36,089 $ 72,478
Events................................. 62,675 68,505 59,235
---------- ---------- ----------
$ 62,675 $ 104,594 $ 131,713
========== ========== ==========
Total assets at December 31:
Publishing............................. $ -- $2,441,441 $2,423,822
Events................................. 1,090,981 1,143,522 1,124,286
---------- ---------- ----------
$1,090,981 $3,584,963 $3,548,108
========== ========== ==========
Depreciation and amortization:
Publishing............................. $ -- $ 101,102 $ 111,133
Events................................. 24,305 33,149 36,126
---------- ---------- ----------
$ 24,305 $ 134,251 $ 147,259
========== ========== ==========
Capital expenditures:
Publishing............................. $ -- $ 13,647 $ 19,025
Events................................. 3,367 7,708 8,797
---------- ---------- ----------
$ 3,367 $ 21,355 $ 27,822
========== ========== ==========
</TABLE>

Operating income by business segment excludes interest income and interest
expense.

F-75
<PAGE>

ZD
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

<TABLE>
<CAPTION>
North America Other areas Combined
------------- ----------- ----------
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1995:
Revenue, net............... $ 192,789 $ 9,940 $ 202,729
=========== ======== ==========
Income (loss) from
operations................ $ 64,930 $ (2,255) $ 62,675
=========== ========
Other non-operating
income.................... 4,199
Related party-interest
expense................... 44,005
----------
Income before taxes........ $ 22,869
----------
Total assets at December
31, 1995.................. $ 1,081,829 $ 9,152 $1,090,981
=========== ======== ==========
Year ended December 31,
1996:
Revenue, net............... $ 838,749 $100,175 $ 938,924
=========== ======== ==========
Income (loss) from
operations................ $ 107,474 $ (2,880) $ 104,594
=========== ======== ==========
Loss related to Retained
Interest in ZDNet......... (16,925)
Other non-operating
income.................... 6,341
Related party-interest
expense................... 120,646
----------
Loss before taxes.......... $ (26,636)
----------
Total assets at December
31, 1996.................. $ 3,550,161 $ 34,802 $3,584,963
=========== ======== ==========
Year ended December 31,
1997:
Revenue, net............... $ 1,008,682 $112,862 $1,121,544
=========== ======== ==========
Income from operations..... $ 126,344 $ 5,369 $ 131,713
=========== ======== ==========
Loss related to Retained
Interest in ZDNet......... (21,238)
Other non-operating
income.................... 8,322
Related party-interest
expense................... 190,445
----------
Loss before taxes.......... $ (71,648)
----------
Total assets at December
31, 1997.................. $ 3,502,753 $ 45,355 $3,548,108
=========== ======== ==========
</TABLE>

Transactions between geographic areas are not significant.

19. Contingencies

ZD is subject to various claims and legal proceedings arising in the normal
course of business.

Class Action and Derivative Litigations

Following a decline in the price per share of ZD's common stock after the
October 8, 1998 announcement (described below), eight securities class action
suits have been filed against ZD and certain of its directors and officers in
the United States District Court for the Southern District of New York.

F-76
<PAGE>

ZD
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

The complaints allege that defendants violated Sections 11, 12(a) (2) and 15
of the Securities Act of 1933 in connection with the registration statement
filed by Ziff-Davis Inc. with the Securities and Exchange Commission relating
to the initial public offering of Ziff-Davis Inc.'s common stock on April 29,
1998 (the "IPO"). More particularly, the complaints allege that the
registration statement contained false and misleading statements and failed to
disclose facts that could have indicated an impending decline in
Ziff-Davis Inc.'s revenue. The complaints seek on behalf of a class of
purchasers of Ziff-Davis Inc.'s common stock from the date of the IPO through
October 8, 1998 unspecified damages, interest, fees and costs, recission, and
injunctive relief such as the imposition of a constructive trust upon the
proceeds of the IPO.

The complaints are as follows: Napoli v. Ziff-Davis Inc., et al., No. 98 Civ.
7158 (filed Oct. 9, 1998); Steinberg, et al. v. Ziff-Davis Inc., et al., No. 98
Civ. 7205 (filed Oct. 13, 1998); Flinker v. Ziff-Davis Inc., et al., No. 98
Civ. 7231 (filed Oct. 14, 1998); Koenig v. Ziff-Davis Inc., et al., No. 98 Civ.
7260 (filed Oct. 15, 1997; Schindler v. Ziff-Davis Inc., et al., No. 98 Civ.
7418 (filed Oct. 19, 1998); Miller v. Ziff-Davis Inc., et al., No. 98 Civ. 7541
(filed Oct. 23, 1998); Felgoise v. Ziff-Davis Inc., et al., No. 98 Civ. 8045
(filed Nov. 9, 1998); and Javier v. Ziff Davis Inc., et al., No. 98 Civ. 8201
(filed Nov. 17, 1998). On January 28, 1999, the court entered an order
consolidating the actions, appointing lead plaintiff's counsel and requiring
the filing of a consolidated amended complaint within 45 days. Thereafter,
Ziff-Davis Inc. will have 45 days to respond to the consolidated amended
complaint.

Although the outcome of the foregoing cases cannot be predicted, Ziff-Davis
Inc. believes that there are substantial defenses to these claims.

Legal Proceeding

F-77
<PAGE>

ZD
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

investments (including investments in Ziff-Davis Inc.) and failed to act in the
best interests of SIM and the minority shareholders by taking actions which
benefited Ziff-Davis Inc. The complaint states claims based on common law
fraud, breach of fiduciary duty and aiding and abetting theories and seeks in
excess of $200,000,000 in damages. Ziff-Davis Inc. and the other defendants
have moved to dismiss all of the claims against them other than a breach of
contract claim which is solely against SBH.

Although the outcome of this case cannot be predicted, Ziff-Davis Inc.
believes that there are substantial defenses to the claims and intends to
defend vigorously.

20. Subsequent Events (unaudited)

Sky TV

On October 28, 1998, ZD acquired the assets of Sky TV Inc. and certain
affiliates for approximately $12,000,000 in cash. Sky TV is a media company
that provides video content for distribution principally through airline in-
flight, cable and broadcast television. Sky TV's principal offices are located
in Dallas and San Francisco.

ZDTV

On February 4, 1999, Ziff-Davis Inc. purchased ZDTV at a purchase price of
approximately $81,400,000. (See Note 12.) Ziff-Davis Inc. paid approximately
$32,800,000 of the purchase price in cash and paid the remainder by applying
approximately $48,600,000 in advances owed to it by MAC Holdings America. Other
than advances to ZDTV which are reported on ZD's balance sheet, the results of
operations of ZDTV are not included in ZD's results for any of the periods
presented.

Vulcan Transactions

On February 4, 1999, Vulcan Ventures, the investment vehicle of Paul G.
Allen, agreed to purchase approximately three million shares of Ziff-Davis Inc.
common stock for $50,000,000 in cash. This purchase is expected to close in the
first quarter of 1999. On February 5, 1999, Vulcan Programming, an entity owned
by Paul G. Allen, purchased a one-third interest in ZDTV for $54,000,000 in
cash.

1998 Incentive Compensation Plan

Ziff-Davis Inc. adopted the 1998 Incentive Compensation Plan (the "Plan") to
provide long-term incentives for its key employees and enhance shareholder
value. The Plan provides for the grant of options, stock appreciation rights,
stock awards and other interests in Ziff-Davis Inc.'s common stock. Ziff-Davis
Inc. has reserved 17,827,400 shares of common stock (regardless of series) for
issuance under the Plan. On February 13, 1998, the Companies granted options to
purchase 5,254,700 shares with an exercise price of $16.00 per share
representing the fair value of such options at that date. Such options vest
ratably over five years.

F-78
<PAGE>

ZD
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

On September 23, 1998, the Board approved the reduction of the exercise price
of all options outstanding under the Plan from $16.00 to $6.00 the closing
market price of Ziff-Davis Inc.'s common stock on that date. In addition, the
vesting period of the options was extended by three months. Repricing of the
stock options did not result in compensation expense to ZD.

On December 21, 1998 the Plan was amended to permit grants of options and
other stock based awards to either series of common stock of Ziff-Davis Inc.
Pursuant to the Plan, the number of shares reserved for issuance was increased
from 8,500,000 shares to 17,827,400. In addition, on December 21, 1998, the
Board approved the grant of options to acquire an aggregate of approximately
5,729,000 shares of ZDNet Stock, at a price of $7.50 per share (the fair value
of the shares at that date), to certain employees. These options are currently
scheduled to vest and become exercisable on the fifth anniversary of the date
of grant, except that, upon the completion of an initial public offering of
ZDNet Stock, these options will vest and become exercisable with respect to 25%
of the shares on December 31, 1999 and an additional 6.25% of the shares at the
end of each three-month period thereafter.

The terms of the options described in the preceding paragraph require an
adjustment in the number of shares of ZDNet Stock that holders may purchase and
the per share purchase price thereof if the initial Number of Shares Issuable
with Respect to ZD's Retained Interest in ZDNet is different from 40,000,000.
This adjustment is similar to the adjustment that would be made to the terms of
options to purchase conventional common stock in the event of a stock split.
Ziff-Davis Inc. currently expects that the initial Number of Shares Issuable
with Respect to ZD's Retained Interest in ZDNet will be 70,000,000. Assuming
that this is so, the total number of shares ZDNet Stock that holders may
purchase upon exercise of these options will increase to approximately
10,200,000 and the per share purchase price thereof will decrease to $4.29.

On January 29, 1999, Ziff-Davis Inc. granted options to a number of employees
in connection with the cancellation of corresponding options to purchase stock
of SOFTBANK Corp. In connection with these grants, Softbank has agreed with
Ziff-Davis Inc. that, if and when any of these options are exercised, (a)
Softbank will deliver to Ziff-Davis Inc., out of the shares of Ziff-Davis Inc.
common stock then held by Softbank, a number of shares of common stock equal to
the number then issuable upon such exercise and (b) Ziff-Davis will deliver to
Softbank the exercise price paid upon such exercise. Thus, the exercise of
these options will not increase the number of shares of Ziff-Davis Inc. common
stock (or ZD Stock) outstanding or ZD's division equity. However, ZD expects to
recognize compensation expense for accounting purposes of approximately
$2,942,000 over three years as a result of these grants. Softbank has agreed
that, if and when Ziff-Davis Inc. recognizes any compensation or other expense
for accounting purposes that results from such grants, Softbank will pay to
Ziff-Davis Inc. the amount thereof.

F-79
<PAGE>

ZD
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

Employee Stock Purchase Plan

Interest Rate Swaps

On June 10, 1998, ZD entered into interest rate swap agreements, with an
aggregate notional amount of $550,000,000. Under these swap agreements, which
began on August 10, 1998, ZD will receive a floating rate of interest based on
three-month LIBOR, which resets quarterly, and ZD will pay a fixed rate of
interest, each quarter, for the terms of the respective agreements. The terms
of these agreements range from 3 to 7 years and the weighted average fixed rate
ZD will pay is 5.85%. ZD has entered into these agreements solely to hedge its
interest rate risk under its floating rate bank debt.

For the nine months period ended September 30, 1998, these interest rate
swaps did not have a material impact on the financial statements.

Restructuring

On October 8, 1998, Ziff-Davis Inc. announced that anticipated results for
the fourth quarter would be below expectations. As a result, a company-wide
restructuring was implemented in which three publications were discontinued and
the work force reduced by approximately 10%. The cost of this restructuring, is
$52,239,000 and will be recognized in the fourth quarter of 1998 as a component
of income from operations.

Credit Facility

On December 16, 1998, the lenders on Ziff-Davis Inc.'s $1,350,000,000 credit
facility agreed to amend certain provisions of that facility. The amended
provisions include an increase in allowed leverage ratios. In return, Ziff-
Davis Inc. agreed to pay a one-time fee of $3,375,000 and increase rates on
amounts borrowed under the facility to rates ranging from LIBOR plus 1.5% to
LIBOR plus 3.375%, depending on the type of loan.

Other

On December 31, 1998, SBH contributed 71,619,355 shares of Ziff-Davis Inc.'s
common stock to SOFTBANK America Inc., an affiliate of Softbank.

F-80
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of
Ziff-Davis Inc., (formerly Ziff-Davis Publishing Company)

In our opinion, the accompanying combined balance sheets and the related
combined statements of operations, cash flows and changes in division equity,
present fairly, in all material respects, the financial position of the ZD
Publishing ("ZD"), a division of Ziff-Davis Inc., formerly Ziff-Davis
Publishing Company (the "Company") at December 31, 1995 and February 28, 1996,
and the results of its operations and its cash flows for the year ended
December 31, 1995 and for the period from January 1, 1996 to February 28, 1996,
in conformity with generally accepted accounting principles. 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 of these statements in accordance with
generally accepted auditing standards which 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, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for the
opinion expressed above.

As discussed in Note 17 to the Financial Statements, the Company was acquired
by SOFTBANK Holdings Inc. on February 29, 1996. As described in Note 1 to the
financial statements, ZD is a division of Ziff-Davis Inc.; accordingly the
financial statements of ZD should be read in conjunction with the audited
financial statements of Ziff-Davis Inc.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP
New York, NY
December 17, 1998

F-81
<PAGE>

ZD PUBLISHING
(a division of Ziff-Davis Inc.)

COMBINED BALANCE SHEETS
(dollars in thousands)

<TABLE>
<CAPTION>
December 31, February
1995 28, 1996
------------ ----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................ $ 10,083 $ 13,669
Accounts receivable, net............................. 109,305 111,368
Inventories.......................................... 21,825 26,009
Deferred taxes....................................... 21,961 23,361
Prepaid postage and other current assets............. 16,570 16,817
---------- ----------
Total current assets................................... 179,744 191,224
Property and equipment, net............................ 62,525 56,873
Retained interest in ZDNet............................. 89,682 91,225
Intangible assets, net................................. 1,265,479 1,256,659
Deferred charges and other assets...................... 27,996 26,457
---------- ----------
Total assets........................................... $1,625,426 $1,622,438
========== ==========
LIABILITIES AND DIVISION EQUITY
Current liabilities:
Accounts payable..................................... $ 55,103 $ 43,097
Accrued expenses..................................... 68,109 77,539
Unearned income, net................................. 81,737 86,435
Due to affiliates and management..................... 58,480 58,762
Current portion of long-term debt.................... 6,847 6,847
Other current liabilities............................ 2,048 2,733
---------- ----------
Total current liabilities.............................. 272,324 275,413
Deferred taxes......................................... 15,432 14,840
Long-term debt......................................... 439,153 439,153
Subordinated debentures--related party................. 525,000 525,000
Other liabilities...................................... 8,367 7,315
---------- ----------
Total liabilities...................................... 1,260,276 1,261,721
---------- ----------
Commitments and contingencies (Notes 15 and 16)
Division equity........................................ 365,150 360,717
---------- ----------
Total liabilities and division equity.................. $1,625,426 $1,622,438
========== ==========
</TABLE>

The accompanying notes are an integral part of the combined financial
statements.

F-82
<PAGE>

ZD PUBLISHING
(a division of Ziff-Davis Inc.)

COMBINED STATEMENTS OF OPERATIONS
(dollars in thousands)

<TABLE>
<CAPTION>
January 1,
Year ended 1996 to
December 31, February 28,
1995 1996
------------ ------------
<S> <C> <C>
Revenue, net........................................ $755,419 $122,562
Cost of production.................................. 192,900 30,974
Selling, general and administrative expenses........ 409,730 68,508
Depreciation and amortization of property and
equipment.......................................... 36,482 6,036
Amortization of intangible assets................... 51,024 8,504
-------- --------
Income from operations............................ 65,283 8,540
Interest expense, net............................... (92,609) (14,030)
Equity in losses of joint ventures.................. (3,391) (235)
Net loss related to retained interest in ZDNet...... (5,755) (814)
-------- --------
Loss before income taxes.......................... (36,472) (6,539)
Income tax benefit.................................. (10,470) (1,992)
-------- --------
Net loss............................................ $(26,002) $ (4,547)
======== ========
</TABLE>

The accompanying notes are an integral part of the combined financial
statements.

F-83
<PAGE>

ZD PUBLISHING
(a division of Ziff-Davis Inc.)

COMBINED STATEMENTS OF CASH FLOWS
(dollars in thousands)
<TABLE>
<CAPTION>
January 1,
Year ended 1996 to
December 31, February 28,
1995 1996
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net loss........................................... $ (26,002) $(4,547)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization.................... 87,506 14,540
Loss from retained interest in ZDNet............. 5,755 814
Loss from equity investments..................... 3,391 235
Deferred tax benefit............................. (10,470) (1,992)
Changes in operating assets and liabilities:
Accounts receivable............................ (11,175) (2,060)
Inventories.................................... (9,014) (4,184)
Accounts payable and accrued expenses.......... 7,073 (2,587)
Unexpired subscriptions, net................... 2,499 4,698
Due to management and affiliates............... (3,020) 282
Other, net..................................... (3,687) 1,121
----------- -------
Net cash provided by operating activities.......... 42,856 6,320
----------- -------
Cash flows from investing activities:
Capital expenditures............................. (12,573) (384)
Capital contributions to ZDNet................... (7,106) (2,350)
Proceeds from sale of businesses................. 23,508 --
----------- -------
Net cash provided (used) by investing activities... 3,829 (2,734)
----------- -------
Cash flows from financing activities:
Borrowings under revolving credit facility....... 80,625 24,335
Repayment of revolving credit facility........... (60,625) (24,335)
Repayment of acquisition indebtedness............ (1,122,931) --
----------- -------
Net cash used by financing activities.............. (1,102,931) --
----------- -------
Net (decrease) increase in cash and cash
equivalents....................................... (1,056,246) 3,586
Cash and cash equivalents at beginning of period... 1,066,329 10,083
----------- -------
Cash and cash equivalents at end of period......... $ 10,083 $13,669
=========== =======
Supplemental cash flow disclosures:
Interest paid.................................... $ 78,811 $29,255
Income taxes paid................................ $ 92,729 $ --
</TABLE>

The accompanying notes are an integral part of the combined financial
statements.

F-84
<PAGE>

ZD PUBLISHING
(a division of Ziff-Davis Inc.)

COMBINED STATEMENTS OF CHANGES IN DIVISION EQUITY
(dollars in thousands)

<TABLE>
<CAPTION>
Cumulative Total
Paid-in Accumulated translation division
capital deficit adjustment equity
-------- ----------- ----------- --------
<S> <C> <C> <C> <C>
Balance at January 1, 1995......... $391,275 $ -- $ -- $391,275
Net loss........................... -- (26,002) -- (26,002)
Foreign currency translation
adjustment........................ -- -- (123) (123)
-------- -------- ----- --------
Balance at December 31, 1995....... 391,275 (26,002) (123) 365,150
Net loss........................... -- (4,547) -- (4,547)
Foreign currency translation
adjustment........................ -- -- 114 114
-------- -------- ----- --------
Balance at February 28, 1996....... $391,275 $(30,549) $ (9) $360,717
======== ======== ===== ========
</TABLE>

The accompanying notes are an integral part of the combined financial
statements.

F-85
<PAGE>

ZD PUBLISHING
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS

(numbers rounded to the nearest thousand)

1. Organization and Basis of Presentation

ZD Publishing ("ZD") is a division of Ziff-Davis Inc., which is a wholly
owned subsidiary of Ziff-Davis Holdings Corp. ("Holdings").

ZD is engaged in publishing magazines, journals and training manuals and
providing market research about the computer industry, with operations in the
U.S., Canada and Europe.

In order to prepare separate financial statements for ZD and ZDNet, Ziff-
Davis Inc. has allocated all of its consolidated assets, liabilities, revenues,
expenses and cash flow between ZD and ZDNet. ZDNet comprises Ziff-Davis Inc.'s
online business division, and ZD comprises Ziff-Davis Inc.'s other businesses
and a "100% Retained Interest" in ZDNet. Thus, the financial statements of ZD
and ZDNet, taken together, comprise all of the accounts included in the
corresponding consolidated financial statements of Ziff-Davis Inc. Each of ZD
and ZDNet is sometimes referred to herein as a "Group".

ZD's financial statements reflect the application of certain cash management
and allocation policies adopted by the Board of Directors of Ziff-Davis Inc.
(the "Board"). These policies are summarized under "Certain Cash Management and
Allocation Policies" below.

Financial impacts arising from ZDNet that affect Ziff-Davis Inc.'s
consolidated results of operations or financial position could affect the
results of operations or financial condition of ZD. Accordingly, financial
information for ZD should be read in conjunction with financial information for
ZDNet and financial information for Ziff-Davis Inc.

Acquisition

Effective January 1, 1995, Holdings, through Ziff-Davis Inc., directly and
indirectly acquired certain assets and assumed certain liabilities of ZD's
publishing business and related businesses (the "Acquisition" or the "Acquired
Businesses") from Ziff Communications Company, L.P., a limited partnership
("ZCC") and other persons and entities (collectively referred to as the
"Sellers"), for an aggregate purchase price of approximately $1,400,000,000
plus transaction costs. Ziff-Davis Inc. funded the Acquisition through the
issuance of common stock, bank borrowings and a subordinated note payable to
Holdings.

F-86
<PAGE>

ZD PUBLISHING
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

The acquisition has been accounted for using the purchase method of
accounting.

2. Summary of Significant Accounting Policies

Principles of Combination

The combined financial statements include the accounts of ZD Publishing. All
significant transactions within the ZD division have been eliminated in
combination.

Investments in companies in which ownership interests range from 20 to 50
percent are accounted for under the equity method. ZD has an equity investment
interest in Family PC G.P. of 50%. The equity investment in Family PC G.P. is
not material to ZD's combined financial statements.

Cash and cash equivalents

ZD considers all highly liquid investments with an original maturity of three
months or less to be cash equivalents.

Concentration of credit risk

ZD places its temporary cash investments with high credit quality financial
institutions. At times, such investments may be in excess of federally insured
limits. ZD has not experienced losses in such accounts.

ZD's customers represent a variety of technology companies in the United
States and other countries. ZD extends credit to its customers and historically
has not experienced significant losses relating to receivables from individual
customers or groups of customers.

Property and equipment

Property and equipment have been recorded at their estimated fair value at
the date of acquisition. Depreciation is computed using the straight-line
method over the estimated useful lives of the acquired assets, ranging from 3
to 39 years. Leasehold improvements are amortized using the straight-line
method over the service life of the improvement or the life of the related
lease, whichever is shorter. Maintenance and repair costs are charged to
expense as incurred.

Paper inventories

Paper inventories are stated at the lower of cost or market. Cost is
determined on a first-in, first-out basis.

F-87
<PAGE>

ZD PUBLISHING
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

Investment in ZDNet Group

Ziff-Davis Inc. accounts for ZD's Retained Interest in ZDNet in a manner
similar to the method prescribed under APB No. 18, "The Equity Method of
Accounting for Investments in Common Stock".

Intangible assets

Intangible assets consist principally of advertising lists, trademarks and
trade names and goodwill. Amortization of these assets is computed on a
straight-line basis over their estimated useful lives. Identifiable intangible
assets are amortized over a period of 2 to 39 years and goodwill, which
represents the excess of the purchase price over the estimated fair values of
net assets acquired, is amortized over 40 years. ZD assesses the recoverability
of its intangible assets whenever adverse events or changes in circumstances
indicate that expected future cash flows (undiscounted and without interest
charges) may not be sufficient to support the carrying amount of intangible
assets. If undiscounted cash flows are not sufficient to support the recorded
assets, an impairment loss is recognized to reduce the carrying value of the
intangibles to its estimated recoverable value.

Revenue recognition

Advertising revenue for ZD's publications, less agency commissions, is
recognized as income in the month that the related publications are sent to
subscribers or becomes available for sale at newsstands.

Circulation revenue consists of both subscription and single copy newsstand
sales. Subscription revenue, less estimated cancellations, is deferred and
recognized as income in the month that the related publications are sent to
subscribers. Newsstand sales, less estimated returns, are recognized in the
month that the related publications become available for sale at newsstands.

Revenue generated by market research is recognized when the service is
provided.

F-88
<PAGE>

ZD PUBLISHING
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

Operating costs and expenses

Cost of production includes paper, manufacturing, distribution and
fulfillment. Selling and promotion costs include subscriber acquisition costs
which are expensed as incurred. Editorial and product development costs are
generally expensed as incurred. Product development costs include the cost of
artwork, graphics, prepress, plates and photography for new products.

Foreign currency

Gains and losses on foreign currency transactions, which are not significant,
have been included in selling, general and administrative expenses. The effect
of translation of foreign currency financial statements into U.S. dollars is
included in the cumulative translation adjustments account in division equity.

Income taxes

ZD uses the asset and liability approach for financial accounting and
reporting of deferred taxes.

Use of estimates

Fair value of financial instruments

All current assets and liabilities are carried at cost, which approximates
fair value because of the short-term maturity of those instruments. The
recorded amounts of ZD's long-term debt also approximate fair value which was
based upon the current rates available to ZD for debt with similar remaining
maturities.

Impairment of long-lived assets

In 1995, the Financial Accounting Standards Board issued SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed Of" ("SFAS 121"). ZD Publishing adopted SFAS 121 in fiscal 1996
with no effect on operations.

F-89
<PAGE>

ZD PUBLISHING
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

3. Certain Cash Management and Allocation Policies

ZD's financial statements reflect the application of certain cash management
and allocation policies summarized below.

Treasury Activities

Ziff-Davis Inc. manages most treasury activities on a centralized,
consolidated basis. These activities include the investment of surplus cash,
the issuance, repayment and repurchase of short-term and long-term debt, and
the issuance and repurchase of common stock and preferred stock. Each of ZD and
ZDNet generally remits its cash receipts (other than receipts of foreign
operations or operations that are not wholly owned) to Ziff-Davis Inc., and
Ziff-Davis Inc. generally funds ZD's and ZDNet's cash disbursements (other than
disbursements of foreign operations or operations that are not wholly owned),
on a daily basis.

In the financial statements of ZD and ZDNet, (1) all external debt and equity
transactions (and the proceeds thereof) were attributed to ZD, (2) whenever
ZDNet held cash (other than cash of ZDNet's foreign operations or cash of
ZDNet's operations that are not wholly owned), that cash was transferred to ZD
and accounted for as a return of capital (i.e., as a reduction in ZDNet's
division equity and ZD's Retained Interest in ZDNet) and (3) whenever ZDNet had
a cash need (other than cash needs of ZDNet's foreign operations or cash needs
of ZDNet's operations that are not wholly owned), that cash need was funded by
ZD and accounted for as a capital contribution (i.e., as an increase in ZDNet's
division equity and ZD's Retained Interest in ZDNet). Accordingly, no interest
income or expense from or to ZDNet has been reflected in the financial
statements of ZD for any period.

Corporate General and Administrative Expenses

Ziff-Davis Inc. allocates the cost of certain corporate, general and
administrative services and shared services (including certain legal,
accounting (tax and financial), information systems, telecommunications,
purchasing, marketing, intellectual property, public relations, corporate
office and travel expenses (collectively, "Central Services"), to ZD Publishing
based on utilization. Where determinations based on utilization alone are
impracticable, Ziff-Davis Inc. uses other methods and criteria that management
believes to be equitable and to provide a reasonable estimate of the cost
attributable to ZD.

Taxes

F-90
<PAGE>

ZD PUBLISHING
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

related tax payments or refunds) are allocated between the Groups based
principally upon the financial income, taxable income, credits and other
amounts directly related to the respective Groups. Tax benefits that cannot be
used by the Group generating such attributes, but can be utilized on a
consolidated basis, are allocated to the Group that generated such benefits. As
a result, the allocated Group amounts of taxes payable or refundable are not
necessarily comparable to those that would have resulted if the Groups had
filed separate tax returns. State income taxes generally are computed on a
separate company basis.

Royalty Charges

ZD charges ZDNet an annual fee for the use of various brands and editorial
content. The current annual fee, which is reflected in ZD's financial
statements as a reduction of selling, general and administrative expenses, is
equal to 5% of the first $100,000,000 of ZDNet revenue, 4% of the next
$50,000,000 of ZDNet's revenue for that year and 3% of any incremental revenue
over $150,000,000 for that year.

4. Accounts Receivable, Net

Accounts receivable, net consist of the following:

<TABLE>
<CAPTION>
December 31, February 28,
1995 1996
------------ ------------
(dollars in thousands)
<S> <C> <C>
Accounts receivable............................ $165,188 $161,329
Allowance for doubtful accounts, returns and
cancellations................................. (55,883) (49,961)
-------- --------
$109,305 $111,368
======== ========

5. Property and Equipment, Net

Property and equipment, net, consist of the following:

<CAPTION>
December 31, February 28,
1995 1996
------------ ------------
(dollars in thousands)
<S> <C> <C>
Computers and equipment........................ $ 54,447 $ 54,829
Leasehold improvements......................... 25,831 25,831
Furniture and fixtures......................... 11,808 11,808
Other.......................................... 7,029 7,029
-------- --------
99,115 99,497
Accumulated depreciation and amortization...... (36,590) (42,624)
-------- --------
$ 62,525 $ 56,873
======== ========
</TABLE>

F-91
<PAGE>

ZD PUBLISHING
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

6. Intangible Assets, Net

Intangible assets, net, consist of the following:

<TABLE>
<CAPTION>
Range of
Lives December 31, February 28,
(years) 1995 1996
-------- ------------ ------------
(dollars in thousands)
<S> <C> <C> <C>
Advertising lists....................... 7-39 $ 643,400 $ 643,400
Trademarks and trade names.............. 30 235,820 235,820
Subscriber lists........................ 3-10 43,136 43,136
Other................................... 2-5 28,800 28,800
License agreements...................... 6-14 11,211 11,211
Goodwill................................ 40 354,136 353,820
---------- ----------
1,316,503 1,316,187
Accumulated amortization................ (51,024) (59,528)
---------- ----------
$1,265,479 $1,256,659
========== ==========
</TABLE>

Intangible assets primarily relate to the acquisition of ZD. As discussed in
Note 1, the acquisition was accounted for under the purchase method of
accounting. As such the purchase price was allocated to tangible and
identifiable intangible assets with the remaining amount allocated to goodwill.

Advertising lists, exhibitor relationships and subscriber lists were recorded
at their estimated fair value as determined by an "income" approach.
Trademarks/trade names were recorded at their estimated fair value using a
"relief from royalty" approach.

All intangible assets are being amortized using the straight-line method over
their estimated useful lives, up to 40 years. In determining the estimated
useful lives, ZD considered its competitive position in the markets in which it
operates, the historical attrition rates of advertisers, exhibitors and
subscribers, legal and contractual obligations, and other factors.

7. Accrued Expenses

Accrued expenses consist of the following:

<TABLE>
<CAPTION>
December 31, February 28,
1995 1996
------------ ------------
(dollars in thousands)
<S> <C> <C>
Payroll and related employee benefits............ $35,044 $35,152
Accrued interest................................. 16,804 27,526
Other taxes payable.............................. 1,588 2,576
Other accrued expenses........................... 14,673 12,285
------- -------
$68,109 $77,539
======= =======
</TABLE>

F-92
<PAGE>

ZD PUBLISHING
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

8. Income Taxes

Income tax benefits and related assets and liabilities attributed to ZD are
determined in accordance with Ziff-Davis Inc.'s tax allocation policy (Note 3)

Loss before income taxes is attributable to the following jurisdictions:

<TABLE>
<CAPTION>
January 1
Year ended to
December 31, February 28,
1995 1996
------------ ------------
(dollars in thousands)
<S> <C> <C>
United States.................................... $(28,059) $(4,648)
Foreign.......................................... (8,413) (1,891)
-------- -------
Total.......................................... $(36,472) $(6,539)
======== =======
</TABLE>

Components of the income tax benefit are as follows:
<TABLE>
<CAPTION>
January 1
Year ended through
December 31, February 28,
1995 1996
------------ ------------
(dollars in thousands)
<S> <C> <C>
U.S. federal income taxes:
Current........................................ $ -- $ --
Deferred....................................... (8,114) (1,544)
State and local income taxes:
Current........................................ -- --
Deferred....................................... (2,356) (448)
Foreign income taxes............................. -- --
-------- -------
Total income tax benefit..................... $(10,470) $(1,992)
======== =======
</TABLE>

A reconciliation of the U.S. federal statutory tax rate to ZD Publishing's
effective tax rate on loss before income taxes is as follows:
<TABLE>
<CAPTION>
January 1
Year ended to
December 31, February 28,
1995 1996
------------ ------------
<S> <C> <C>
Federal statutory tax note..................... 35.0% 35.0%
State and local taxes (net of federal tax
benefit)...................................... 6.0 6.0
Equity in losses of ZDNet...................... (6.5) (5.1)
Foreign losses................................. (2.6) (1.7)
Amortization of nondeductible goodwill......... (1.4) (1.4)
Other nondeductible expenses................... (1.8) (2.3)
---- ----
Effective tax rate........................... 28.7% 30.5%
==== ====
</TABLE>

F-93
<PAGE>

ZD PUBLISHING
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

Following is a summary of the components of the deferred tax accounts at
December 31, 1995 and February 28, 1996:

<TABLE>
<CAPTION>
December 31, February 28,
1995 1996
------------ ------------
(dollars in thousands)
<S> <C> <C>
Current deferred tax assets:
Allowance for doubtful accounts.............. $ 8,293 $ 8,432
Employee compensation, bonus, and vacation... 12,183 12,581
Other........................................ 1,485 2,348
-------- --------
Current deferred tax assets................ 21,961 23,361
-------- --------
Noncurrent deferred tax assets and
(liabilities):
Basis difference in intangible assets........ (68,224) (70,402)
Basis difference in property and equipment... (3,401) (1,876)
Deferred rental expense...................... 3,285 3,139
Net operating loss carryforwards............. 97,196 98,258
Acquisition reserves......................... 2,773 2,756
Other........................................ (220) (36)
-------- --------
Gross noncurrent deferred tax assets....... 31,409 31,839
Valuation allowance.......................... (46,841) (46,679)
-------- --------
Net noncurrent deferred tax assets and
(liabilities)............................. (15,432) (14,840)
-------- --------
Total net deferred tax assets.................. $ 6,529 $ 8,521
======== ========
</TABLE>

As of December 31, 1995 and February 28, 1996, ZD had total deferred tax
assets of $78,374,000 and $80,835,000, respectively, and total deferred tax
liabilities of $71,845,000 and $72,314,000, respectively.

As of February 28, 1996, ZD has U.S. and foreign net operating loss
carryforwards of approximately $230,000,000, which will begin to expire on
December 31, 1996. The December 31, 1995 and the February 28, 1996 net deferred
tax asset is reduced by a valuation allowance of $46,841,000 and $46,679,000,
respectively, relating to tax benefits of foreign net operating loss
carryforwards which are not expected to be recognized.

ZD's foreign operations have no undistributed earnings for remittance to the
U.S. and therefore no U.S. or foreign tax provision on remittances has been
recorded.

F-94
<PAGE>

ZD PUBLISHING
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

9. Due to Management and Affiliates

Payables to management and affiliates consist of the following:

<TABLE>
<CAPTION>
December 31, February 28,
1995 1996
------------ ------------
(dollars in thousands)
<S> <C> <C>
Payable to:
Management..................................... $28,161 $28,443
Sellers........................................ 21,500 21,500
Holdings....................................... 8,819 8,819
------- -------
$58,480 $58,762
======= =======
</TABLE>

As part of the Acquisition, ZD agreed to assume certain obligations to
management arising out of prior employment arrangements. Approximately
$40,000,000 was due under these arrangements, of which approximately
$12,000,000 was paid in 1995. The balance of the obligation, including accrued
interest, was paid in 1997.

Amounts due to sellers represent final amounts payable related to the
Acquisition.

10. Long-Term Debt

Long-term debt at December 31, 1995 and February 28, 1996 is comprised of the
following:

<TABLE>
<CAPTION>
(dollars
in
thousands)
<S> <C>
Bank debt:
Tranche A....................................................... $ 86,604
Tranche B....................................................... 179,479
Tranche C....................................................... 159,917
Revolving credit arrangement.................................... 20,000
--------
446,000
Less--Current portion........................................... (6,847)
--------
$439,153
========
</TABLE>

On December 21, 1994, Ziff-Davis Inc. borrowed $515,000,000 under the terms
of a Credit Agreement. The proceeds of the loan were used to finance a portion
of the Acquisition and pay certain transaction costs.

F-95
<PAGE>

ZD PUBLISHING
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

Tranche C is an eight-year term loan providing for quarterly payments,
aggregating $1,000,000 per calendar year commencing September 30, 1995 through
December 31, 2001, followed by four quarterly payments of $39,500,000 through
December 31, 2002.

The Credit Agreement also provides Ziff-Davis Inc. with an additional
$85,000,000, increased to $150,000,000 under terms of the August 31, 1995
amendment, under a revolving credit arrangement through December 31, 2000.
These funds are available for loans, letters of credit, and swing-line loans,
subject to certain maximum levels of borrowing. At least once during each year,
for a period of 30 consecutive days, the loans outstanding under the revolving
credit facility must be reduced so that the aggregate outstanding amount does
not exceed $130,000,000 during such 30-day period. The commitment fee for the
revolving credit facility is .50% during 1995 and 1996 on the unused portion of
the facility. Ziff-Davis Inc. has the option to permanently reduce the amount
available for borrowings under the revolving credit facility by a minimum of
$5,000,000 at any time. At December 31, 1995 and February 28, 1996,
$130,000,000 under the revolving credit facility is available for borrowing.

During 1995 and the period January 1, 1996 to February 28, 1996, the Tranche
A and revolving credit loans bore interest, payable at least quarterly, at
either the Average Bank Rate ("ABR"), as defined, plus 1.25%, or at the
Eurodollar rate, plus 2.5% at the election of Ziff-Davis Inc. Tranche B and C
loans bore interest, payable at least quarterly, at either the ABR, plus 1.75%
and 2.25%, respectively, or at the Eurodollar rate, as defined, plus 3% and
3.5%, respectively, at the election of Ziff-Davis Inc. Swing-line loans bear
interest at the ABR, plus the applicable margins as discussed above. Borrowings
outstanding at December 31, 1995 and February 28, 1996 were $446,000,000 and
the weighted average interest rate was 8.8% and 10.1%, respectively.

Ziff-Davis Inc. is required to comply with various restrictive covenants,
including maintaining certain financial ratios, restrictions on additional
indebtedness, capital expenditures, acquisitions, certain asset sales,
declaration of dividends and acquisition of Ziff-Davis Inc.'s or Holdings'
common stock. All borrowings under the Credit Agreement are secured by the
common stock and other equity interests of Ziff-Davis Inc. and its wholly owned
subsidiaries.

Ziff-Davis Inc. is required to make mandatory prepayments of the loans with
the net proceeds of certain asset sales and debt issuances, if any. Ziff-Davis
Inc. is also required, commencing with the year ending December 31, 1995, to
prepay the loans with a portion of excess cash flow, as defined, once certain
cash balances are achieved. These cash balances were not achieved during 1995
or for the period from January 1, 1996 to February 28, 1996 and therefore no
prepayments occurred.

F-96
<PAGE>

ZD PUBLISHING
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

Scheduled principal payments for each of the next five years are as follows:

<TABLE>
<CAPTION>
(dollars
in
thousands)
<S> <C>
1996............................................................ $ 6,847
1997............................................................ 13,518
1998............................................................ 21,524
1999............................................................ 23,658
2000............................................................ 52,795
Thereafter...................................................... 327,658
--------
Total......................................................... $446,000
========
</TABLE>

11. Related Party Transactions

Prior to the Acquisition, ZCC provided certain services to ZD, including
legal, tax, human resources, payroll, facilities management and management
information services. The remaining unpaid balance (approximately $8,100,000)
for such services was paid in the normal course of business during 1995.
Beginning in 1995, ZD sublet office space and provided administrative services
to ZCC. Such office space and services were provided to ZCC at ZD's cost. The
majority partners of ZCC have a continuing investment in Holdings of
approximately 6%.

On the closing date of the Acquisition, Ziff-Davis Inc. paid approximately
$280,000,000 in cash to the Sellers and issued notes due January 13, 1995 and
January 16, 1995 totaling $1,033,931,000, for the balance. These notes were
subsequently fully paid in January, 1995.

See Note 12 for a description of subordinated debentures.

In connection with the Acquisition, Ziff-Davis Inc. paid transaction costs of
$14,000,000 to an affiliate of Holdings.

Ziff-Davis Inc. paid $44,555,000 and $3,791,000 in interest to Holdings for
the year ended December 31, 1995 and for the period from January 1, 1996 to
February 28, 1996, respectively.

Included in selling, general and administrative expenses is an allocation for
Ziff-Davis Inc.'s Central Services amounting to $16,098,000 for the period
January 1, 1996 to February 28, 1996. Also included as a reduction of selling,
general and administrative expenses is a royalty charge from ZDNet amounting to
$679,000 and $145,000 for the year ended December 31, 1995 and the period
January 1, 1996 to February 28, 1996. (See Note 3.)

F-97
<PAGE>

ZD PUBLISHING
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

ZD's publications sell advertising to ZDNet at discounts to market rates. Had
ZD charged market rates for such advertising, ZD's revenue would have increased
by $178,000 and $57,000 for the years ended December 31, 1995, and the period
from January 1, 1996 to February 28, 1996, respectively.

12. Subordinated Debentures--Related Party

On December 21, 1994, Ziff-Davis Inc. issued a $525,000,000 subordinated note
payable to Holdings to finance a portion of the Acquisition. The note bears
interest at 8 1/2% per annum with interest payable semiannually on February 28
and August 31 of each year. The principal is repayable in three installments of
$175,000,000 each on December 21, 2005, December 21, 2006 and December 21,
2007. This note is fully subordinated in right of payment to the bank
borrowings (see Note 10).

13. Employee Benefit Plans

Retirement plans

Ziff-Davis Inc. and its subsidiaries maintain various defined contribution
retirement plans. Substantially all of ZD's employees are eligible to
participate in one of the plans under which annual contributions may be made by
ZD for the benefit of all eligible employees. Employees may also make
contributions to the plan in which they participate which, subject to certain
limitations, may be matched by Ziff-Davis Inc. up to certain specified
percentages. Employees are generally eligible to participate in a plan upon
joining Ziff-Davis Inc. and receive matching contributions immediately upon
commencement of employment. In addition, the employees become eligible to
receive a discretionary Ziff-Davis Inc. contribution after one year of
employment. ZD made contributions of $8,097,000 and $1,391,000 for the year
ended December 31, 1995 and for the period ended February 28, 1996,
respectively.

14. Sale of Businesses

During 1995, ZD disposed of two subsidiaries and received cash consideration
of $23,508,000. No gain or loss was realized on the dispositions.

F-98
<PAGE>

ZD PUBLISHING
(a division of Ziff-Davis Inc.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

15. Operating Lease Commitments

ZD utilizes equipment and space under lease to Ziff-Davis Inc. ZD's portion
of the minimum lease payments based on square feet utilized as follows:

<TABLE>
<CAPTION>
(dollars
in
thousands)
<S> <C>
1996 (ten-month period)........................................ $15,251
1997........................................................... 18,635
1998........................................................... 17,132
1999........................................................... 11,189
2000........................................................... 8,113
Thereafter..................................................... 3,930
-------
Total........................................................ $74,250
=======
</TABLE>

Netted in the above totals is approximately $2,300,000 for which ZD has
noncancelable subleases in place. Total sublease income approximates ZD's
required payments under the related leases. Rent expense amounted to
approximately $22,117,000 and $3,909,000 for the year ended December 31, 1995
and for the period from January 1, 1996 to February 28, 1996, respectively.

16. Contingencies

ZD is subject to various claims and legal proceedings arising in the normal
course of business. Management believes that the ultimate liability, if any, in
the aggregate will not be material to the combined balance sheet, future
operations or cash flows.

17. Subsequent Event

Acquisition of Ziff-Davis Inc.

In February 1996, SOFTBANK Corp. entered into an agreement to acquire the
stock of Ziff-Davis Inc. for an aggregate purchase price of approximately
$1,800,000,000, plus transaction costs. In a separate agreement, MAC Inc. Ltd.,
an affiliated company of SOFTBANK Corp., acquired directly and through
affiliates, certain of the assets and assumed certain of the liabilities of ZD
for an aggregate purchase price of approximately $302,000,000.

F-99
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholder of
Ziff-Davis Inc. and ZD COMDEX and Forums Inc.

In our opinion, the accompanying combined balance sheets and the related
combined statements of operations, cash flows and changes in stockholder's
equity, present fairly, in all material respects, the financial position of
Ziff-Davis Inc. and ZD COMDEX and Forums Inc. and their subsidiaries (the
"Companies") at December 31, 1997 and 1996, and the results of Ziff-Davis
Inc.'s operations and cash flows for the period from February 29, 1996 to
December 31, 1996 and for the year ended December 31, 1997 and the results of
ZD COMDEX and Forums Inc.'s operations and cash flows for each of the three
years in the period ended December 31, 1997, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Companies' management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.

/s/ Price Waterhouse LLP

Price Waterhouse LLP
New York, NY
February 17, 1998

F-100
<PAGE>

ZDI (ZIFF-DAVIS INC.) AND ZDCF (ZD COMDEX AND FORUMS INC.)

COMBINED BALANCE SHEETS
(Financial and other information subsequent to February 17, 1998 is unaudited)

(dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
December 31, September 30,
---------------------- 1998
1996 1997 Consolidated
---------- ---------- -------------
(unaudited)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............. $ 29,915 $ 30,301 $ 27,153
Accounts receivable, net.............. 203,863 221,310 195,330
Inventories........................... 16,804 17,853 19,065
Prepaid expenses and other current as-
sets................................. 35,190 37,900 45,406
Due from affiliates................... 77,208 131,290 46,472
Deferred taxes........................ 8,674 8,794 8,794
---------- ---------- ----------
Total current assets.................... 371,654 447,448 342,220
Property and equipment, net............. 53,561 53,536 68,149
Intangible assets, net.................. 3,148,333 3,030,333 2,947,913
Other assets............................ 10,625 15,329 54,419
---------- ---------- ----------
Total assets............................ $3,584,173 $3,546,646 $3,412,701
========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable...................... $ 57,105 $ 55,468 $ 44,243
Accrued expenses...................... 79,921 80,094 104,670
Unearned income, net.................. 174,876 154,682 220,872
Due to affiliates and management...... 69,416 398,332 --
Current portion of notes payable to
affiliates........................... 33,198 125,790 7,692
Other current liabilities............. 3,890 4,222 6,323
---------- ---------- ----------
Total current liabilities............... 418,406 818,588 383,800
Notes payable to affiliates............. 2,522,252 2,408,240 71,924
Notes payable, net of unamortized dis-
count.................................. -- -- 1,454,123
Deferred taxes.......................... 181,309 180,117 146,997
Other liabilities....................... 14,450 13,571 11,809
---------- ---------- ----------
Total liabilities....................... 3,136,417 3,420,516 2,068,653
---------- ---------- ----------
Commitments and contingencies (Notes 15,
16 and 18)
Stockholders' equity:
Preferred stock(1).................... -- -- --
Common stock(2)....................... -- -- 1,000
Additional paid-in capital............ 498,818 248,330 1,550,239
Accumulated deficit................... (48,250) (119,429) (205,608)
Deferred compensation................. (2,448) (996) (807)
Cumulative translation adjustment..... (364) (1,775) (776)
---------- ---------- ----------
Total stockholders' equity.............. 447,756 126,130 1,344,048
---------- ---------- ----------
Total liabilities and stockholders' eq-
uity................................... $3,584,173 $3,546,646 $3,412,701
========== ========== ==========
</TABLE>
- --------
(1) September 30, 1998: par value $.01 per share, 10,000,000 shares authorized,
no shares issued and outstanding; December 31, 1997 and 1996: par value
$.01 per share, 10,000,000 shares authorized, no shares issued and
outstanding.
(2) September 30, 1998: par value $.01 per share, 120,000,000 shares
authorized, 100,000,000 shares issued and outstanding; December 31, 1997
and 1996: par value $.01 per share, 2,000 shares authorized, 200 shares
issued and outstanding.

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

F-101
<PAGE>

ZDI (ZIFF-DAVIS INC.) AND ZDCF (ZD COMDEX AND FORUMS INC.)

COMBINED STATEMENTS OF OPERATIONS
(Financial and other information subsequent to February 17, 1998 is unaudited)

(dollars in thousands, except per share amounts)

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

F-102
<PAGE>

ZDI (ZIFF-DAVIS INC.) AND ZDCF (ZD COMDEX AND FORUMS INC.)

COMBINED STATEMENTS OF CASH FLOWS
(Financial and other information subsequent to February 17, 1998 is unaudited)
(dollars in thousands)
<TABLE>
<CAPTION>
Nine months ended
Years ended December 31, September 30,
-------------------------------- -----------------------
1998
1995 1996 1997 1997 Consolidated
--------- ----------- -------- --------- ------------
(unaudited)
<S> <C> <C> <C> <C> <C>
Cash flows from operat-
ing activities:
Net income (loss)....... $ 10,945 $ (52,081) $(71,179) $(143,810) $ (86,179)
Adjustments to reconcile
net income (loss) to
net cash provided
(used) by operating ac-
tivities:
Depreciation and amor-
tization.............. 24,305 139,736 154,940 117,697 114,594
Amortization of debt
issuance costs and
discount.............. -- -- -- -- 1,313
Income from equity in-
vestments............. -- (115) (2,030) (252) (4,688)
Deferred tax provision
(benefit)............. 11,924 24,957 (1,312) (984) (33,589)
Changes in operating
assets and liabili-
ties:
Accounts receivable... (25,379) (38,086) (18,899) 23,395 28,622
Inventories........... -- 7,788 (853) (1,631) (591)
Accounts payable and
accrued expenses..... 9,516 12,850 (7,376) (28,883) 6,703
Unearned income....... (3,153) 1,392 (20,194) 80,118 62,770
Due to affiliates and
management........... (7,460) (29,303) (38,543) (50,666) 10,707
Other, net............ 5,470 (5,595) 2,082 (15,634) (16,871)
--------- ----------- -------- --------- -----------
Net cash provided (used)
by operating
activities............. 26,168 61,543 (3,364) (20,650) 82,791
--------- ----------- -------- --------- -----------
Cash flows from invest-
ing activities:
Capital expenditures.. (3,367) (22,365) (30,196) (18,636) (27,399)
Investments........... -- -- -- (60) (6,193)
Acquisitions, net of
cash acquired........ (814,520) (2,124,823) (14,000) (2,998) (6,999)
--------- ----------- -------- --------- -----------
Net cash used by invest-
ing activities......... (817,887) (2,147,188) (44,196) (21,694) (40,591)
--------- ----------- -------- --------- -----------
Cash flows from financ-
ing activities:
Proceeds from equity
offering............. -- -- -- -- 380,337
Proceeds from issuance
of notes payable..... -- -- -- -- 242,723
Proceeds from issuance
of bank debt......... -- -- -- -- 1,240,200
Proceeds from notes
payable to affili-
ates................. 575,450 1,080,000 10,000 -- --
Payments of amounts
due to affiliates.... -- -- -- -- (314,798)
Payments of bank
debt................. -- -- -- -- (45,000)
Principal payments on
notes payable to
affiliates........... (77,450) -- (31,420) (19,162) (1,569,532)
Purchase of treasury
shares............... -- -- -- -- (29,500)
Sale of treasury
shares............... -- -- -- -- 29,500
Advance from majority
shareholder.......... -- -- -- -- 20,377
Contributed capital... 317,408 1,015,652 69,366 69,366 345
Payment of dividends.. -- (8,000) -- -- --
--------- ----------- -------- --------- -----------
Net cash provided (used)
by financing
activities............. 815,408 2,087,652 47,946 50,204 (45,348)
Net increase (decrease)
in cash and cash
equivalents............ 23,689 2,007 386 7,860 (3,148)
Cash and cash
equivalents at
beginning of period.... 4,219 27,908 29,915 29,915 30,301
--------- ----------- -------- --------- -----------
Cash and cash equiva-
lents at end of peri-
od..................... $ 27,908 $ 29,915 $ 30,301 $ 37,775 $ 27,153
========= =========== ======== ========= ===========
</TABLE>

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

F-103
<PAGE>

ZDI (ZIFF-DAVIS INC.) AND ZDCF (ZD COMDEX AND FORUMS INC.)

COMBINED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(Financial and other information subsequent to February 17, 1998 is unaudited)

(dollars in thousands)

<TABLE>
<CAPTION>
Ziff-Davis Inc. ZDI ZDCF Additional Retained Cumulative
------------------- Treasury ------------- ------------- paid-in earnings Deferred translation
Shares Amount Stock Shares Amount Shares Amount capital (deficit) compensation adjustment
----------- ------ -------- ------ ------ ------ ------ ---------- --------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at
January 1,
1995........... -- $ -- $ -- -- $ -- 100 $ -- $ 62,178 $ 886 $ -- $ --
Capital
contribution
from Softbank.. 317,408
Net income...... 10,945
Foreign currency
translation
adjustment..... 111
----------- ------ ------- ---- ----- ---- ----- ---------- --------- ------ ------
Balance at
December 31,
1995........... -- -- -- -- -- 100 -- 379,586 11,831 -- 111
Acquisition of
Ziff-Davis
Inc............ 100 -- 1,014,178
Return of
capital........ (899,948)
Capital
contribution... 1,474
Dividend paid... (8,000)
Shares
contributed to
restricted
stock plan..... 3,528 (3,528)
Compensation
earned on
restricted
stock.......... 1,080
Net loss........ (52,081)
Foreign currency
translation
adjustment..... (475)
----------- ------ ------- ---- ----- ---- ----- ---------- --------- ------ ------
Balance at
December 31,
1996........... -- -- -- 100 -- 100 -- 498,818 (48,250) (2,448) (364)
Return of
capital........ (381,434)
Capital
contribution... 128,482
Shares
contributed to
restricted
stock plan..... 2,464 (2,464)
Compensation
earned on
restricted
stock.......... 3,916
Net loss........ (71,179)
Foreign currency
translation
adjustment..... (1,411)
----------- ------ ------- ---- ----- ---- ----- ---------- --------- ------ ------
Balance at
December 31,
1997........... -- -- -- 100 -- 100 -- 248,330 (119,429) (996) (1,775)
Capital
contribution... 9,007
Capitalization
of amounts due
to affiliates.. 908,673
Contribution of
subsidiaries
from SBH to
Ziff-Davis
Inc............ 73,619,355 736 (100) -- (100) --
Initial public
offering....... 25,800,000 258 375,235
Acquisition of
fixed assets
from an
affiliate...... 580,645 6 8,994
Purchase of
treasury shares
from SBH....... (2,000,000) (20) (29,480)
Sale of treasury
shares to the
public......... 2,000,000 20 29,480
Net loss........ (86,179)
Compensation
earned on
restricted
stock.......... 189
Foreign currency
translation
adjustment..... 999
----------- ------ ------- ---- ----- ---- ----- ---------- --------- ------ ------
Balance at
September 30,
1998
(unaudited).... 100,000,000 $1,000 $ -- -- $ -- -- $ -- $1,550,239 $(205,608) $ (807) $ (776)
=========== ====== ======= ==== ===== ==== ===== ========== ========= ====== ======
<CAPTION>
Total
stockholders'
equity
-------------
<S> <C>
Balance at
January 1,
1995........... $ 63,064
Capital
contribution
from Softbank.. 317,408
Net income...... 10,945
Foreign currency
translation
adjustment..... 111
-------------
Balance at
December 31,
1995........... 391,528
Acquisition of
Ziff-Davis
Inc............ 1,014,178
Return of
capital........ (899,948)
Capital
contribution... 1,474
Dividend paid... (8,000)
Shares
contributed to
restricted
stock plan..... --
Compensation
earned on
restricted
stock.......... 1,080
Net loss........ (52,081)
Foreign currency
translation
adjustment..... (475)
-------------
Balance at
December 31,
1996........... 447,756
Return of
capital........ (381,434)
Capital
contribution... 128,482
Shares
contributed to
restricted
stock plan..... --
Compensation
earned on
restricted
stock.......... 3,916
Net loss........ (71,179)
Foreign currency
translation
adjustment..... (1,411)
-------------
Balance at
December 31,
1997........... 126,130
Capital
contribution... 9,007
Capitalization
of amounts due
to affiliates.. 908,673
Contribution of
subsidiaries
from SBH to
Ziff-Davis
Inc............ 736
Initial public
offering....... 375,493
Acquisition of
fixed assets
from an
affiliate...... 9,000
Purchase of
treasury shares
from SBH....... (29,500)
Sale of treasury
shares to the
public......... 29,500
Net loss........ (86,179)
Compensation
earned on
restricted
stock.......... 189
Foreign currency
translation
adjustment..... 999
-------------
Balance at
September 30,
1998
(unaudited).... $1,344,048
=============
</TABLE>

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

F-104
<PAGE>

ZDI (ZIFF-DAVIS INC.) AND ZDCF (ZD COMDEX AND FORUMS INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS
(Financial and other information subsequent to February 17, 1998 is unaudited)

(numbers rounded to the nearest thousand)

1. The Companies and Basis of Presentation

The financial statements as of December 31, 1997 and for each of the three
years in the period then ended, are prepared on a combined basis and include
the accounts of ZDI (Ziff-Davis Inc.) and ZDCF (ZD COMDEX and Forums Inc.) and
their subsidiaries and predecessor companies (collectively the "Companies").
The Companies are wholly owned indirect subsidiaries of SOFTBANK Corp., a
Japanese corporation which, as of December 31, 1997, was 50.2% owned by Mr.
Son, its President, including 43.4% directly owned by his wholly owned holding
company, MAC Inc. (along with its affiliates "MAC"), also a Japanese
corporation. SOFTBANK Corp. and its affiliates are hereafter referred to as
"Softbank". Concurrent with the Reorganization and initial public offering
(described below) Ziff-Davis Inc. was renamed ZD Inc. and ZD COMDEX and Forums
Inc. was renamed ZD Events, Inc.

The Companies operate in two business segments: (1) publishing and (2)
events.

Publishing

Events

Acquisition of ZDI (formerly Ziff-Davis Publishing Company and Ziff-Davis
Holdings Corp.)

In February 1996, Softbank acquired the stock of Ziff-Davis Holdings Corp.
("Holdings") for an aggregate purchase price of approximately $1,800,000,000,
plus transaction costs. Concurrent with the acquisition, in a separate
agreement, MAC, directly or through wholly owned affiliates, acquired certain
of the assets and assumed certain of the liabilities of ZDI (the "MAC Assets")
for an aggregate purchase price of approximately $302,000,000.

F-105
<PAGE>

ZDI (ZIFF-DAVIS INC.) AND ZDCF (ZD COMDEX AND FORUMS INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)
(Financial and other information subsequent to February 17, 1998 is unaudited)

(numbers rounded to the nearest thousand)

The acquisitions of ZDI by the Companies and the MAC Assets by MAC have been
accounted for as of February 29, 1996 using the purchase method of accounting.
The excess of the purchase price over the fair value of the assets acquired and
liabilities assumed was $1,922,000,000 and $285,000,000, respectively.

Subsequent to the acquisition, Holdings and ZDI were merged with ZDI being
the surviving corporation.

Unaudited summarized pro forma financial information

The following unaudited summarized pro forma financial information presents
the results of operations of the Companies as if the acquisition of ZDI had
taken place on January 1, 1995:

<TABLE>
<CAPTION>
Years ended
December 31,
--------------------
1995 1996
-------- ----------
(dollars in
thousands)
<S> <C> <C>
Revenue, net........................................ $971,724 $1,080,604
======== ==========
Income from operations.............................. $ 80,113 $ 88,065
======== ==========
Net loss............................................ $(61,816) $ (67,011)
======== ==========
</TABLE>

Purchase of MAC Assets

In 1997, ZDI agreed to purchase certain of the MAC Assets for $370,000,000.
The acquisition occurred in two tranches, the first of which closed on October
31, 1997 and the second of which closed upon completion of an initial public
offering of Ziff-Davis Inc.'s common stock (further described below). At
December 31, 1997, ZDI accrued the $370,000,000 purchase price which has been
recorded as a return of capital.

The acquisitions from MAC described above have been accounted for in a manner
similar to a pooling of interests as all entities involved are under common
control. Accordingly, the accompanying combined financial statements include
the results of operations of the MAC Assets from February 29, 1996. Throughout
these financial statements any reference to ZDI and ZDCF or the Companies
includes ZDI, ZDCF and the MAC Assets from February 29, 1996.

Acquisition of Sendai

On May 8, 1996, ZDI acquired substantially all of the assets and liabilities
of Sendai Publishing Group, Inc., a publisher and distributor of magazines,
books, products and

F-106
<PAGE>

ZDI (ZIFF-DAVIS INC.) AND ZDCF (ZD COMDEX AND FORUMS INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)
(Financial and other information subsequent to February 17, 1998 is unaudited)

(numbers rounded to the nearest thousand)

computer services related to the electronic gaming industry, for approximately
$27,500,000, plus transaction costs. The acquisition was accounted for as a
purchase and accordingly, Sendai's results are included in the combined
financial statements since the date of acquisition. The excess of the purchase
price over assets acquired approximated $33,378. The operations of Sendai did
not have a material effect on the combined results of operations for the year
ended December 31, 1996.

Acquisition of COMDEX

Effective April 1, 1995, Softbank acquired the assets of the COMDEX trade
show business, now part of ZDCF, for approximately $803,000,000, plus
transaction costs. The acquisition has been accounted for as of April 1, 1995
using the purchase method of accounting and accordingly COMDEX's results are
included in the combined financial statements since the date of acquisition.
The excess of the purchase price over the fair value of the assets acquired and
liabilities assumed was $849,000,000.

Unaudited interim financial information

The unaudited, financial statements for the nine months ended September 30,
1997 and 1998 and as of September 30, 1998 have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
adjustments) considered necessary to present fairly the financial position of
the Companies at September 30, 1998 and the results of its operations and cash
flows for the nine months ended September 30, 1998 and 1997 have been included.
Operating results for the periods presented are not necessarily indicative of
the results that may be expected for the year ended December 31, 1998. As a
result of the reorganization described below, the financial statements
presented for September 30, 1998 are prepared on a consolidated basis.

2. Reorganization and initial public offering; ZDNet Stock Proposal (unaudited)

On February 4, 1998, a nonstock corporation, ZD Inc., was formed in
contemplation of a reorganization and initial public offering of the Companies.
Concurrent with the initial public offering (described below), Ziff-Davis Inc.
was renamed ZD Inc. and ZDCF was renamed ZD Events Inc. and ZD Inc. was renamed
Ziff-Davis Inc.

On May 4, 1998 Softbank, through its wholly owned subsidiary SOFTBANK
Holdings Inc. ("SBH"), completed a reorganization whereby the common stock of
ZD Inc. and ZD Events Inc. were contributed to Ziff-Davis Inc. in exchange for
73,619,335 shares of

F-107
<PAGE>

ZDI (ZIFF-DAVIS INC.) AND ZDCF (ZD COMDEX AND FORUMS INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)
(Financial and other information subsequent to February 17, 1998 is unaudited)

(numbers rounded to the nearest thousand)

Ziff-Davis Inc.'s common stock. Concurrently, with the reorganization, Ziff-
Davis Inc. (1) completed an initial public offering of 25,800,000 common shares
at an initial public offering price of $15.50 per share, (2) issued
$250,000,000 of 8 1/2% subordinated notes due 2008, (3) entered into a
$1,350,000,000 credit facility with a group of banks under which $1,250,000,000
was borrowed and (4) converted $908,673,000 of intercompany indebtedness to
equity. In addition, Ziff-Davis Inc. received approximately $9,100,000 of fixed
assets from Kingston Technology Company ("Kingston"), a related party, in
exchange for 580,645 shares of Ziff-Davis Inc.'s common stock. These assets
have been subsequently leased back to Kingston. Total shares of common stock
issued to Softbank and its affiliates were 74,200,000. The transactions
described above are hereafter referred to as the "Reorganization".

Proceeds, net of transaction costs, from the initial public offering and
funding transactions in the reorganization of $1,863,260,000 were used to
complete the purchase of certain assets from MAC for $370,000,000 and repay
intercompany indebtedness.

On May 14, 1998 an affiliate of Softbank sold 50,000 shares of Ziff-Davis
Inc.'s common stock to an unrelated third party. On May 28, 1998, Ziff-Davis
Inc.'s U.S. underwriters exercised their option to purchase 2.0 million
additional shares of common stock to cover over-allotments. Ziff-Davis Inc.
purchased the additional shares from SBH resulting in no change to the total
number of shares outstanding.

Unaudited Pro Forma Financial Information

The following summary pro forma information has been prepared as if the
Reorganization, described above, had been consummated on January 1, 1998. The
pro forma adjustments for the nine month period include a $5,219,000 reduction
of interest expense, a $900,000 increase in depreciation expense and a $900,000
reduction of selling, general and administrative expenses, as well as the tax
effect of these items recorded at the combined federal and state statutory rate
of 41%.

<TABLE>
<CAPTION>
Nine months ended
September 30, 1998
----------------------
(dollars in thousands)
<S> <C>
Revenue, net:......................................... $ 730,547
Depreciation and amortization ........................ 115,494
Loss from operations.................................. (17,395)
Interest expense, net................................. 105,966
Loss before income taxes.............................. (114,549)
Income tax benefit.................................... 31,449
Net loss.............................................. (83,100)
Net loss per basic common share....................... (0.83)
Weighted average common shares outstanding............ 100,000,000
</TABLE>

F-108
<PAGE>

ZDI (ZIFF-DAVIS INC.) AND ZDCF (ZD COMDEX AND FORUMS INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)
(Financial and other information subsequent to February 17, 1998 is unaudited)

(numbers rounded to the nearest thousand)

ZDNet Stock Proposal

The stockholders of Ziff-Davis Inc. are scheduled to vote on a proposal (the
"Tracking Stock Proposal") to authorize the issuance of a new series of common
stock, to be designated as Ziff-Davis, Inc.--ZDNet Common Stock ("ZDNet
Stock"), intended to reflect the performance of Ziff-Davis Inc.'s online
business division ("ZDNet"). The majority owner of the common stock of Ziff-
Davis Inc. has agreed to vote for the Tracking Stock Proposal. Before the ZDNet
Stock is first issued, Ziff-Davis Inc.'s existing common stock will be re-
classified as Ziff-Davis Inc.--ZDNet Common Stock ("ZD Stock"), and that stock
will be intended to reflect the performance of Ziff-Davis Inc.'s other
businesses and a Retained Interest in ZDNet (i.e., Ziff-Davis Inc.'s interest
in ZDNet excluding the interest intended to be represented by outstanding
shares of ZDNet Stock) (collectively, "ZD").

3. Summary of Significant Accounting Policies

Principles of Combination and Consolidation

The combined financial statements include the accounts of ZDI and ZDCF
including, as discussed above, the MAC Assets. All significant transactions
between these entities have been eliminated in combination and consolidation.
The financial statements of Ziff-Davis Inc. prepared subsequent to the
Reorganization described above have been prepared on a consolidated basis.

Investments in companies in which ownership interests range from 20% to 50%
and the Companies have the ability to exercise significant influence over the
operating and financial policies of such companies are accounted for under the
equity method.

Cash and cash equivalents

The Companies consider all highly liquid investments with an original
maturity of three months or less to be cash equivalents.

Concentration of credit risk

The Companies place their temporary cash investments with high credit quality
financial institutions. At times, such investments may be in excess of
federally insured limits. The Companies have not experienced losses in such
accounts.

F-109
<PAGE>

ZDI (ZIFF-DAVIS INC.) AND ZDCF (ZD COMDEX AND FORUMS INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)
(Financial and other information subsequent to February 17, 1998 is unaudited)

(numbers rounded to the nearest thousand)

The Companies' advertisers and exhibitors include principally customers who
represent a variety of technology companies in the United States and other
countries. The Companies extend credit to their customers and distributors and
historically have not experienced significant losses relating to receivables
from individual customers or groups of customers.

Property and equipment

Property and equipment have been recorded at cost or their estimated fair
value at the date of acquisition. Depreciation is computed using the straight-
line method over the estimated useful lives of the assets which range from
three to thirty years. Leasehold improvements are amortized using the straight-
line method over the service life of the improvement or the life of the related
lease, whichever is shorter. Maintenance and repair costs are charged to
expense as incurred.

Inventories

Inventories, which consist principally of paper, are stated at the lower of
cost or market. Cost is determined on a first-in, first-out basis.

Intangible assets

Intangible assets consist principally of advertising lists, exhibitor
relationships, trademarks and trade names, and goodwill. Amortization of these
assets is computed on a straight-line basis over their estimated useful lives.
Identifiable intangible assets are amortized over a period of 2 to 40 years and
goodwill, which represents the excess of the purchase price over the estimated
fair values of net assets acquired, is amortized over a period of 5 to 40 years
(refer to Note 6). The Companies assess the recoverability of their intangible
assets whenever adverse events or changes in circumstances indicate that
expected future cash flows (undiscounted and without interest charges) may not
be sufficient to support the carrying amount of intangible assets. If
undiscounted cash flows are not sufficient to support the recorded assets, an
impairment loss is recognized to reduce the carrying value of the intangibles
to its estimated recoverable value. The Companies have not experienced any
impairment of their intangible assets.

Revenue recognition

Advertising revenue for the Companies' publications, less agency commissions,
is recognized as income in the month that the related publications are sent to
subscribers or become available for sale at newsstands.

F-110
<PAGE>

ZDI (ZIFF-DAVIS INC.) AND ZDCF (ZD COMDEX AND FORUMS INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)
(Financial and other information subsequent to February 17, 1998 is unaudited)

(numbers rounded to the nearest thousand)

Payments received in advance of trade shows, conferences and seminars are
initially reported on the balance sheet as deferred revenue and are recognized
as income when the events take place.

Revenue generated by market research is recognized when the service is
provided.

Online revenues are derived principally from the sale of advertisements on
short-term contracts. Online revenues are recognized ratably in the period in
which the advertisement is displayed, provided that no significant obligations
remain and collection of the resulting receivable is probable. The Companies'
obligations typically include guarantees of minimum number of "impressions", or
times that an advertisement appears in pages viewed by users of the Companies'
online properties. To the extent minimum guaranteed impressions are not met,
the Companies defers recognition of the corresponding revenues until the
remaining guaranteed impression levels are achieved.

Operating costs and expenses

Cost of production includes the direct costs of producing magazines, online
content, newsletters and training materials, primarily paper, printing and
distribution, and the direct costs associated with organizing, producing and
managing trade shows, seminars, conferences and expositions. Selling, general
and administrative costs include subscriber acquisition costs which are
expensed as incurred. Editorial and product development costs are expensed as
incurred. Product development costs include the cost of artwork, graphics,
prepress, plates and photography for new products.

Foreign currency

The effect of translating foreign currency financial statements into U.S.
dollars is included in the cumulative translation adjustments account in
stockholder's equity. Gains and losses on foreign currency transactions, which
are not significant to operations, have been included in selling, general and
administrative expenses. The Companies have not historically entered into
forward currency contracts.

Other non-operating income

Other non-operating income includes management fee income and the Companies'
equity share of income or loss from joint ventures.

Income taxes

The Companies use the asset and liability approach for financial accounting
and reporting of deferred taxes.

F-111
<PAGE>

ZDI (ZIFF-DAVIS INC.) AND ZDCF (ZD COMDEX AND FORUMS INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)
(Financial and other information subsequent to February 17, 1998 is unaudited)

(numbers rounded to the nearest thousand)

Use of estimates

Fair value of financial instruments

All current assets and liabilities are carried at cost, which approximates
fair value because of the short-term maturity of those instruments. The
recorded amounts of the Companies' long-term debt payable to affiliates also
approximate fair value based upon the current rates available to the Companies
for debt with similar remaining maturities.

Stock-based compensation

The Companies have elected to follow Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees" ("APB 25"), to account for stock
options. Effective January 1, 1996, the Companies adopted the disclosure-only
provisions of Statement of Financial Accounting Standard ("SFAS") No. 123,
"Accounting for Stock-Based Compensation".

Earnings per share

Historical earnings per share data have been omitted on the basis that they
are not meaningful due to the insignificant number of shares outstanding. Pro
forma earnings per share is computed assuming 100 million weighted average
common shares outstanding.

Reclassifications

Certain amounts have been reclassified, where appropriate, to conform to the
current financial statement presentation.

New Accounting Pronouncements

SFAS No. 130, "Reporting Comprehensive Income", issued in June 1997, will
require the Companies to disclose, in financial statement format, all non-owner
changes in equity. Such changes include, for example, cumulative foreign
currency translation adjustments and unrealized gains and losses on securities
available for sale. Such transactions have historically not been material to
the Companies financial statements.

SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information", issued in June 1997, establishes standards for reporting
information about

F-112
<PAGE>

ZDI (ZIFF-DAVIS INC.) AND ZDCF (ZD COMDEX AND FORUMS INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)
(Financial and other information subsequent to February 17, 1998 is unaudited)

(numbers rounded to the nearest thousand)

operating segments in annual financial statements and interim financial
reports. It also establishes standards for related disclosures about products
and services, geographic areas and major customers. Generally, financial
information will be required to be reported on the basis that is used
internally for evaluating segment performance and deciding how to allocate
resources to segments.

The Companies expect to adopt the above statements beginning with their 1998
financial statements.

In June 1998, the Financial Accounting Standards Board issued SFAS 133
"Accounting for Derivative Instruments and Hedging Activities". SFAS 133
establishes accounting and reporting standards for derivative instruments and
for hedging activities and is effective for all fiscal quarters of fiscal years
beginning after June 15, 1999. The Companies do not expect the adoption of SFAS
133 to have a material impact on their results of operations.

4. Accounts Receivable, Net

Accounts receivable, net consist of the following:

<TABLE>
<CAPTION>
December 31,
------------------
1996 1997
-------- --------
(dollars in
thousands)
<S> <C> <C>
Accounts receivable.................................. $284,829 $309,565
Allowance for doubtful accounts, returns and
cancellations....................................... (80,966) (88,255)
-------- --------
$203,863 $221,310
======== ========
</TABLE>

5. Property and Equipment, Net

Property and equipment, net, consist of the following:

<TABLE>
<CAPTION>
December 31,
-----------------
1996 1997
-------- -------
(dollars in
thousands)
<S> <C> <C>
Computers and equipment................................. $ 30,513 $50,170
Leasehold improvements.................................. 38,439 40,033
Furniture and fixtures.................................. 18,402 17,619
-------- -------
87,354 107,822
Accumulated depreciation and amortization............... (33,793) (54,286)
-------- -------
$ 53,561 $53,536
======== =======
</TABLE>

F-113
<PAGE>

ZDI (ZIFF-DAVIS INC.) AND ZDCF (ZD COMDEX AND FORUMS INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)
(Financial and other information subsequent to February 17, 1998 is unaudited)

(numbers rounded to the nearest thousand)

6. Intangible Assets, Net

Intangible assets, net, consist of the following:

<TABLE>
<CAPTION>
Range of December 31,
Useful Lives ----------------------
(years) 1996 1997
------------ ---------- ----------
(dollars in
thousands)
<S> <C> <C> <C>
Advertising lists..................... 7-34 $ 888,100 $ 888,100
Exhibitor relationships............... 4-27 154,070 154,070
Trademarks/trade names................ 30-40 735,595 735,595
License agreements.................... 6-14 11,212 11,212
Subscriber lists...................... 3-10 51,475 51,475
Other................................. 2-20 57,599 57,599
Goodwill.............................. 5-40 1,380,993 1,387,556
---------- ----------
3,279,044 3,285,607
Accumulated amortization.............. (130,711) (255,274)
---------- ----------
$3,148,333 $3,030,333
========== ==========
</TABLE>

All intangible assets are being amortized using the straight-line method over
their estimated useful lives, up to 40 years. In determining the estimated
useful lives, the Companies considered their competitive position in the
markets in which they operate, the historical attrition rates of advertisers,
subscribers and exhibitors, legal and contractual obligations, and other
factors.

F-114
<PAGE>

ZDI (ZIFF-DAVIS INC.) AND ZDCF (ZD COMDEX AND FORUMS INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)
(Financial and other information subsequent to February 17, 1998 is unaudited)

(numbers rounded to the nearest thousand)

7. Accrued Expenses

Accrued expenses consist of the following:

<TABLE>
<CAPTION>
December 31,
-----------------------
1996 1997
----------- -----------
(dollars in thousands)
<S> <C> <C>
Payroll and related employee benefits............. $ 24,978 $ 29,112
Accrued interest-related party.................... 4,449 6,226
Other taxes payable............................... 6,310 2,822
Other............................................. 44,184 41,934
----------- -----------
$ 79,921 $ 80,094
=========== ===========
</TABLE>

8. Unearned Income

Unearned income consists of the following:

<TABLE>
<CAPTION>
December 31,
------------------
1996 1997
-------- --------
(dollars in
thousands)
<S> <C> <C>
Unexpired subscriptions................................ $100,387 $ 82,167
Prepaid conference fees................................ 91,776 80,706
Reserve for cancellations.............................. (17,287) (8,191)
-------- --------
$174,876 $154,682
======== ========
</TABLE>

9. Income Taxes

Prior to the Reorganization and initial public offering described in Note 2,
the Companies have been included in consolidated U.S. federal income tax
returns filed by Softbank, except for operations relating to the MAC Assets
(described in Note 1), which were assets of a separate taxpayer. The tax
expense reflected in the combined statements of operations and tax liabilities
reflected in the combined balance sheet have been prepared on a separate return
basis as though the Companies filed stand-alone income tax returns. No tax
benefit has been recorded for the losses related to the MAC Assets, as such
losses are not available to the Companies.

The Companies and Softbank do not have a tax sharing agreement. Therefore, no
intercompany tax payments have been made and no related intercompany receivable
or payable has been recorded.

F-115
<PAGE>

ZDI (ZIFF-DAVIS INC.) AND ZDCF (ZD COMDEX AND FORUMS INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)
(Financial and other information subsequent to February 17, 1998 is unaudited)

(numbers rounded to the nearest thousand)

Income (loss) before income taxes is attributable to the following
jurisdictions:

<TABLE>
<CAPTION>
December 31,
---------------------------
1995 1996 1997
------- -------- --------
(dollars in thousands)
<S> <C> <C> <C>
United States................................. $25,094 $(22,095) $(74,638)
Foreign....................................... (2,225) (5,029) 2,147
------- -------- --------
Total....................................... $22,869 $(27,124) $(72,491)
======= ======== ========
</TABLE>

Components of the provision (benefit) for income taxes are as follows:

<TABLE>
<CAPTION>
December 31,
-----------------------
1995 1996 1997
------- ------- -------
(dollars in thousands)
<S> <C> <C> <C>
U.S. federal income taxes:
Current........................................ $ -- $ -- $ --
Deferred....................................... 9,240 19,338 (1,017)
State and local income taxes:
Current........................................ -- -- --
Deferred....................................... 2,684 5,619 (295)
Foreign income taxes............................. -- -- --
------- ------- -------
Total provision (benefit) for income taxes..... $11,924 $24,957 $(1,312)
======= ======= =======
</TABLE>

A reconciliation of the U.S. federal statutory tax rate to the Companies'
effective tax rate on income (loss) before income taxes is as follows:
<TABLE>
<CAPTION>
December 31,
--------------------
1995 1996 1997
---- ------ -----
<S> <C> <C> <C>
Federal statutory tax
rate................... 35.0% 35.0% 35.0%
State and local taxes
(net of federal tax
benefit)............... 6.0 6.0 6.0
Non-recognition of
combined losses of MAC
Assets................. 9.9 (116.6) (32.2)
Amortization of non-
deductible goodwill.... 1.0 (13.1) (5.8)
Other................... 0.2 (3.3) (1.2)
---- ------ -----
Effective tax rate...... 52.1% (92.0)% 1.8%
==== ====== =====
</TABLE>

The effective tax rate differs from the federal statutory tax rate primarily
as a result of the Companies' inability to deduct losses of the MAC Assets
prior to May 4, 1998. The amortization of nondeductible goodwill resulted
primarily from the acquisition of 100% of the stock of ZDI in 1996.

F-116
<PAGE>

ZDI (ZIFF-DAVIS INC.) AND ZDCF (ZD COMDEX AND FORUMS INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)
(Financial and other information subsequent to February 17, 1998 is unaudited)

(numbers rounded to the nearest thousand)

Following is a summary of the components of the deferred tax accounts at
December 31, 1996 and December 31, 1997:

<TABLE>
<CAPTION>
December 31,
--------------------
1996 1997
--------- ---------
(dollars in
thousands)
<S> <C> <C>
Current deferred tax assets and (liabilities):
Allowance for doubtful accounts................... $ 8,825 $ 8,750
Other............................................. (151) 44
--------- ---------
Current deferred net tax assets................. 8,674 8,794
--------- ---------
Noncurrent deferred tax assets and (liabilities):
Basis difference in intangible assets............. (273,375) (288,286)
Net operating loss and other carryforwards........ 129,798 133,314
Other............................................. 11,603 13,711
--------- ---------
Noncurrent deferred tax liabilities............. (131,974) (141,261)
Valuation allowance................................. (49,335) (38,856)
--------- ---------
Net noncurrent deferred tax liabilities......... (181,309) (180,117)
--------- ---------
Net deferred tax liabilities........................ $(172,635) $(171,323)
========= =========
</TABLE>

As of December 31, 1996 and 1997 the Companies had total deferred tax assets
of $100,891,000 and $116,963,000 respectively, and total deferred tax
liabilities of $273,526,000 and $288,286,000 respectively. The December 31,
1996 and December 31, 1997 net deferred tax assets are reduced by a valuation
allowance of $49,335,000 and $38,856,000 respectively, primarily relating to
tax benefits of foreign net operating loss carryforwards which are not expected
to be realized. The decrease in the valuation allowance in 1997 is primarily
related to the expiration of foreign net operating loss carryforwards. No
deferred tax asset has been established for the losses associated with the MAC
Assets, which will not be available to the Companies as a deduction.

The Companies have U.S. and foreign net operating loss carryforwards of
approximately $286,322,000 which will begin to expire in 1998. The Companies'
utilization of certain net operating loss carryforwards, of approximately
$122,549,000 is subject to limitations, due to the change of ownership
resulting from the Softbank acquisition of the ZDI stock on February 29, 1996.
Management believes that such limitations will not significantly affect the
Companies' ability to recognize the deferred tax assets relating to the
carryforward. Accordingly, no valuation allowance to reduce the deferred tax
asset relating to the carryforward has been established. In addition, the
Companies have alternative minimum tax credit carryforwards of $385,000 which
may be carried forward indefinitely until used.

The Companies' foreign subsidiaries have no undistributed earnings for
remittance to the U.S. and, therefore, no U.S. or foreign tax provision on
remittances has been recorded.

F-117
<PAGE>

ZDI (ZIFF-DAVIS INC.) AND ZDCF (ZD COMDEX AND FORUMS INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)
(Financial and other information subsequent to February 17, 1998 is unaudited)

(numbers rounded to the nearest thousand)

10. Related Party Transactions

The Companies are members of a group of companies affiliated through common
majority ownership with Softbank and have various transactions and
relationships with members of the group. Due to these relationships, it is
possible that the terms of those transactions are not the same as those that
would result from transactions among unrelated parties.

Receivables/payables

Receivables from affiliates consist of the following:

Payables to management and affiliates consist of the following:

<TABLE>
<CAPTION>
December 31,
----------------
1996 1997
------- --------
(dollars in
thousands)
<S> <C> <C>
Payable to:
Management.............................................. $29,834 $ --
MAC and subsidiaries.................................... -- 270,000
Softbank................................................ 39,582 126,371
Other affiliates........................................ -- 1,961
------- --------
$69,416 $398,332
======= ========
</TABLE>

As part of the 1996 acquisition of ZDI, the Companies agreed to assume
certain obligations to management arising out of prior employment arrangements
with previous owners. In January 1997, the Companies paid all amounts due,
including accrued interest, through the payment date.

Prior to the Reorganization and initial public offering, the Companies were
members of Softbank's central cash management system. Under this system, the
Companies would periodically transfer excess cash to Softbank for cash
management purposes and in turn receive cash advances from Softbank to fund the
Companies' short-term working capital requirements. Interest is accrued based
on the net balance outstanding at the end of each month. Interest income is
earned at the 30-day LIBOR rate for the applicable month. Interest expense is
incurred at the 30-day LIBOR rate plus 0.5%.

F-118
<PAGE>

ZDI (ZIFF-DAVIS INC.) AND ZDCF (ZD COMDEX AND FORUMS INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)
(Financial and other information subsequent to February 17, 1998 is unaudited)

(numbers rounded to the nearest thousand)

Other affiliated arrangements

During the years ended December 31, 1996 and 1997, the Companies incurred
$2,000,000 and $1,631,000, in advertising expense with Yahoo!, Inc. ("Yahoo!"),
an affiliated company. No advertising expense with Yahoo! was incurred in 1995.

The Companies sell advertising space and exhibition services to Kingston
Technology Company ("Kingston"), an affiliated company. During the years ended
December 31, 1995, 1996 and 1997, the Companies recorded revenues of $0,
$882,000 and $2,667,000, respectively, from sales to Kingston. These services
were provided under terms consistent with those provided to unaffiliated
customers.

ZDCF has entered into an agreement to manage certain trade shows and
expositions owned by Softbank and its affiliates, whereby ZDCF earns management
and licensing fees. The fees earned by ZDCF for the years ended December 31,
1995, 1996 and 1997 were $1,979,000, $3,394,000 and $4,057,000, respectively.

In 1996 and 1997, the Companies had an arrangement with SOFTBANK Interactive
Marketing ("SIM"), an affiliated company, for the provision of interactive
media sales. The Companies paid commissions to SIM of $600,000 and $1,800,000
during the years ended December 31, 1996 and 1997, respectively. Effective
December 31, 1997, SIM was acquired by an unrelated third party. Management
believes that the sale of SIM by Softbank will have no material impact on the
Companies.

The Companies have an arrangement with SOFTBANK Services, an affiliated
company, whereby the Companies are charged for administrative services provided
plus a management fee. For the years ended December 31, 1995, 1996 and 1997,
the Companies incurred services fees of $0, $359,000 and $1,259,000,
respectively, in relation to this agreement.

ZDI has entered into certain licensing agreements with Softbank for the
publishing and distribution of Japanese language editions of certain
publications. The fees earned by ZDI for the years ended December 31, 1996 and
1997 were approximately $964,000 and $1,818,000, respectively, in each year.

In July 1997, Ziff-Davis Inc. entered into a license and services agreement
to develop ZDTV for MAC Holdings (America) Inc. ("MHA"), a company that is
wholly owned by Mr. Masayoshi Son, who is a director of Ziff-Davis Inc. Under
this agreement, Ziff-Davis Inc. agreed to fund ZDTV's operations through
unsecured advances and was granted an option to purchase ZDTV for a price equal
to MHA's investment plus 10% per annum for the

F-119
<PAGE>

ZDI (ZIFF-DAVIS INC.) AND ZDCF (ZD COMDEX AND FORUMS INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)
(Financial and other information subsequent to February 17, 1998 is unaudited)

(numbers rounded to the nearest thousand)

period of investment. The cumulative advances, which totaled $14.4 million net
of $10.1 million in repayments through December 31, 1997, were repaid
concurrently with the Reorganization. (See Notes 2 and 18.)

ZDI has entered into operating leases for television production equipment and
has sublet such equipment to ZDTV, an affiliated company. The terms of the
subleases are substantially identical to the terms of the leases which provide
for annual lease payments totaling approximately $610,000 through 2003.

Notes payable to affiliates

The Companies' long-term debt is payable to Softbank and consists of the
following:

(2) These notes mature on December 31, 2001 and bear an interest rate of 6.5%
per annum, payable on the last business day of each quarter beginning March
31, 1997.

(3) Notes mature on February 28, 2010. The notes bear interest at a rate of
8.0% per annum.

(4) Notes mature on February 28, 2009. The notes bear interest at 9.9% per
annum.

(5) Note is payable in 52 equal quarterly installments commencing March 31,
1997. The note bears interest at a rate of 8.0% per annum.

(6) Note is payable on January 1, 2007. The note bears interest at a rate of
8.0% per annum.

F-120
<PAGE>

ZDI (ZIFF-DAVIS INC.) AND ZDCF (ZD COMDEX AND FORUMS INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)
(Financial and other information subsequent to February 17, 1998 is unaudited)

(numbers rounded to the nearest thousand)

Scheduled principal payments due on long-term debt outstanding at December
31, 1997 are as follows:

<TABLE>
<CAPTION>
(dollars
in
thousands)
<S> <C>
1998............................................................ $ 125,790
1999............................................................ 125,790
2000............................................................ 125,790
2001............................................................ 1,025,790
2002............................................................ 125,790
Thereafter...................................................... 1,005,080
----------
Total......................................................... $2,534,030
==========
</TABLE>
See Note 2 for a discussion of the Companies' restructuring of its debt and
equity structures through the Reorganization and initial public offering.

During 1995, 1996 and 1997, the Companies incurred $44,005,000, $120,646,000
and $190,445,000, respectively of interest expense due to Softbank related to
the above notes payable.

Guarantee of Softbank's U.S. debt

In April 1996, Softbank signed a line of credit agreement totaling
$50,000,000 with an independent lender for which the Companies, along with
certain other Softbank affiliates, are guarantors. In January 1997 and October
1997, this line of credit was increased to $75,000,000 and $150,000,000,
respectively. At December 31, 1997, $102,500,000 was outstanding under the line
of credit (see Note 18).

Return of capital and dividends

On December 15, 1996, the Companies declared a return of capital of
approximately $900,000,000 paid through the issuance of a note payable to a
subsidiary of Softbank and a cash dividend of $8,000,000 to Softbank. In 1997,
the Companies recorded a return of capital of $381,434,000 in connection with
the purchase price of companies under common control.

11. Employee Stock Compensation Plans

Executive stock option plan

The SOFTBANK 1996 and 1997 Executive Stock Option Plans provide for the
granting of nonqualified stock options to purchase the common stock of Softbank
to officers, directors and key employees of the Companies. Under the plans,
options have been granted at exercise prices equal to the closing market price
in Japan's public equities

F-121
<PAGE>

ZDI (ZIFF-DAVIS INC.) AND ZDCF (ZD COMDEX AND FORUMS INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)
(Financial and other information subsequent to February 17, 1998 is unaudited)

(numbers rounded to the nearest thousand)

market (market price denominated in Japanese yen) on the date of grant. As of
December 31, 1997, substantially all options granted become exercisable in
various installments over the first six anniversaries of the date of grant and
expire ten years after the date of grant.

Information relating to stock options during 1995, 1996 and 1997 is as
follows:

<TABLE>
<CAPTION>
Weighted Average
Number Option Price
of Shares Per Share(1)
--------- ----------------
<S> <C> <C>
Shares outstanding under options at
December 31, 1995......................... -- --
Granted.................................... 739,493(2) $87.15
Exercised.................................. -- --
Forfeited.................................. 12,740(2) 87.15
-------
Shares outstanding under options at
December 31, 1996......................... 726,753 87.15
Granted.................................... 386,363 61.40
Exercised.................................. -- --
Forfeited.................................. 146,130 78.88
-------
Shares outstanding under options at
December 31, 1997......................... 966,986 $78.11
=======
Shares exercisable
At December 31, 1996..................... -- --
At December 31, 1997 (price range $44.26-
$87.15)................................. 107,630 $82.06
</TABLE>
- --------
(1) The exercise price of the stock options is set in Japanese yen. The
exercise prices as shown above have been converted to U.S. dollars based
upon the exchange rate as of the date of grant for the respective options.

(2) Adjusted for a 1.4:1 stock split during 1996 and a 1.3:1 stock split during
1997.

As permitted by SFAS 123, the Companies have chosen to continue to account
for stock options in accordance with the provisions of APB 25 and, accordingly,
no compensation expense related to stock option grants was recorded in 1996 or
1997. Pro forma information regarding net income is required by SFAS 123 and
has been determined as if the Companies had accounted for stock options under
the fair value method. The fair value of the option grants was estimated at the
date of grant using the Black-Scholes option-pricing model with the following
assumptions for 1996 and 1997:

<TABLE>
<CAPTION>
1996 1997
------- -------
<S> <C> <C>
Risk-free interest rate.................................. 5.89% 6.35%
Dividend yield........................................... 0.26% 0.22%
Volatility factor........................................ 54.03% 51.35%
Expected life............................................ 6 years 6 years
</TABLE>

F-122
<PAGE>

ZDI (ZIFF-DAVIS INC.) AND ZDCF (ZD COMDEX AND FORUMS INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)
(Financial and other information subsequent to February 17, 1998 is unaudited)

(numbers rounded to the nearest thousand)

The weighted average fair value of options granted in 1996 and 1997 was
$64.30 and $34.05, respectively. For purposes of the pro forma disclosures, the
estimated fair value of the options is amortized to expense over the options'
vesting period. Had compensation cost for the stock option plans been
determined based upon the fair value at the grant date for awards during 1996
and 1997, consistent with the provisions of SFAS 123, the Companies' net loss
would have been increased by approximately $3,100,000 and $4,200,000 ,
respectively. On January 23, 1998, the exercise price of all of the shares
outstanding under option agreements were reset to an exercise price equal to
the closing market price on Japan's Tokyo Stock Exchange First Section at that
date. In conjunction with the repricing, those options previously exercisable
on December 31, 1997 may now be exercised only after July 19, 1998. Repricing
of the stock options will not result in compensation expense to the Companies.

Other stock compensation plans

During 1996 and 1997, the Companies granted 45,760 and 61,940 shares of
common stock of Softbank, respectively, (adjusted for a 1.4:1 stock split
during 1996 and a 1.3:1 stock split during 1997) to certain key employees,
subject to restrictions as to continuous employment which expire over a three
to five-year period from the date of grant. The granting of the shares to the
Companies' employees has been recorded as additional paid-in capital offset by
a reduction to stockholder's equity as deferred compensation. Such amounts were
recorded at the fair value, as established by market price of the shares on the
date of grant. The unearned compensation is being amortized ratably over the
restricted periods. During 1996, restrictions on 13,790 shares expired, 2,160
shares were forfeited and $1,080,000 was charged to expense related to the
restricted stock awards. During 1997, restrictions on 75,210 shares expired,
2,150 shares were forfeited and $3,916,000 was charged to expense related to
these restricted stock awards.

12. Employee Benefit Plans

Pension plan

Certain employees of ZDCF who have met eligibility requirements are covered
by a noncontributory defined benefit pension plan. The benefits are based on
years of service and average compensation at the time of retirement. The
Companies' funding policy is to contribute amounts sufficient to meet the
minimum funding requirements as set forth in the Employee Retirement Income
Security Act of 1974 ("ERISA"). Contributions to the plan are determined in
accordance with the projected unit credit cost method. Plan assets consist of
U.S. equity securities, high grade corporate bonds and commercial paper, and
U.S. treasury notes.

F-123
<PAGE>

ZDI (ZIFF-DAVIS INC.) AND ZDCF (ZD COMDEX AND FORUMS INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)
(Financial and other information subsequent to February 17, 1998 is unaudited)

(numbers rounded to the nearest thousand)

Net periodic pension cost includes the following components:

<TABLE>
<CAPTION>
1995 1996 1997
---- ------ ----
(dollars in
thousands)
<S> <C> <C> <C>
Service cost........................................... $472 $ 700 $391
Interest cost.......................................... 363 472 456
Expected return on plan assets......................... (172) (300) (445)
Amortization of transition obligation.................. 149 199 75
---- ------ ----
Net periodic pension cost.............................. $812 $1,071 $477
==== ====== ====
</TABLE>

The following table sets forth the funded status and amounts recognized in
the balance sheet:

<TABLE>
<CAPTION>
1996 1997
----------- -----------
(dollars in thousands)
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation.................... $ 4,132 $ 5,721
----------- -----------
Accumulated benefit obligations.............. 4,224 5,721
=========== ===========
Projected benefit obligations.................. 7,967 5,721
Plan assets at fair value...................... (4,467) (6,004)
----------- -----------
Projected benefit obligation in excess (less
than) of plan assets.......................... 3,500 (283)
Unrecognized net transition asset (liability).. (2,297) 1,279
----------- -----------
Pension liability included in balance sheet.... $ 1,203 $ 996
=========== ===========
</TABLE>

During 1997, the Companies decided to terminate the defined benefit pension
plan and pursuant to this decision, all accrued benefits became fully vested as
of August 31, 1997. The above amounts reflect the effects of such termination.
All accrued plan obligations will be settled during 1998. There was no
significant gain or loss recognized in connection with the termination. Any
gain or loss associated with the plan settlement will be recognized in 1998.

Retirement plans

The Companies maintain various defined contribution retirement plans.
Substantially all of the Companies' employees are eligible to participate in
one of the plans under which annual contributions may be made by the Companies
for the benefit of all eligible employees. In certain cases, employees may also
make contributions to the plan in which

F-124
<PAGE>

ZDI (ZIFF-DAVIS INC.) AND ZDCF (ZD COMDEX AND FORUMS INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)
(Financial and other information subsequent to February 17, 1998 is unaudited)

(numbers rounded to the nearest thousand)

they participate which, and subject to certain limitations, may be matched by
the Companies up to certain specified percentages. Employees are generally
eligible to participate in a plan upon joining the Companies and receive
matching contributions after one year of employment. The Companies made
contributions to the plans totaling $2,115,000, $10,470,000 and $13,725,000 in
1995, 1996 and 1997, respectively.

13. Investments in and Advances to Unconsolidated Affiliates

The Companies have investments in the following companies/joint ventures:

<TABLE>
<CAPTION>
Carrying value
at December 31,
Ownership ---------------
Company/joint venture Percentage 1996 1997
--------------------- ---------- ------- -------
(dollars in
thousands)
<S> <C> <C> <C>
Mac Publishing LLC.............................. 50% $ -- $16,244
ExpoComm LLC.................................... 50 7,698 7,758
Family PC G.P................................... 50 10,138 9,342
</TABLE>

The entities listed above are engaged primarily in the publication or
distribution of print media and the organization, production and management of
trade shows. Other investments and joint ventures are not material to the
Companies' financial statements.

The Companies equity income (loss) was $0, $(796,000) and $335,000 in 1995,
1996 and 1997, respectively.

14. Supplemental Cash Flow Information

<TABLE>
<CAPTION>
1995 1996 1997
-------- ---------- --------
(dollars in thousands)
<S> <C> <C> <C>
Cash paid during the year for:
Interest to related parties................ $ 8,390 $ 99,509 $185,447
Income taxes............................... -- 360 4
Noncash investing and financing activities:
Fair value of assets acquired.............. $836,479 $2,508,603 $ 20,749
Liabilities assumed........................ 21,959 370,518 6,749
-------- ---------- --------
Cash paid.................................. 814,520 2,138,085 14,000
Less--Cash acquired........................ -- 13,262 --
-------- ---------- --------
Net cash paid for acquisitions............. $814,520 $2,124,823 $ 14,000
-------- ---------- --------
Return of capital dividends................ $ -- $ 899,948 $381,434
======== ========== ========
Capital contributions...................... $ -- $ 5,002 $ 61,580
======== ========== ========
</TABLE>

F-125
<PAGE>

ZDI (ZIFF-DAVIS INC.) AND ZDCF (ZD COMDEX AND FORUMS INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)
(Financial and other information subsequent to February 17, 1998 is unaudited)

(numbers rounded to the nearest thousand)

15. Operating Lease Commitments

The Companies are obligated under various operating leases which expire at
various dates through 2021. Future minimum rental commitments under
noncancelable operating leases are as follows:

<TABLE>
<CAPTION>
(dollars
in
thousands)
<S> <C>
1998................................................................. $ 34,912
1999................................................................. 32,702
2000................................................................. 28,875
2001................................................................. 25,891
2002................................................................. 24,932
Thereafter........................................................... 248,407
--------
Total................................................................ $395,719
========
</TABLE>

Netted in the above totals is approximately $5,000,000 for which ZDI has
noncancelable subleases in place. Total sublease income approximates ZDI's
required payments under the related leases. Rent expense amounted to
approximately $2,492,000, $23,015,000 and $29,994,000 for the years ended
December 31, 1995, 1996 and 1997, respectively.

16. Contingencies

The Companies are subject to various claims and legal proceedings arising in
the normal course of business.

17. Segment Information

Business segment information

The Companies' operations have been classified into two business segments:
(1) publishing and (2) events.

Publishing

Events

The events segment is engaged in the organization, production and management
of trade shows, conferences and seminars for the computer industry. The events
segment's principal operations are in North America and to a lesser extent in
Europe, Asia and Latin America.

F-126
<PAGE>

ZDI (ZIFF-DAVIS INC.) AND ZDCF (ZD COMDEX AND FORUMS INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)
(Financial and other information subsequent to February 17, 1998 is unaudited)

(numbers rounded to the nearest thousand)

Summarized financial information by business segment as of December 31, 1995,
1996 and 1997 and for each of the years then ended is set forth below:

<TABLE>
<CAPTION>
1995 1996 1997
---------- ---------- ----------
(dollars in thousands)
<S> <C> <C> <C>
Revenue, net:
Publishing............................. $ -- $ 690,255 $ 866,233
Events................................. 202,729 264,884 287,528
---------- ---------- ----------
$ 202,729 $ 955,139 $1,153,761
========== ========== ==========
Income from operations:
Publishing............................. $ -- $ 18,676 $ 49,997
Events................................. 62,675 68,505 59,235
---------- ---------- ----------
$ 62,675 $ 87,181 $ 109,232
========== ========== ==========
Total assets at December 31:
Publishing............................. $ -- $2,440,651 $2,422,360
Events................................. 1,090,981 1,143,522 1,124,286
---------- ---------- ----------
$1,090,981 $3,584,173 $3,546,646
========== ========== ==========
Depreciation and amortization:
Publishing............................. $ -- $ 106,587 $ 118,814
Events................................. 24,305 33,149 36,126
---------- ---------- ----------
$ 24,305 $ 139,736 $ 154,940
========== ========== ==========
Capital expenditures:
Publishing............................. $ -- $ 14,657 $ 21,399
Events................................. 3,367 7,708 8,797
---------- ---------- ----------
$ 3,367 $ 22,365 $ 30,196
========== ========== ==========
</TABLE>

F-127
<PAGE>

ZDI (ZIFF-DAVIS INC.) AND ZDCF (ZD COMDEX AND FORUMS INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)
(Financial and other information subsequent to February 17, 1998 is unaudited)

(numbers rounded to the nearest thousand)

Operating income by business segment excludes interest income and interest
expense.

<TABLE>
<CAPTION>
North America Other areas Combined
------------- ----------- ----------
(dollars in thousands)
<S> <C> <C> <C>
Year ended December 31, 1995:
Revenue, net............................. $ 192,789 $ 9,940 $ 202,729
========== ======== ==========
Income (loss) from operations............ $ 64,930 $ (2,255) $ 62,675
========== ======== ----------
Other non-operating income............... 4,199
Related party-interest expense........... 44,005
----------
Income before taxes...................... $ 22,869
==========
Total assets at December 31, 1995........ $1,081,829 $ 9,152 $1,090,981
========== ======== ==========
Year ended December 31, 1996:
Revenue, net............................. $ 854,666 $100,473 $ 955,139
========== ======== ==========
Income (loss) from operations............ $ 92,210 $ (5,029) $ 87,181
========== ======== ----------
Other non-operating income............... 6,341
Related party-interest expense........... 120,646
----------
Loss before taxes........................ $ (27,124)
==========
Total assets at December 31, 1996........ $3,549,102 $ 35,071 $3,584,173
========== ======== ==========
Year ended December 31, 1997:
Revenue, net............................. $1,040,297 $113,464 $1,153,761
========== ======== ==========
Income from operations................... $ 107,085 $ 2,147 $ 109,232
========== ======== ----------
Other non-operating income............... 8,722
Related party-interest expense........... 190,445
----------
Loss before taxes........................ $ (72,491)
==========
Total assets at December 31, 1997........ $3,500,945 $ 45,701 $3,546,646
========== ======== ==========
</TABLE>

Transactions between geographic areas are not significant.

18. Subsequent Events (unaudited)

Guarantee of Softbank's U.S. Debt

In March 1998, the Companies increased their guarantee of Softbank's U.S.
debt from $150 million to $450 million. This guarantee was released on May 4,
1998.

Interest Rate Swaps

On June 10, 1998, Ziff-Davis Inc. entered into interest rate swap agreements,
with an aggregate notional amount of $550,000,000. Under these swap agreements,
which began

F-128
<PAGE>

ZDI (ZIFF-DAVIS INC.) AND ZDCF (ZD COMDEX AND FORUMS INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)
(Financial and other information subsequent to February 17, 1998 is unaudited)

(numbers rounded to the nearest thousand)

on August 10, 1998, Ziff-Davis Inc. will receive a floating rate of interest
based on three-month LIBOR, which resets quarterly, and Ziff-Davis Inc. will
pay a fixed rate of interest, each quarter, for the terms of the respective
agreements. The terms of these agreements range from 3 to 7 years and the
weighted average fixed rate Ziff-Davis Inc. will pay is 5.85%. Ziff-Davis Inc.
has entered into these agreements solely to hedge its interest rate risk under
its floating rate bank debt.

For the nine months period ended September 30, 1998, these interest rate
swaps did not have a material impact on Ziff-Davis Inc.'s financial statements.

Restructuring

Class Action and Derivative Litigations

The complaints allege that defendants violated Sections 11, 12(a) (2) and 15
of the Securities Act of 1933 in connection with the registration statement
filed by Ziff-Davis Inc. with the Securities and Exchange Commission relating
to the initial public offering of Ziff-Davis Inc.'s stock on April 29, 1998
(the "IPO"). More particularly, the complaints allege that the registration
statement contained false and misleading statements and failed to disclose
facts that could have indicated an impending decline in Ziff-Davis Inc.'s
revenue. The complaints seek on behalf of a class of purchasers of Ziff-Davis
Inc.'s common stock from the date of the IPO through October 8, 1998
unspecified damages, interest, fees and costs, rescission, and injunctive
relief such as the imposition of a constructive trust upon the proceeds of the
IPO.

F-129
<PAGE>

ZDI (ZIFF-DAVIS INC.) AND ZDCF (ZD COMDEX AND FORUMS INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)
(Financial and other information subsequent to February 17, 1998 is unaudited)

(numbers rounded to the nearest thousand)

Javier v. Ziff-Davis Inc., et al., No. 98 Civ. 8201 (filed Nov. 17, 1998). On
January 28, 1999, the court entered an order consolidating the actions,
appointing lead plaintiff's counsel and requiring the filing of a consolidated
amended complaint within 45 days. Thereafter, Ziff-Davis Inc. will have 45 days
to respond to the consolidated amended complaint.

Although the outcome of the foregoing cases cannot be predicted, Ziff-Davis
Inc. believes there are substantial defenses to these claims.

Legal Proceedings

Ziff-Davis Inc. was named as a defendant in an action, filed on April 17,
1998 in the Supreme Court of the State of New York, by minority shareholders of
SOFTBANK Interactive Marketing Inc. ("SIM"), formerly an indirect subsidiary of
Softbank. The complaint alleges, among other things, that SBH, SIM's majority
shareholder, acting with Ziff-Davis Inc. and two of its senior officers and
directors who were directors of SIM (and who were also named as defendants),
had conflicts of interest between SIM and other Softbank investments (including
investments in Ziff-Davis Inc.) and failed to act in the best interests of SIM
and the minority shareholders by taking actions which benefited Ziff-Davis Inc.
The complaint states claims based on common law fraud, breach of fiduciary duty
and aiding and abetting theories and seeks in excess of $200,000,000 in
damages. Ziff-Davis Inc. and the other defendants have moved to dismiss all of
the claims against them other than a breach of contract claim which is solely
against SBH.

Although the outcome of this case cannot be predicted, Ziff-Davis Inc.
believes that there are substantial defenses to the claims and intends to
defend vigorously.

Sky TV

On October 28, 1998, Ziff-Davis Inc. acquired the assets of Sky TV Inc. and
certain affiliates for approximately $12,000,000 in cash. Sky TV is a media
company that produces video content for distribution principally through
airline in-flight, cable and broadcast television. Sky TV's principal offices
are located in Dallas and San Francisco.

F-130
<PAGE>

ZDI (ZIFF-DAVIS INC.) AND ZDCF (ZD COMDEX AND FORUMS INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)
(Financial and other information subsequent to February 17, 1998 is unaudited)

(numbers rounded to the nearest thousand)

Deja News

On July 22, 1998, Ziff-Davis Inc. purchased $5,000 in Series C, convertible,
non-voting preferred shares of Deja News Inc., an Internet discussion network.
This investment is being accounted for on a cost basis.

ZDTV

On February 4, 1999, Ziff-Davis Inc. purchased ZDTV at a purchase price of
approximately $81,400,000 (see note 10). Ziff-Davis Inc. paid approximately
$32,800,000 of the purchase price in cash and paid the remainder by applying
approximately $48,600,000 in advances owed to it by MAC Holdings America. Other
than advances to ZDTV which are reported on Ziff-Davis Inc.'s balance sheet,
the results of operations of ZDTV are not included in Ziff-Davis Inc.'s
results.

Vulcan Transactions

On February 4, 1999, Vulcan Ventures, the investment vehicle of Paul G.
Allen, agreed to purchase approximately three million shares of Ziff-Davis Inc.
common stock for $50,000,000 in cash. This purchase is expected to close in the
first quarter of 1999. On February 5, 1999, Vulcan Programming Inc., an entity
owned by Paul G. Allen, purchased a one-third interest in ZDTV for $54,000,000
in cash.

Credit Facility

1998 Incentive Compensation Plan

On September 23, 1998, the Board of Directors approved the reduction of the
exercise price of all options outstanding under the Plan from $16.00 to $6.00,
the closing market price of Ziff-Davis Inc.'s common stock on that date. In
addition, the vesting period of the options was extended by three months. The
repricing did not result in compensation expenses to Ziff-Davis Inc.

F-131
<PAGE>

ZDI (ZIFF-DAVIS INC.) AND ZDCF (ZD COMDEX AND FORUMS INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)
(Financial and other information subsequent to February 17, 1998 is unaudited)

(numbers rounded to the nearest thousand)

In addition, on December 21, 1998, the Board approved the grant of options to
acquire an aggregate of approximately 5,729,000 shares of ZDNet Stock, at a
price of $7.50 per share (the fair value of the shares at that date), to
certain employees. These options are currently scheduled to vest and become
exercisable on the fifth anniversary of the date of grant, except that, upon
the completion of an initial public offering of ZDNet Stock, these options will
vest and become exercisable with respect to 25% of the shares on December 31,
1999 and an additional 6.25% of the shares at the end of each three-month
period thereafter.

On January 29, 1999, Ziff-Davis Inc. granted options to a number of employees
in connection with the cancellation of corresponding options to purchase stock
of SOFTBANK Corp. In connection with these grants, an affiliate of SOFTBANK
Corp. has agreed with Ziff-Davis Inc. that, if and when any of these options
are exercised, (a) that affiliate will cause the shares of Ziff-Davis Inc.
common stock issuable upon such exercise to be supplied to Ziff-Davis and (b)
Ziff-Davis will deliver to that affiliate or its designee the exercise price
paid upon such exercise. Thus, the exercise of these options will not increase
the number of shares of Ziff-Davis Inc. common stock outstanding or Ziff-Davis
Inc.'s stockholders' equity. However, Ziff-Davis Inc. expects to recognize
compensation expense for accounting purposes of approximately $3,018,000 over
three years as a result of these grants. In order to address this point, an
affiliate of SOFTBANK Corp. has agreed to reimburse Ziff-Davis Inc. for any
compensation expense recognized by it for accounting purposes as a result of
such grants.

F-132
<PAGE>

ZDI (ZIFF-DAVIS INC.) AND ZDCF (ZD COMDEX AND FORUMS INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)
(Financial and other information subsequent to February 17, 1998 is unaudited)

(numbers rounded to the nearest thousand)

Employee Stock Purchase Plan

Ziff-Davis Inc. adopted the Employee Stock Purchase Plan (the "Stock Purchase
Plan") whereby eligible employees may purchase Ziff-Davis Inc.'s common stock
with after tax payroll deductions of 1% to 10% of their base pay. The price at
which shares of common stock will be purchased is the lesser of 85% of the fair
market value of a share of common stock on (1) the first business day of a
purchase period or (2) the last business day of a purchase period. Ziff-Davis
Inc. has reserved 2,500,000 shares of common stock (regardless of series) for
issuance under the Stock Purchase Plan.

Other

On December 31, 1998, SBH contributed 71,619,355 shares of Ziff-Davis Inc.'s
common stock to SOFTBANK America Inc., an affiliate of Softbank.

F-133
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholder of
Ziff-Davis Inc., (formerly Ziff-Davis Publishing Company)

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, cash flows and changes in stockholder's
equity, present fairly, in all material respects, the financial position of
Ziff-Davis Inc. and its subsidiaries (formerly Ziff-Davis Publishing Company or
the "Company") at December 31, 1995 and February 28, 1996, and the results of
their operations and their cash flows for the year ended December 31, 1995 and
for the period from January 1, 1996 to February 28, 1996, in conformity with
generally accepted accounting principles. 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 of these statements in accordance with generally accepted auditing
standards which 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.

As discussed in Note 16 to the financial statements, the Company was acquired
by SOFTBANK Holdings Inc. on February 29, 1996.

/s/ Price Waterhouse LLP

Price Waterhouse LLP
New York, NY
February 17, 1998

F-134
<PAGE>

ZDI (ZIFF-DAVIS INC., FORMERLY ZIFF-DAVIS PUBLISHING COMPANY)
(a wholly owned subsidiary of Ziff-Davis Holdings Corp.)

CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except per share amounts)

<TABLE>
<CAPTION>
December 31, February 28,
1995 1996
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.......................... $ 10,083 $ 13,669
Accounts receivable, net........................... 113,078 116,075
Inventories........................................ 21,825 26,009
Deferred taxes..................................... 22,129 23,570
Prepaid postage and other current assets........... 16,621 16,852
---------- ----------
Total current assets............................. 183,736 196,175
Property and equipment, net.......................... 64,110 58,589
Intangible assets, net............................... 1,348,064 1,338,684
Deferred charges and other assets.................... 27,996 26,457
---------- ----------
Total assets..................................... $1,623,906 $1,619,905
========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable................................... $ 56,488 $ 43,795
Accrued expenses................................... 68,814 78,333
Unexpired subscriptions, net....................... 81,737 86,435
Due to management and affiliates................... 58,480 58,762
Current portion of long-term debt.................. 6,847 6,847
Other current liabilities.......................... 2,048 2,733
---------- ----------
Total current liabilities........................ 274,414 276,905
Deferred taxes....................................... 11,822 10,815
Long-term debt....................................... 439,153 439,153
Subordinated debentures--related party............... 525,000 525,000
Other long-term liabilities.......................... 8,367 7,315
---------- ----------
Total liabilities................................ 1,258,756 1,259,188
---------- ----------
Commitments and contingencies (Notes 14, 15 and 16)
Stockholder's equity:
Common stock, $.01 par value; 1,000 shares
authorized; 100 shares issued and outstanding..... -- --
Additional paid-in capital......................... 391,275 391,275
Accumulated deficit................................ (26,002) (30,549)
Cumulative translation adjustment.................. (123) (9)
---------- ----------
Total stockholder's equity....................... 365,150 360,717
---------- ----------
Total liabilities and stockholder's equity....... $1,623,906 $1,619,905
========== ==========
</TABLE>

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

F-135
<PAGE>

ZDI (ZIFF-DAVIS INC., FORMERLY ZIFF-DAVIS PUBLISHING COMPANY)
(a wholly owned subsidiary of Ziff-Davis Holdings Corp.)

CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands)

<TABLE>
<CAPTION>
January 1, 1996
Year ended to
December 31, February 28,
1995 1996
------------ ---------------
<S> <C> <C>
Revenue, net..................................... $768,995 $125,465
Cost of production............................... 193,646 31,112
Selling, general and administrative expenses..... 428,053 71,946
Depreciation and amortization of property and
equipment....................................... 37,160 6,073
Amortization of intangible assets................ 54,386 9,064
-------- --------
Income from operations......................... 55,750 7,270
Interest expense, net............................ (92,609) (14,030)
Equity in losses of joint ventures............... 3,391 235
-------- --------
Loss before income taxes....................... (40,250) (6,995)
Income tax benefit............................... (14,248) (2,448)
-------- --------
Net loss......................................... $(26,002) $ (4,547)
======== ========
</TABLE>

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

F-136
<PAGE>

ZDI (ZIFF-DAVIS INC., FORMERLY ZIFF-DAVIS PUBLISHING COMPANY)
(a wholly owned subsidiary of Ziff-Davis Holdings Corp.)

CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)

<TABLE>
<CAPTION>
January 1, 1996
Year ended to
December 31, February 28,
1995 1996
------------ ---------------
<S> <C> <C>
Cash flows from operating activities:
Net loss......................................... $ (26,002) $ (4,547)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization................... 91,546 15,137
Loss from equity investments.................... 3,391 235
Provisions for bad debts, allowances and
cancellations.................................. 14,097 3,014
Deferred tax benefit............................ (14,248) (2,448)
Changes in operating assets and liabilities:
Accounts receivable............................ (26,956) (6,011)
Inventories.................................... (9,014) (4,184)
Accounts payable and accrued expenses.......... 8,136 (3,174)
Unexpired subscriptions, net................... 2,499 4,698
Due to management and affiliates............... (3,020) 282
Other, net..................................... (3,366) 1,136
----------- --------
Net cash provided by operating activities......... 37,063 4,138
----------- --------
Cash flows from investing activities:
Capital expenditures............................. (14,163) (552)
Proceeds from sale of businesses................. 23,508 --
----------- --------
Net cash provided (used) by investing activities.. 9,345 (552)
----------- --------
Cash flows from financing activities:
Borrowings under revolving credit facility....... 80,625 24,335
Repayment of revolving credit facility........... (60,625) (24,335)
Repayment of acquisition indebtedness............ (1,122,931) --
----------- --------
Net cash used by financing activities............. (1,102,931) --
----------- --------
Net (decrease)/increase in cash and cash
equivalents...................................... (1,056,523) 3,586
Cash and cash equivalents at beginning of period.. 1,066,606 10,083
----------- --------
Cash and cash equivalents at end of period........ $ 10,083 $ 13,669
=========== ========
Supplemental cash flow disclosures:
Interest paid.................................... $ 78,811 $ 29,255
Income taxes paid................................ $ 92,729 $ --
</TABLE>

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

F-137
<PAGE>

ZDI (ZIFF-DAVIS INC., FORMERLY ZIFF-DAVIS PUBLISHING COMPANY)
(a wholly owned subsidiary of Ziff-Davis Holdings Corp.)

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY

(dollars in thousands)

<TABLE>
<CAPTION>
Common stock Additional Cumulative Total
------------- paid-in Accumulated Translation stockholder's
Shares Amount capital Deficit adjustment equity
------ ------ ---------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1,
1995................... 100 $-- $391,275 $ -- $ -- $391,275
Net loss................ -- -- -- (26,002) -- (26,002)
Foreign currency
translation
adjustment............. -- -- -- -- (123) (123)
--- ---- -------- -------- ----- --------
Balance at December 31,
1995................... 100 -- 391,275 (26,002) (123) 365,150
Net loss................ -- -- -- (4,547) -- (4,547)
Foreign currency
translation
adjustment............. -- -- -- -- 114 114
--- ---- -------- -------- ----- --------
Balance at February 28,
1996................... 100 $-- $391,275 $(30,549) $ (9) $360,717
=== ==== ======== ======== ===== ========
</TABLE>

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

F-138
<PAGE>

ZDI (ZIFF-DAVIS INC., FORMERLY ZIFF-DAVIS PUBLISHING COMPANY)
(a wholly owned subsidiary of Ziff-Davis Holdings Corp.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(numbers rounded to the nearest thousand)

1. Organization and Acquisition

Ziff-Davis Inc. ("ZDI", formerly Ziff-Davis Publishing Company) is a wholly
owned subsidiary of Ziff-Davis Holdings Corp. ("Holdings").

ZDI is engaged in publishing magazines, journals and training manuals and
providing market research about the computer industry, with operations in the
United States, Canada and Europe.

Acquisition

Effective January 1, 1995, Holdings, through ZDI, directly and indirectly
acquired certain assets and assumed certain liabilities of the Ziff-Davis
publishing business and related businesses (the "Acquisition" or the "Acquired
Businesses") from Ziff Communications Company, L.P., a limited partnership
("ZCC") and other persons and entities (collectively referred to as the
"Sellers"), for an aggregate purchase price of approximately $1,400,000,000
plus transaction costs. ZDI funded the Acquisition through the issuance of
common stock, bank borrowings and a subordinated note payable to Holdings.

The acquisition has been accounted for using the purchase method of
accounting.

2. Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of ZDI and its
subsidiaries. All significant intercompany accounts and transactions have been
eliminated in consolidation.

Investments in companies in which ownership interests range from 20 to 50
percent are accounted for under the equity method. ZDI has an equity investment
interest in Family PC G.P. of 50%. The equity investment in Family PC G.P. is
not material to ZDI's consolidated financial statements.

Cash and cash equivalents

ZDI considers all highly liquid investments with an original maturity of
three months or less to be cash equivalents.

Concentration of credit risk

ZDI places its temporary cash investments with high credit quality financial
institutions. At times, such investments may be in excess of federally insured
limits. ZDI has not experienced losses in such accounts.

F-139
<PAGE>

ZDI (ZIFF-DAVIS INC., FORMERLY ZIFF-DAVIS PUBLISHING COMPANY)
(a wholly owned subsidiary of Ziff-Davis Holdings Corp.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

ZDI's advertisers include customers who represent a variety of technology
companies in the United States and other countries. ZDI extends credit to its
customers and historically has not experienced significant losses relating to
receivables from individual customers or groups of customers.

Property and equipment

Paper inventories

Paper inventories are stated at the lower of cost or market. Cost is
determined on a first-in, first-out basis.

Intangible assets

Intangible assets consist principally of advertising lists, trademarks and
trade names and goodwill. Amortization of these assets is computed on a
straight-line basis over their estimated useful lives. Identifiable intangible
assets are amortized over a period of 2 to 39 years and goodwill, which
represents the excess of the purchase price over the estimated fair values of
net assets acquired, is amortized over 40 years. ZDI assesses the
recoverability of its intangible assets whenever adverse events or changes in
circumstances indicate that expected future cash flows (undiscounted and
without interest charges) may not be sufficient to support the carrying amount
of intangible assets. If undiscounted cash flows are not sufficient to support
the recorded assets, an impairment loss is recognized to reduce the carrying
value of the intangibles to its estimated recoverable value.

Revenue recognition

Advertising revenue for ZDI's publications, less agency commissions, is
recognized as income in the month that the related publications are sent to
subscribers or becomes available for sale at newsstands.

F-140
<PAGE>

ZDI (ZIFF-DAVIS INC., FORMERLY ZIFF-DAVIS PUBLISHING COMPANY)
(a wholly owned subsidiary of Ziff-Davis Holdings Corp.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

estimated returns, are recognized in the month that the related publications
become available for sale at newsstands.

Revenue generated by market research is recognized when the service is
provided.

Operating costs and expenses

Foreign currency

Income taxes

ZDI uses the asset and liability approach for financial accounting and
reporting of deferred taxes.

Use of estimates

Fair value of financial instruments

All current assets and liabilities are carried at cost, which approximates
fair value because of the short-term maturity of those instruments. The
recorded amounts of ZDI's long-term debt also approximate fair value which was
based upon the current rates available to ZDI for debt with similar remaining
maturities.

Impairment of long-lived assets

In 1995, the Financial Accounting Standards Board issued SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed Of" ("SFAS 121"). ZDI adopted SFAS 121 in fiscal 1996 with no
effect on operations.

F-141
<PAGE>

ZDI (ZIFF-DAVIS INC., FORMERLY ZIFF-DAVIS PUBLISHING COMPANY)
(a wholly owned subsidiary of Ziff-Davis Holdings Corp.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

Earnings per share

Historical earnings per share data has been omitted on the basis that it is
not meaningful due to the insignificant number of shares outstanding.

3. Accounts Receivable, Net

Accounts receivable, net consist of the following:

<TABLE>
<CAPTION>
December 31, February 28,
1995 1996
------------ ------------
(dollars in thousands)
<S> <C> <C> <C>
Accounts receivable........................ $168,961 $166,036
Allowance for doubtful accounts, returns
and cancellations......................... (55,883) (49,961)
-------- --------
$113,078 $116,075
======== ========
</TABLE>

4. Property and Equipment, Net

Property and equipment, net, consist of the following:

<TABLE>
<CAPTION>
December 31, February 28,
1995 1996
------------ ------------
(dollars in thousands)
<S> <C> <C> <C>
Computers and equipment..................... $ 55,838 $ 56,390
Leasehold improvements...................... 25,999 25,999
Furniture and fixtures...................... 12,404 12,404
Other....................................... 7,029 7,029
-------- --------
101,270 101,822
Accumulated depreciation and amortization... (37,160) (43,233)
-------- --------
$ 64,110 $ 58,589
======== ========
</TABLE>

5. Intangible Assets, Net

Intangible assets, net, consist of the following:

<TABLE>
<CAPTION>
Range of
Lives December 31, February 28,
(years) 1995 1996
-------- ------------ ------------
(dollars in thousands)
<S> <C> <C> <C>
Advertising lists....................... 7-39 $ 645,800 $ 645,800
Trademarks and trade names.............. 30 235,820 235,820
Subscriber lists........................ 3-10 47,436 47,436
Other................................... 2-5 28,800 28,800
License agreements...................... 6-14 11,211 11,211
Goodwill................................ 40 433,383 433,067
---------- ----------
1,402,450 1,402,134
Accumulated amortization................ (54,386) (63,450)
---------- ----------
$1,348,064 $1,338,684
========== ==========
</TABLE>

F-142
<PAGE>

ZDI (ZIFF-DAVIS INC., FORMERLY ZIFF-DAVIS PUBLISHING COMPANY)
(a wholly owned subsidiary of Ziff-Davis Holdings Corp.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

Intangible assets primarily relate to the acquisition of ZDI. As discussed in
Note 1, the acquisition was accounted for under the purchase method of
accounting. As such the purchase price was allocated to tangible and
identifiable intangible assets with the remaining amount allocated to goodwill.

All intangible assets are being amortized using the straight-line method over
their estimated useful lives, up to 40 years. In determining the estimated
useful lives, ZDI considered its competitive position in the markets in which
it operates, the historical attrition rates of advertisers, exhibitors and
subscribers, legal and contractual obligations, and other factors.

6. Accrued Expenses

Accrued expenses consist of the following:

<TABLE>
<CAPTION>
December 31, February 28,
1995 1996
------------ ------------
(dollars in thousands)
<S> <C> <C> <C>
Payroll and related employee benefits........ $ 35,044 $35,152
Accrued interest............................. 16,804 27,526
Other taxes payable.......................... 1,588 2,576
Other accrued expenses....................... 15,378 13,079
-------- -------
$ 68,814 $78,333
======== =======

7. Income Taxes

Loss before income taxes is attributable to the following jurisdictions:

<CAPTION>
Year January 1
ended to
December 31, February 28,
1995 1996
------------ ------------
(dollars in thousands)
<S> <C> <C> <C>
United States................................ $(31,114) $(4,757)
Foreign...................................... (9,136) (2,238)
-------- -------
Total...................................... $(40,250) $(6,995)
======== =======
</TABLE>

F-143
<PAGE>

ZDI (ZIFF-DAVIS INC., FORMERLY ZIFF-DAVIS PUBLISHING COMPANY)
(a wholly owned subsidiary of Ziff-Davis Holdings Corp.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

Components of the income tax benefit are as follows:

<TABLE>
<CAPTION>
Year January 1
ended through
December 31, February 28,
1995 1996
------------ ------------
(dollars in thousands)
<S> <C> <C>
U.S. federal income taxes:
Current........................................ $ -- $ --
Deferred....................................... (11,040) (1,897)
State and local income taxes:
Current........................................ -- --
Deferred....................................... (3,208) (551)
Foreign income taxes............................. -- --
-------- -------
Total income tax benefit..................... $(14,248) $(2,448)
======== =======
</TABLE>

A reconciliation of the U.S. federal statutory tax rate to ZDI's effective
tax rate on loss before income taxes is as follows:

<TABLE>
<CAPTION>
Year January 1
ended to
December 31, February 28,
1995 1996
------------ ------------
<S> <C> <C>
Federal statutory tax rate..................... 35.0% 35.0%
State and local taxes (net of federal tax
benefit)...................................... 6.0 6.0
Foreign losses................................. (2.5) (2.5)
Amortization of nondeductible goodwill......... (1.3) (1.2)
Other nondeductible expenses................... (1.8) (2.3)
---- ----
Effective tax rate........................... 35.4% 35.0%
==== ====
</TABLE>

F-144
<PAGE>

ZDI (ZIFF-DAVIS INC., FORMERLY ZIFF-DAVIS PUBLISHING COMPANY)
(a wholly owned subsidiary of Ziff-Davis Holdings Corp.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

Following is a summary of the components of the deferred tax accounts at
December 31, 1995 and February 28, 1996:

<TABLE>
<CAPTION>
December 31, February 28,
1995 1996
------------ ------------
(dollars in thousands)
<S> <C> <C>
Current deferred tax assets:
Allowance for doubtful accounts................. $ 8,396 $ 8,535
Employee compensation, bonus, and vacation...... 12,248 12,687
Other........................................... 1,485 2,348
-------- --------
Current deferred tax assets................... 22,129 23,570
-------- --------
Noncurrent deferred tax assets and (liabilities):
Basis difference in intangible assets........... (69,271) (71,589)
Basis difference in property and equipment...... (3,378) (1,863)
Deferred rental expense......................... 3,285 3,139
Net operating loss carryforwards................ 102,165 103,954
Acquisition reserves............................ 2,773 2,756
Other........................................... (220) (36)
-------- --------
Gross noncurrent deferred tax assets.......... 35,354 36,361
Valuation allowance............................. (47,176) (47,176)
-------- --------
Net noncurrent deferred tax liabilities....... (11,822) (10,815)
-------- --------
Total net deferred tax assets..................... $ 10,307 $ 12,755
======== ========
</TABLE>

As of December 31, 1995 and February 28, 1996, ZDI had total deferred tax
assets of $83,176,000 and $86,243,000, respectively and total deferred
liabilities of $73,488,000.

As of February 28, 1996, ZDI has U.S. and foreign net operating loss
carryforwards of approximately $244,172,000 which will begin to expire on
December 31, 1996. The December 31, 1995 and the February 28, 1996 net deferred
tax asset is reduced by a valuation allowance of $47,176,000 relating to tax
benefits of foreign net operating loss carryforwards which are not expected to
be recognized.

ZDI's foreign subsidiaries have no undistributed earnings for remittance to
the U.S. and therefore no U.S. or foreign tax provision on remittances has been
recorded.

8. Due to Management and Affiliates

Payables to management and affiliates consist of the following:

<TABLE>
<CAPTION>
December 31, February 28,
1995 1996
------------ ------------
(dollars in thousands)
<S> <C> <C>
Payable to:
Management....................................... $28,161 $28,443
Sellers.......................................... 21,500 21,500
Holdings......................................... 8,819 8,819
------- -------
$58,480 $58,762
======= =======
</TABLE>

F-145
<PAGE>

ZDI (ZIFF-DAVIS INC., FORMERLY ZIFF-DAVIS PUBLISHING COMPANY)
(a wholly owned subsidiary of Ziff-Davis Holdings Corp.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

As part of the Acquisition, ZDI agreed to assume certain obligations to
management arising out of prior employment arrangements. Approximately
$40,000,000 was due under these arrangements, of which approximately
$12,000,000 was paid in 1995. The balance of the obligation, including accrued
interest, was paid in 1997.

Amounts due to sellers represent final amounts payable related to the
Acquisition.

9. Long-Term Debt

Long-term debt at December 31, 1995 and February 28, 1996 is comprised of the
following:

<TABLE>
<CAPTION>
(dollars
in
thousands)
<S> <C>
Bank debt:
Tranche A....................... $ 86,604
Tranche B....................... 179,479
Tranche C....................... 159,917
Revolving credit arrangement.... 20,000
--------
446,000
Less--Current portion............. (6,847)
--------
$439,153
========
</TABLE>

On December 21, 1994, ZDI borrowed $515,000,000 under the terms of a Credit
Agreement. The proceeds of the loan were used to finance a portion of the
Acquisition and pay certain transaction costs.

Tranche A, as amended on August 31, 1995, is a six-year term loan due
quarterly in varying amounts from September 30, 1995 through December 31, 2000.
Tranche B is a seven-year term loan due quarterly in varying amounts commencing
September 30, 1995 through September 30, 2001, with a final payment of
$126,000,000 on December 31, 2001. Tranche C is an eight-year term loan
providing for quarterly payments, aggregating $1,000,000 per calendar year
commencing September 30, 1995 through December 31, 2001, followed by four
quarterly payments of $39,500,000 through December 31, 2002.

The Credit Agreement also provides ZDI with an additional $85,000,000,
increased to $150,000,000 under terms of the August 31, 1995 amendment, under a
revolving credit arrangement through December 31, 2000. These funds are
available for loans, letters of credit, and swing-line loans, subject to
certain maximum levels of borrowing. At least once during each year, for a
period of 30 consecutive days, the loans outstanding under the revolving credit
facility must be reduced so that the aggregate outstanding amount does not
exceed $130,000,000 during such 30-day period. The commitment fee for the
revolving credit facility is .50%

F-146
<PAGE>

ZDI (ZIFF-DAVIS INC., FORMERLY ZIFF-DAVIS PUBLISHING COMPANY)
(a wholly owned subsidiary of Ziff-Davis Holdings Corp.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

during 1995 and 1996 on the unused portion of the facility. ZDI has the option
to permanently reduce the amount available for borrowings under the revolving
credit facility by a minimum of $5,000,000 at any time. At December 31, 1995
and February 28, 1996, $130,000,000 under the revolving credit facility is
available for borrowing.

During 1995 and the period January 1, 1996 to February 28, 1996, the Tranche
A and revolving credit loans bore interest, payable at least quarterly, at
either the Average Bank Rate ("ABR"), as defined, plus 1.25%, or at the
Eurodollar rate, plus 2.5% at the election of ZDI. Tranche B and C loans bore
interest, payable at least quarterly, at either the ABR, plus 1.75% and 2.25%,
respectively, or at the Eurodollar rate, as defined, plus 3% and 3.5%,
respectively, at the election of ZDI. Swing-line loans bear interest at the
ABR, plus the applicable margins as discussed above. Borrowings outstanding at
December 31, 1995 and February 28, 1996 were $446,000,000 and the weighted
average interest rate was 8.8% and 10.1%, respectively.

ZDI is required to comply with various restrictive covenants, including
maintaining certain financial ratios, restrictions on additional indebtedness,
capital expenditures, acquisitions, certain asset sales, declaration of
dividends and acquisition of ZDI's or Holdings' common stock. All borrowings
under the Credit Agreement are secured by the common stock and other equity
interests of ZDI and its wholly-owned subsidiaries.

ZDI is required to make mandatory prepayments of the loans with the net
proceeds of certain asset sales and debt issuances, if any. ZDI is also
required, commencing with the year ending December 31, 1995, to prepay the
loans with a portion of excess cash flow, as defined, once certain cash
balances are achieved. These cash balances were not achieved during 1995 or for
the period from January 1, 1996 to February 28, 1996 and therefore no
prepayments occurred.

Scheduled principal payments for each of the next five years are as follows:

<TABLE>
<CAPTION>
(dollars
in
thousands)
<S> <C>
1996................................................................. $ 6,847
1997................................................................. 13,518
1998................................................................. 21,524
1999................................................................. 23,658
2000................................................................. 52,795
Thereafter........................................................... 327,658
--------
Total.............................................................. $446,000
========
</TABLE>

10. Related Party Transactions

Prior to the Acquisition, ZCC provided certain services to ZDI, including
legal, tax, human resources, payroll, facilities management and management
information services.

F-147
<PAGE>

ZDI (ZIFF-DAVIS INC., FORMERLY ZIFF-DAVIS PUBLISHING COMPANY)
(a wholly owned subsidiary of Ziff-Davis Holdings Corp.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

The remaining unpaid balance (approximately $8,100,000) for such services was
paid in the normal course of business during 1995. Beginning in 1995, ZDI
sublet office space and provided administrative services to ZCC. Such office
space and services were provided to ZCC at ZDI's cost. The majority partners of
ZCC have a continuing investment in Holdings of approximately 6%.

On the closing date of the Acquisition, ZDI paid approximately $280,000,000
in cash to the Sellers and issued notes due January 13, 1995 and January 16,
1995 totaling $1,033,931,000, for the balance. These notes were subsequently
fully paid in January, 1995.

See Note 11 for a description of subordinated debentures.

In connection with the Acquisition, ZDI paid transaction costs of $14,000,000
to an affiliate of Holdings.

ZDI paid $44,555,000 and $3,791,000 in interest to Holdings for the year
ended December 31, 1995 and for the period from January 1, 1996 to February 28,
1996, respectively.

11. Subordinated Debentures--Related Party

On December 21, 1994, ZDI issued a $525,000,000 subordinated note payable to
Holdings to finance a portion of the Acquisition. The note bears interest at 8
1/2% per annum with interest payable semiannually on February 28 and August 31
of each year. The principal is repayable in three installments of $175,000,000
each on December 21, 2005, December 21, 2006 and December 21, 2007. This note
is fully subordinated in right of payment to the bank borrowings (see Note 9).

12. Employee Benefit Plans

Retirement plans

ZDI and its subsidiaries maintain various defined contribution retirement
plans. Substantially all of ZDI's employees are eligible to participate in one
of the plans under which annual contributions may be made by ZDI for the
benefit of all eligible employees. Employees may also make contributions to the
plan in which they participate which, subject to certain limitations, may be
matched by ZDI up to certain specified percentages. Employees are generally
eligible to participate in a plan upon joining ZDI and receive matching
contributions immediately upon commencement of employment. In addition, the
employees become eligible to receive a discretionary ZDI contribution after one
year of employment. ZDI made contributions of $8,432,000 and $1,407,000 for the
year ended December 31, 1995 and for the period ended February 28, 1996,
respectively.

F-148
<PAGE>

ZDI (ZIFF-DAVIS INC., FORMERLY ZIFF-DAVIS PUBLISHING COMPANY)
(a wholly owned subsidiary of Ziff-Davis Holdings Corp.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

(numbers rounded to the nearest thousand)

13. Sale of Businesses

During 1995, ZDI disposed of two subsidiaries and received cash consideration
of $23,508,000. No gain or loss was realized on the dispositions.

14. Operating Lease Commitments

ZDI is obligated under various operating leases which expire at various dates
through 2006. Future minimum rental commitments under noncancelable operating
leases are as follows:

<TABLE>
<CAPTION>
(dollars
in
thousands)
<S> <C>
1996 (ten-month period).............................................. $15,771
1997................................................................. 19,606
1998................................................................. 18,219
1999................................................................. 12,532
2000................................................................. 9,611
Thereafter........................................................... 14,583
-------
Total.............................................................. $90,322
=======
</TABLE>

Netted in the above totals is approximately $2,300,000 for which ZDI has
noncancelable subleases in place. Total sublease income approximates ZDI's
required payments under the related leases. Rent expense amounted to
approximately $22,900,000 and $4,020,000 for the year ended December 31, 1995
and for the period from January 1, 1996 to February 28, 1996, respectively.

15. Contingencies

ZDI is subject to various claims and legal proceedings arising in the normal
course of business. Management believes that the ultimate liability, if any, in
the aggregate will not be material to the consolidated balance sheet, future
operations or cash flows.

16. Subsequent Events

Acquisition of Ziff-Davis Inc.

In February 1996, SOFTBANK Corp. entered into an agreement to acquire the
stock of ZDI for an aggregate purchase price of approximately $1,800,000,000,
plus transaction costs. In a separate agreement, MAC Inc. Ltd., an affiliated
company of SOFTBANK Corp., acquired directly and through affiliates, certain of
the assets and assumed certain of the liabilities of ZDI for an aggregate
purchase price of approximately $302,000,000.

F-149
<PAGE>

UNDERWRITING

Ziff-Davis Inc. and the underwriters for the U.S. offering (the "U.S.
Underwriters") named below have entered into an underwriting agreement with
respect to the shares of ZDNet Stock (the "Shares") being offered in the United
States. Subject to certain conditions, each U.S. Underwriter has severally
agreed to purchase the number of Shares indicated in the following table.
Goldman, Sachs & Co., Donaldson, Lufkin & Jenrette Securities Corporation and
Hambrecht & Quist LLC are the representatives of the U.S. Underwriters.

<TABLE>
<CAPTION>
Number of
U.S. Underwriters Shares
----------------- ---------
<S> <C>
Goldman, Sachs & Co. .............................................. .
Donaldson, Lufkin & Jenrette Securities Corporation................ .
Hambrecht & Quist LLC.............................................. .
---
Total............................................................ .
===
</TABLE>

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

If the U.S. Underwriters sell more Shares than the total number set forth in
the table above, the U.S. Underwriters have an option to buy up to an
additional 1,500,000 Shares from Ziff-Davis Inc. to cover such sales. They may
exercise that option for 30 days. If any Shares are purchased pursuant to this
option, the U.S. Underwriters will severally purchase Shares in approximately
the same proportion as set forth in the table above.

The following table shows the per share and total underwriting discounts to
be paid to the U.S. Underwriters by Ziff-Davis Inc. Such amounts are shown
assuming both no exercise and full exercise of the U.S. Underwriters' option to
purchase 1,500,000 additional Shares.

Paid by Ziff-Davis Inc.

<TABLE>
<CAPTION>
No Full
Exercise Exercise
-------- --------
<S> <C> <C>
Per Share.................................................. $ . $ .
Total...................................................... $ . $ .
</TABLE>

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

Shares sold by the U.S. Underwriters to the public will initially be offered
at the initial public offering price set forth on the cover of this prospectus.
Any shares sold by the U.S. Underwriters to securities dealers may be sold at a
discount of up to $ . per share from the initial public offering price. Any
such securities dealers may resell any shares purchased from the Underwriters
to certain other brokers or dealers at a discount of up to $ . per share from
the initial public offering price. If all the Shares are not sold at the
initial offering price, the representatives may change the offering price and
the other selling terms.

Goldman Sachs International, Donaldson, Lufkin & Jenrette International and
Hambrecht & Quist LLC have entered into an underwriting agreement with the
underwriters for the offering of . Shares outside of the United States. The
terms and conditions of the offering in the United States and the international
offering outside of the United States are the same and the sale of Shares in
both offerings are conditioned on each other.

U-1
<PAGE>

Goldman Sachs International, Donaldson, Lufkin & Jenrette International and
Hambrecht & Quist LLC are representatives of the underwriters for the
international offering outside the United States (the "International
Underwriters"). We refer to the U.S. Underwriters and the International
Underwriters, collectively, as the "Underwriters".

The Underwriters have entered into an agreement in which they agree to
restrictions on where and to whom they and any dealer purchasing from them may
offer Shares as a part of the distribution of the Shares. The Underwriters also
have agreed that they may sell Shares among each of the underwriting groups.

Ziff-Davis Inc. has agreed with the Underwriters not to dispose of or hedge
any of its ZDNet Stock or securities convertible into or exchangeable for
shares of ZDNet Stock during the period from the date of this prospectus
continuing through the date 180 days after the date of this prospectus, except
with the prior written consent of the representatives. This agreement does not
apply to any existing employee benefit plans. See "Shares Eligible for Future
Sale" for a discussion of this agreement and certain other transfer
restrictions.

Prior to the offering, there has been no public market for the Shares. The
initial public offering price has been negotiated among Ziff-Davis Inc. and the
representatives. Among the factors to be considered in determining the initial
public offering price of the Shares, in addition to prevailing market
conditions, will be Ziff-Davis Inc.'s and ZDNet's historical performance,
estimates of the business potential and earnings prospects of Ziff-Davis Inc.
and ZDNet, an assessment of the management of Ziff-Davis Inc. and ZDNet and the
consideration of the above factors in relation to market valuation of companies
in related businesses.

ZDNet Stock will be listed on the NYSE under the symbol ".". In order to meet
one of the requirements for listing ZDNet Stock on the NYSE, the Underwriters
have undertaken to sell lots of . or more shares to a minimum of . beneficial
holders.

In connection with the offering, the Underwriters may purchase and sell
shares of ZDNet Stock in the open market. These transactions may include short
sales, stabilizing transactions and purchases to cover positions created by
short sales. Short sales involve the sale by the Underwriters of a greater
number of shares than they are required to purchase in the offering.
Stabilizing transactions consist of certain bids or purchases made for the
purpose of preventing or retarding a decline in the market price of ZDNet Stock
while the offering is in progress.

The Underwriters also may impose a penalty bid. This occurs when a particular
Underwriter repays to the Underwriters a portion of the underwriting discount
received by it because the representatives have repurchased shares sold by or
for the account of such Underwriter in stabilizing or short covering
transactions.

These activities by the Underwriters may stabilize, maintain or otherwise
affect the market price of ZDNet Stock. As a result, the price of ZDNet Stock
may be higher than the price that otherwise might exist in the open market. If
these activities are commenced, they may be discontinued by the Underwriters at
any time. These transactions may be effected on the NYSE, in the over-the-
counter market or otherwise.

U-2
<PAGE>

The Underwriters do not expect sales to discretionary accounts to exceed five
percent of the total number of shares offered.

Ziff-Davis Inc. estimates that its share of the total expenses of the
offering, excluding underwriting discounts, will be approximately $..

At the request of Ziff-Davis Inc., up to . Shares have been reserved for sale
by the U.S. Underwriters to employees of Ziff-Davis Inc. and its affiliates and
certain other purchasers. Such Shares will be sold at the initial public
offering price and, to the extent sold, will not otherwise be available for
sale as a part of the Offering. If any such Shares are not sold in this manner
they will be offered by the U.S. Underwriters as a part of the offering.
Purchasers in the directed offering are subject to the 180-day lockup described
above.

Ziff-Davis Inc. has agreed to indemnify the several Underwriters against
certain liabilities, including liabilities under the Securities Act.

This prospectus may be used by the Underwriters and other dealers in
connection with offers and sales of the shares, including sales of shares
initially sold by the Underwriters in the offering being made outside of the
United States, to persons located in the United States.

U-3
<PAGE>

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

No dealer, salesperson or other person is authorized to give any information
or to represent anything not contained in this prospectus. You must not rely
on any unauthorized information or representations. This prospectus is an
offer to sell or to buy only the shares offered hereby, but only under
circumstances where it is lawful to do so. The information contained in this
prospectus is current only as of its date.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
Summary.................................................................. 3
Risk Factors............................................................. 17
Cautionary Statement Regarding Forward-Looking Statements................ 39
Trading Prices of and Dividends on Existing Common Stock................. 40
Use of Proceeds.......................................................... 41
Dividend Policy.......................................................... 42
Capitalization........................................................... 43
Dilution................................................................. 44
ZDNet Selected Historical Combined Financial and Other Data.............. 45
ZDNet Management's Discussion and Analysis of Financial Condition and
Results of Operations................................................... 46
ZDNet Description of Business............................................ 60
Management of ZDNet...................................................... 74
ZD Selected Historical Combined Financial and Other Data................. 76
ZD Management's Discussion and Analysis of Financial Condition and
Results of Operations................................................... 77
ZD Description of Business............................................... 95
Ziff-Davis Inc. Selected Historical Combined Financial and Other Data.... 111
Ziff-Davis Inc. Management's Discussion and Analysis of Financial
Condition and Results of Operations..................................... 112
Ziff-Davis Inc. Description of Business.................................. 128
Management of Ziff-Davis Inc. ........................................... 129
Executive Compensation................................................... 133
Certain Relationships with Our Majority Stockholders and Related
Transactions............................................................ 147
Security Ownership of Certain Beneficial Owners and Management........... 153
Certain Cash Management and Allocation Policies.......................... 155
Description of Capital Stock............................................. 159
Shares Eligible for Future Sale.......................................... 182
Ziff-Davis Inc.'s Debt................................................... 185
Certain United States Tax Consequences................................... 188
Validity of ZDNet Stock.................................................. 192
Experts.................................................................. 192
Where You Can Find More Information...................................... 192
Index of Certain Terms................................................... 194
Illustration of Certain Terms............................................ I-1
Index to Financial Statements............................................ F-1
Underwriting............................................................. U-1
</TABLE>

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

. Shares

Ziff-Davis Inc.-- ZDNet

Common Stock

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

[LOGO]

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

Joint Global Coordinators and Joint Book-Running Managers

Goldman, Sachs & Co.
Donaldson, Lufkin & Jenrette

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

Hambrecht & Quist

Representatives of the Underwriters

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution

The following is a statement of the estimated expenses, other than
underwriting discounts and commissions, to be incurred in connection with the
distribution of the securities registered under this Registration Statement.

<TABLE>
<CAPTION>
Amount to be paid
-----------------
<S> <C>
Securities and Exchange Commission registration fee... $36,140
NASD fees and expenses................................ 12,000
Legal fees and expenses............................... .
Fees and expenses of qualification under state
securities laws (including legal fees)............... .
NYSE listing fees and expenses........................ .
Accounting fees and expenses.......................... .
Printing and engraving fees........................... .
Registrar and transfer agent's fees................... .
Miscellaneous......................................... .
-------
Total................................................. $ .
=======
</TABLE>

Item 14. Indemnification of Directors and Officers

Section 145 of the Delaware General Corporation Law provides that a
corporation may indemnify directors and officers as well as other employees and
individuals against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with any threatened, pending or completed actions, suits or
proceedings in which such person is made a party by reason of such person being
or having been a director, officer, employee or agent of the Registrant. The
statute provides that the indemnification is not exclusive of other rights to
which those seeking indemnification may be entitled under any by-law,
agreement, vote of stockholders or disinterested directors or otherwise.
Section 6.4 of the Registrant's By-laws provides for indemnification by the
Registrant of its directors, officers and employees to the fullest extent
permitted by the Delaware General Corporation Law. In addition to the
protection available under the Registrant's Amended and Restated Certificate of
Incorporation, By-laws and insurance policies, the Registrant has entered into
agreements with its outside directors to indemnify them to the fullest extent
permitted by law against losses arising from any claim against them by reason
of being or having been a director.

Section 102(b)(7) of the Delaware General Corporation Law permits a
corporation to provide in its certificate of incorporation that a director of
the corporation shall not be personally liable to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (1) for any breach of the director's duty of loyalty to
the corporation or its stockholders, (2) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(3) for payments of unlawful dividends or unlawful stock repurchases or
redemptions, or (4) for any transaction from which the director derived an
improper personal benefit. Ziff-Davis Inc.'s Certificate of Incorporation
provides for such limitation of liability.

Reference is also made to Section . of the Underwriting Agreement filed as
Exhibit 1.1 to the Registration Statement for information concerning the
Underwriters' obligation to indemnify the Registrant and its officers and
directors in certain circumstances.

II-1
<PAGE>

Item 15. Recent Sales of Unregistered Securities

On December 29, 1998, SOFTBANK Kingston Inc., an affiliate of the Registrant,
sold 30,000 shares of the Registrant's common stock to Donaldson, Lufkin &
Jenrette Securities Corporation, a Delaware corporation ("DLJ"), for $11.00 per
share pursuant to an exemption from registration under Section 4(1 1/2) of the
Securities Act of 1933, as amended.

DLJ is an "accredited investor" within the meaning of Rule 501 of the
Securities Act, and by reason of its business and financial experience DLJ has
such knowledge, sophistication and experience in business and financial matters
that it is capable of evaluating the merits and risks of an investment in the
shares and is able to bear the economic risk of such investment. DLJ is
purchasing the shares for its own account for investment purposes and not with
a view to distribution. DLJ will not offer, sell or deliver at any time,
directly or indirectly, the shares unless the shares are offered and sold under
the applicable exemptions of the Securities Act.

On February 5, 1999 Vulcan Ventures, Inc., a Washington corporation, entered
into an agreement with the Registrant to purchase approximately three million
shares of the Registrant's common stock for $50 million pursuant to an
exemption from registration under Regulation D of the Securities Act. We expect
the purchase of common stock to close in the first quarter of 1999, subject to
the expiration or early termination of the waiting period under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended.

Vulcan is a sophisticated investor capable of evaluating the merits and risks
of the purchase of the shares. Vulcan is purchasing the shares for its own
account as principal, for investment and not with a view to the resale or
distribution of all or any part thereof. Vulcan recognizes that the shares
being purchased have not been registered under applicable Federal or State
securities laws, and that such shares are being offered and sold in reliance
upon the exemptions from registration provided in the Securities Act and
applicable exemptions under State securities laws. Vulcan is an accredited
investor (as that term is defined in Regulation D under the Securities Act) and
has the economic ability to maintain its investment in such shares for an
indefinite period of time.

Item 16. Exhibits and Financial Statement Schedules

(a) Exhibits

<TABLE>
<C> <S>
1.1 Underwriting Agreement.**
3.1 Amended and Restated Certificate of Incorporation of Ziff-Davis Inc.
(incorporated by reference to the exhibit in the Company's Registration Statement
on Form S-1, File No.
333-43493).
3.2 Form of Amended and Restated Certificate of Incorporation of Ziff-Davis Inc.
3.3 By-laws of Ziff-Davis Inc. (incorporated by reference to the exhibit in the
Company's Registration Statement on Form S-1, File No. 333-43493).
4.1 Specimen of certificate representing Ziff-Davis Inc.'s ZD Stock, par value $.01
per share (incorporated by reference to Ziff-Davis Inc.'s Registration Statement
on Form S-1, File No. 333-46493).
</TABLE>

II-2
<PAGE>

<TABLE>
<S> <C>
4.2 Specimen of certificate representing Ziff-Davis Inc.'s ZDNet Stock, par value
$.01 per share.**
5.1 Opinion of Sullivan & Cromwell, counsel to Ziff-Davis Inc.**
10.1 1998 Incentive Compensation Plan.**
10.2 1998 Employee Stock Purchase Plan.**
10.3 1998 Non-Employee Directors Stock Option Plan.**
10.4 Undertaking, dated as of April 1, 1998, between SOFTBANK Corp. and ZD Inc.
(incorporated by reference to the exhibit in Ziff-Davis Inc.'s Registration
Statement on Form S-1, File No. 333-43493).
10.5 License and Services Agreement, dated as of July 28, 1997, between Ziff-Davis
Inc., ZDTV LLC, ZD Television Productions, Inc., MAC Holdings (America) Inc. and
MAC Inc. (incorporated by reference to the exhibit in Ziff-Davis Inc.'s
Registration Statement on Form S-1, File No. 333-43493).
10.6 Master License Agreement, dated as of April 1, 1998, between Ziff-Davis Inc. and
SOFTBANK Corp. (incorporated by reference to the exhibit in Ziff-Davis Inc.'s
Registration Statement on Form S-1, File No. 333-43493).
10.7 License Agreement, dated as of July 1, 1997, between MAC Inc. and Ziff-Davis Inc.
and SOFTBANK Corp. (incorporated by reference to the exhibit in Ziff-Davis Inc.'s
Registration Statement on Form S-1, File No. 333-43493).
10.8 Agreement to Produce, dated April 1, 1998, between ZD COMDEX and Forums Inc. and
SOFTBANK Corp. (incorporated by reference to the exhibit in Ziff-Davis Inc.'s
Registration Statement on Form S-1, File No. 333-43493).
10.9 Trademark License Agreement, dated as of April 1, 1998, between ZD COMDEX and
Forums Inc. and SOFTBANK Forums KK (incorporated by reference to the exhibit in
Ziff-Davis Inc.'s Registration Statement on Form S-1, File No. 333-43493).
10.10 Technical Assistance Agreement, dated as of April 1, 1998, between ZD COMDEX and
Forums Inc. and SOFTBANK Forums KK (incorporated by reference to the exhibit in
Ziff-Davis Inc.'s Registration Statement on Form S-1, File No. 333-43493).
10.11 Registration Rights Agreement, dated as of April 1, 1998, between ZD Inc. and
SOFTBANK Holdings Inc. (incorporated by reference to the exhibit in Ziff-Davis
Inc.'s Registration Statement on Form S-1, File No. 333-43493).
10.12 Credit Agreement, dated as of March 27, 1996 between SOFTBANK Holdings Inc., the
Guarantors listed therein, The Bank of New York and Morgan Stanley Senior
Funding, Inc., as amended March 9, 1998 (incorporated by reference to the exhibit
in Ziff-Davis Inc.'s Registration Statement on Form S-1, File No. 333-43493).
10.13 Secured Guaranteed Credit Agreement, dated as of May 4, 1998, among Ziff-Davis
Inc., the Banks listed therein, Morgan Stanley Senior Funding, Inc., as
Syndication Agent, the Chase Manhattan Bank and DLJ Capital Funding, Inc., as Co-
Documentation Agents, (incorporated by reference to the exhibit in Ziff-Davis
Inc.'s Registration Statement on Form S-1, File No. 333-49441).
10.14 Amendment No. 1 and Waiver to Secured Guaranteed Credit Agreement, dated as of
May 28, 1998, among Ziff-Davis Inc., the Banks listed therein and The Bank of New
York, as Administrative Agent.
10.15 Amendment No. 2 to Secured Guaranteed Credit Agreement, dated as of June 8, 1998,
among Ziff-Davis Inc., the Banks listed therein and The Bank of New York, as
Administrative Agent.
10.16 Amendment No. 3 to Secured Credit Agreement, dated as of December 30, 1998, among
Ziff-Davis Inc., the Banks listed therein and The Bank of New York, as
Administrative Agent.
</TABLE>

II-3
<PAGE>

<TABLE>
<S> <C>
10.17 Lease of Ziff-Davis Inc. headquarters at 28 East 28th Street, New York, New York
(incorporated by reference to the exhibit in Ziff-Davis Inc.'s Registration
Statement on Form S-1, File No. 333-43493).
10.18 Lease Agreement, dated as of May 4, 1998, between Ziff-Davis Inc., ZD Inc., ZD
COMDEX and Forums Inc. and Kingston Technology Company (incorporated by reference
to the exhibit in Ziff-Davis Inc.'s Registration Statement on Form S-1, File No.
333-43493).
10.19 1998 Non-Employee Directors Stock Option Plan Agreement (incorporated by
reference to the exhibit in Ziff-Davis Inc.'s Registration Statement on Form S-1,
File No. 333-43493).
10.20 Assignment, dated as of May 4, 1998, between Kingston Technology Company and
Ziff-Davis Inc. (incorporated by reference to the exhibit in Ziff-Davis Inc.'s
Registration Statement on Form S-1, File No. 333-43493).
10.21 Employment Agreement, dated as of April 1, 1998, between ZD Inc. and Eric Hippeau
(incorporated by reference to the exhibit in Ziff-Davis Inc.'s Registration
Statement on Form S-1, File No. 333-43493).
10.22 Employment Agreement, dated as of April 1, 1998, between ZD COMDEX and Forums
Inc. and Jason E. Chudnofsky (incorporated by reference to the exhibit in Ziff-
Davis Inc.'s Registration Statement on Form S-1, File No. 333-43493).
10.23 Employment Agreement, dated as of April 1, 1998, between Ziff-Davis Inc. and
Terri S. Holbrooke.**
10.24 Employment Agreement, dated as of April 1, 1998, between Ziff-Davis Inc. and
Timothy C. O'Brien.**
10.25 Employment Agreement, dated as of November 6, 1998, between Ziff-Davis Inc. and
Michael S. Perlis.**
10.26 Stock Purchase Agreement, dated as of February 5, 1999, by and between Ziff-Davis
Inc. and Vulcan Ventures, Inc.**
21.1 List of subsidiaries of Ziff-Davis Inc.**
23.1 Consent of PricewaterhouseCoopers LLP.
23.2 Consent of PricewaterhouseCoopers LLP.
23.3 Consent of Sullivan & Cromwell (included in Exhibit 5 above).**
24.1 Power of Attorney (included in signature page hereto).*
27.1 Financial Data Schedule.**
</TABLE>
- --------

* Previously filed.

** To be filed by amendment.

Item 17. Undertakings

(a) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described under "Item 14, Indemnification
of Directors and Officers" above, or otherwise, the registrant has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.

II-4
<PAGE>

(b) The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

II-5
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, New York on
the 8th day of February, 1999.

ZIFF-DAVIS INC.

By: /s/ Eric Hippeau*
----------------------------------
Name:Eric Hippeau
Title: Chairman, Chief Executive
Officer

Pursuant to the requirements of the Securities Act of 1933, this Amendment to
the Registration Statement has been signed by the following persons in the
capacities indicated on February 8, 1999:

<TABLE>
<CAPTION>
Name Title
---- -----

<S> <C>
/s/ Eric Hippeau* Chairman, Chief Executive Officer, Director
______________________________________ (Principal Executive Officer)
Eric Hippeau

/s/ Timothy C. O'Brien* Chief Financial Officer, Director
______________________________________ (Principal Financial Officer)
Timothy C. O'Brien

/s/ Mark D. Moyer* Controller (Principal Accounting Officer)
______________________________________
Mark D. Moyer

/s/ Masayoshi Son* Director
______________________________________
Masayoshi Son

/s/ Yoshitaka Kitao* Director
______________________________________
Yoshitaka Kitao

/s/ Ronald Fisher* Director
______________________________________
Ronald D. Fisher

/s/ Jason E. Chudnofsky* Director
______________________________________
Jason E. Chudnofsky
</TABLE>

II-6
<PAGE>

<TABLE>
<CAPTION>
Name Title
---- -----

<S> <C>
/s/ Jonathan D. Lazarus* Director
______________________________________
Jonathan D. Lazarus

/s/ Jerry Yang* Director
______________________________________
Jerry Yang
Director
______________________________________
Daniel L. Rosensweig

</TABLE>

*By: /s/ J. Malcolm Morris
------------------------------

J. Malcolm Morris

Attorney-in-fact

II-7
<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
Page No.
--------
<C> <S> <C>
1.1 Underwriting Agreement.**
3.1 Amended and Restated Certificate of Incorporation of Ziff-
Davis Inc. (incorporated by reference to the exhibit in the
Company's Registration Statement on Form S-1, File No.
333-43493).
3.2 Form of Amended and Restated Certificate of Incorporation of
Ziff-Davis Inc.
3.3 By-laws of Ziff-Davis Inc. (incorporated by reference to the
exhibit in the Company's Registration Statement on Form S-1,
File No. 333-43493).
4.1 Specimen of certificate representing Ziff-Davis Inc.'s ZD
Stock, par value $.01 per share (incorporated by reference
to Ziff-Davis Inc.'s Registration Statement on Form S-1,
File No. 333-46493).
4.2 Specimen of certificate representing Ziff-Davis Inc.'s ZDNet
Stock, par value $.01 per share.**
5.1 Opinion of Sullivan & Cromwell, counsel to Ziff-Davis Inc.**
10.1 1998 Incentive Compensation Plan.**
10.2 1998 Employee Stock Purchase Plan.**
10.3 1998 Non-Employee Directors Stock Option Plan.**
10.4 Undertaking, dated as of April 1, 1998, between SOFTBANK
Corp. and ZD Inc.(incorporated by reference to the exhibit
in Ziff-Davis Inc.'s Registration Statement on Form S-1,
File No. 333-43493).
10.5 License and Services Agreement, dated as of July 28, 1997,
between Ziff-Davis Inc., ZDTV LLC, ZD Television
Productions, Inc., MAC Holdings (America) Inc. and MAC Inc.
(incorporated by reference to the exhibit in Ziff-Davis
Inc.'s Registration Statement on Form S-1, File No. 333-
43493).
10.6 Master License Agreement, dated as of April 1, 1998, between
Ziff-Davis Inc. and SOFTBANK Corp. (incorporated by
reference to the exhibit in Ziff-Davis Inc.'s Registration
Statement on Form S-1, File No. 333-43493).
10.7 License Agreement, dated as of July 1, 1997, between MAC
Inc. and Ziff-Davis Inc. and SOFTBANK Corp. (incorporated by
reference to the exhibit in Ziff-Davis Inc.'s Registration
Statement on Form S-1, File No. 333-43493).
10.8 Agreement to Produce, dated April 1, 1998, between ZD COMDEX
and Forums Inc. and SOFTBANK Corp. (incorporated by
reference to the exhibit in Ziff-Davis Inc.'s Registration
Statement on Form S-1, File No. 333-43493).
10.9 Trademark License Agreement, dated as of April 1, 1998,
between ZD COMDEX and Forums Inc. and SOFTBANK Forums KK
(incorporated by reference to the exhibit in
Ziff-Davis Inc.'s Registration Statement on Form S-1, File
No. 333-43493).
10.10 Technical Assistance Agreement, dated as of April 1, 1998,
between ZD COMDEX and Forums Inc. and SOFTBANK Forums KK
(incorporated by reference to the exhibit in
Ziff-Davis Inc.'s Registration Statement on Form S-1, File
No. 333-43493).
10.11 Registration Rights Agreement, dated as of April 1, 1998,
between ZD Inc. and SOFTBANK Holdings Inc. (incorporated by
reference to the exhibit in Ziff-Davis Inc.'s Registration
Statement on Form S-1, File No. 333-43493).
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
Page No.
--------
<C> <S> <C>
10.12 Credit Agreement, dated as of March 27, 1996 between
SOFTBANK Holdings Inc., the Guarantors listed therein, The
Bank of New York and Morgan Stanley Senior Funding, Inc., as
amended March 9, 1998 (incorporated by reference to the
exhibit in Ziff-Davis Inc.'s Registration Statement on
Form S-1, File No. 333-43493).
10.13 Secured Guaranteed Credit Agreement, dated as of May 4,
1998, among Ziff-Davis Inc., the Banks listed therein,
Morgan Stanley Senior Funding, Inc., as Syndication Agent,
the Chase Manhattan Bank and DLJ Capital Funding, Inc., as
Co-Documentation Agents, (incorporated by reference to the
exhibit in Ziff-Davis Inc.'s Registration Statement on Form
S-1, File No. 333-49441).
10.14 Amendment No. 1 and Waiver to Secured Guaranteed Credit
Agreement, dated as of May 28, 1998, among Ziff-Davis Inc.,
the Banks listed therein and The Bank of New York, as
Administrative Agent.
10.15 Amendment No. 2 to Secured Guaranteed Credit Agreement,
dated as of June 8, 1998, among Ziff-Davis Inc., the Banks
listed therein and The Bank of New York, as Administrative
Agent.
10.16 Amendment No. 3 to Secured Credit Agreement, dated as of
December 30, 1998, among Ziff-Davis Inc., the Banks listed
therein and The Bank of New York, as Administrative Agent.
10.17 Lease of Ziff-Davis Inc. headquarters at 28 East 28th
Street, New York, New York (incorporated by reference to the
exhibit in Ziff-Davis Inc.'s Registration Statement on Form
S-1, File No. 333-43493).
10.18 Lease Agreement, dated as of May 4, 1998, between Ziff-Davis
Inc., ZD Inc., ZD COMDEX and Forums Inc. and Kingston
Technology Company (incorporated by reference to the exhibit
in Ziff-Davis Inc.'s Registration Statement on Form S-1,
File No. 333-43493).
10.19 1998 Non-Employee Directors Stock Option Plan Agreement
(incorporated by reference to the exhibit in Ziff-Davis
Inc.'s Registration Statement on Form S-1, File No. 333-
43493).
10.20 Assignment, dated as of May 4, 1998, between Kingston
Technology Company and
Ziff-Davis Inc. (incorporated by reference to the exhibit in
Ziff-Davis Inc.'s Registration Statement on Form S-1,
File No. 333-43493).
10.21 Employment Agreement, dated as of April 1, 1998, between ZD
Inc. and Eric Hippeau (incorporated by reference to the
exhibit in Ziff-Davis Inc.'s Registration Statement on Form
S-1, File No. 333-43493).
10.22 Employment Agreement, dated as of April 1, 1998, between ZD
COMDEX and Forums Inc. and Jason E. Chudnofsky (incorporated
by reference to the exhibit in Ziff-Davis Inc.'s
Registration Statement on Form S-1, File No. 333-43493).
10.23 Employment Agreement, dated as of April 1, 1998, between
Ziff-Davis Inc. and Terri S. Holbrooke.**
10.24 Employment Agreement, dated as of April 1, 1998, between
Ziff-Davis Inc. and Timothy C. O'Brien.**
10.25 Employment Agreement, dated as of November 6, 1998, between
Ziff-Davis Inc. and Michael S. Perlis.**
10.26 Stock Purchase Agreement, dated as of February 5, 1999, by
and between Ziff-Davis Inc. and Vulcan Ventures, Inc.**
21.1 List of subsidiaries of Ziff-Davis Inc.**
23.1 Consent of PricewaterhouseCoopers LLP.
23.2 Consent of PricewaterhouseCoopers LLP.
23.3 Consent of Sullivan & Cromwell (included in Exhibit 5
above).**
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
Page No.
--------
<C> <S> <C>
24.1 Power of Attorney (included in signature page hereto).*
27.1 Financial Data Schedule.**
</TABLE>
- --------

* Previously filed.

** To be filed by amendment.

<PAGE>

Exhibit 3.2

AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

ZIFF-DAVIS INC.

(Adopted in accordance with Sections 242 and 245 of the General Corporation Law
of the State of Delaware)

The undersigned, a duly authorized officer of Ziff-Davis Inc. (the
"Corporation"), hereby certifies as follows:

FIRST. The name under which the Corporation was originally incorporated was
ZD Inc., and the date of filing of its original certificate of incorporation
was February 4, 1998.

SECOND. This Amended and Restated Certificate of Incorporation has been duly
adopted in accordance with Sections 242 and 245 of the General Corporation Law
of the State of Delaware.

THIRD. The text of the Corporation's amended and restated certificate of
incorporation is hereby further amended and restated to read in full as
follows:

ARTICLE I

NAME

The name of the Corporation is Ziff-Davis Inc.

ARTICLE II

REGISTERED OFFICE AND AGENT

The address of the Corporation's registered office in the State of Delaware
is Corporation Trust Center, 1209 Orange Street in the City of Wilmington,
County of New Castle, Delaware 19801. The name of its registered agent at such
address is The Corporation Trust Company.

ARTICLE III

PURPOSES

The purposes of the Corporation are to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of
Delaware.

ARTICLE IV

CAPITAL STOCK

A. Authorized Shares.

The total number of shares of all classes of stock which the Corporation
shall have authority to issue is 210 million shares of which 200 million shares
shall be designated as Common Stock, par value $.01 per share ("Common Stock"),
and 10 million shares shall be designated as Preferred Stock, par value $.01
per share ("Preferred Stock").

1
<PAGE>

B. Common Stock.

1. Issuance of Common Stock in Series; Designation; Re-classification

The Corporation shall have the authority to issue shares of Common Stock in
two series. One series of Common Stock shall be designated as Ziff-Davis Inc.--
ZD Common Stock ("ZD Stock"). The second series of Common Stock shall be
designated as Ziff-Davis Inc.--ZDNet Common Stock ("ZDNet Stock"). When the
filing of this Amended and Restated Certificate of Incorporation becomes
effective, each share of Common Stock outstanding immediately prior thereto
shall thereupon automatically be re-classified as one share of ZD Stock (and
outstanding certificates that had theretofore represented shares of Common
Stock shall thereupon represent an equivalent number of shares of ZD Stock
despite the absence of any indication thereon to that effect).

The total number of shares of ZD Stock which the Corporation shall have the
authority to issue shall initially be 120 million, and the total number of
shares of ZDNet Stock which the Corporation shall have the authority to issue
shall initially be 80 million. The Board of Directors shall have the authority
to increase or decrease from time to time the total number of shares of Common
Stock of either series which the Corporation shall have the authority to issue,
but not above the number which, when added to the total number of shares of the
other series of Common Stock that the Corporation would have the authority to
issue, would exceed the total number of shares of Common Stock that the
Corporation has the authority to issue, and not below the number of shares of
such series then outstanding.

2. Dividends.

(a) Dividends. Subject to the preferences and other terms of any outstanding
series of Preferred Stock, the holders of either series of Common Stock shall
be entitled to receive dividends on their shares of Common Stock if, as and
when declared by the Board of Directors out of legally available funds, but (i)
the aggregate amounts paid as dividends on ZD Stock on any day may not exceed
the Available Dividend Amount for ZD on that day and (ii) the aggregate amounts
paid as dividends on ZDNet Stock on any day, together with the aggregate
amounts that are re-allocated to ZD as a result of such dividends as required
pursuant to clause (ii) in the proviso to the definition of ZD below, may not
exceed the Available Dividend Amount for ZDNet on that day.

(b) Discrimination Between or Among Series of Common Stock. Subject to
paragraph (a) of this Section 2 and subject to the preferences and other terms
of any outstanding series of Preferred Stock, the Corporation shall have the
authority to declare and pay dividends on both, one or neither series of Common
Stock in equal or unequal amounts, notwithstanding the performance of either
Group, the amount of assets available for dividends on either series of Common
Stock, the amount of prior dividends paid on either series of Common Stock, the
respective voting rights of each series of Common Stock or any other factor.

3. Mandatory Dividend, Redemption or Exchange on Disposition of All or
Substantially All of the Assets of a Group; Exchange of One Series of Common
Stock for the Other Series or for Stock of a Subsidiary at the Corporation's
Option.

(a) Mandatory Dividend, Redemption or Exchange. (i) In the event of a
Disposition of All or Substantially All of the Assets of a Group (other than an
Exempt Disposition), the Corporation shall, on or prior to the 85th Trading Day
after the consummation of such Disposition, either:

(x) declare and pay a dividend to holders of the series of Common Stock
that relates to that Group (in cash, securities (other than Common Stock)
or other property, or a combination thereof), subject to the limitations on
dividends set forth under Section 2 of this Article IV(B), in an amount
having a Fair Value equal to their Proportionate Interest in the Net
Proceeds of such Disposition;

(y) redeem from holders of the series of Common Stock that relates to
that Group, for cash, securities (other than Common Stock) or other
property (or a combination thereof) in an amount having a

2
<PAGE>

Fair Value equal to their Proportionate Interest in the Net Proceeds of
such Disposition, all of the outstanding shares of the relevant series of
Common Stock (or, if such Group continues after such Disposition to own any
material assets other than the proceeds of such Disposition, a number of
shares of such series of Common Stock (rounded, if necessary, to the
nearest whole number) having an aggregate average Market Value, during the
20 consecutive Trading Day period beginning on (and including) the 16th
Trading Day immediately following the date on which the Disposition is
consummated, equal to such Fair Value); or

(z) issue, in exchange for all of the outstanding shares of the series of
Common Stock that relates to that Group, a number of shares of the series
of Common Stock that does not relate to that Group (rounded, if necessary,
to the nearest whole number) having an aggregate value equal to 110% of the
aggregate value of all of the outstanding shares of the series of Common
Stock that relates to that Group (where in each case value is based on the
average Market Value of a share of the relevant series of Common Stock
during the 20 consecutive Trading Day period beginning on (and including)
the 16th Trading Day immediately following the date on which the
Disposition is consummated).

(ii) At any time within one year after completing any dividend or partial
redemption pursuant to (x) or (y) of the preceding sentence, the Corporation
may issue, in exchange for all of the remaining outstanding shares of the
series of Common Stock that relates to the Group that consummated the
applicable Disposition, a number of shares of the series of Common Stock that
does not relate to that Group (rounded, if necessary, to the nearest whole
number) having an aggregate value equal to 110% of the aggregate value of all
of the outstanding shares of the series of Common Stock that relates to that
Group (where in each case value is based on the average Market Value of a share
of the relevant series of Common Stock during the 20 consecutive Trading Day
period ending on (and including) the 5th Trading Day immediately preceding the
date on which the Corporation mails the notice of exchange to holders of the
relevant series).

(iii) For purposes of this Section 3, if a Group consummates a Disposition in
a series of related transactions, such Disposition shall not be deemed to have
been completed until consummation of the last of such transactions.

(b) Optional Exchange of One Series of Common Stock for the Other Series. (i)
The Corporation may, at any time before ZDNet Stock exceeds the 65% of Total
Market Capitalization Trigger, issue, in exchange for all of the outstanding
shares of ZDNet Stock, a number of shares of ZD Stock (rounded, if necessary,
to the nearest whole number) having an aggregate value equal to the percentage
of the aggregate value of all of the outstanding shares of ZDNet Stock (the
"Applicable Percentage") specified for the applicable date of exchange below
(where in each case value is based on the average Market Value of a share of
the relevant series of Common Stock during the 20 consecutive Trading Day
period ending on (and including) the 5th Trading Day immediately preceding the
date on which the Corporation mails the notice of exchange to holders of ZDNet
Stock).

<TABLE>
<CAPTION>
The Applicable Percentage
If the Exchange Date Falls Will be the Percentage Specified
During the Period Indicated Below for Such Period Below
--------------------------------- --------------------------------
<S> <C>
First Quarter............................... 125%
Second Quarter.............................. 124.166667%
Third Quarter............................... 123.333333%
Fourth Quarter.............................. 122.5%
Fifth Quarter............................... 121.666667%
Sixth Quarter............................... 120.833333%
Seventh Quarter............................. 120%
Eighth Quarter.............................. 119.166667%
Ninth Quarter............................... 118.333333%
Tenth Quarter............................... 117.5%
Eleventh Quarter............................ 116.666667%
Twelfth Quarter............................. 115.833333%
After Twelfth Quarter....................... 115%
</TABLE>

3
<PAGE>

For purposes of the foregoing chart, (x) the first "Quarter" is the period from
and including the date of first issuance of shares of ZDNet Stock to but
excluding the third month anniversary of such date (provided that, if the date
of first issuance of shares of ZDNet Stock is the 29th, 30th or 31st day of any
month, the first "Quarter" will be the period from and including such date of
first issuance to but excluding the third month anniversary of the first day of
the month immediately following the month in which such date of first issuance
falls) and (y) each subsequent "Quarter" is the period from and including the
day after the end of the prior Quarter to but excluding the third month
anniversary of such day.

(ii) The Corporation may, at any time after ZDNet Stock exceeds the 65% of
Total Market Capitalization Trigger but before ZDNet Stock falls below the 50%
of Total Market Capitalization Threshold, issue, in exchange for all of the
outstanding shares of ZD Stock, a number of shares of ZDNet Stock (rounded, if
necessary, to the nearest whole number) having an aggregate value equal to 115%
of the aggregate value of all of the outstanding shares of ZD Stock (where in
each case value is based on the average Market Value of a share of the relevant
series of Common Stock during the 20 consecutive Trading Day period ending on
(and including) the 5th Trading Day immediately preceding the date on which the
Corporation mails the notice of exchange to holders of ZD Stock).

(iii) The Corporation may, if ZDNet Stock exceeds the 65% of Total Market
Capitalization Trigger and thereafter falls below the 50% of Total Market
Capitalization Threshold (and regardless of whether ZDNet Stock shall
thereafter remain below the 50% of Total Market Capitalization Threshold or the
65% of Total Market Capitalization Trigger), issue, in exchange for all of the
outstanding shares of either series of Common Stock (the "Series of Common
Stock Being Retired"), a number of shares of the other series of Common Stock
(rounded, if necessary, to the nearest whole number) having an aggregate value
equal to the aggregate value of all of the outstanding shares of the Series of
Common Stock Being Retired (where in each case value is based on the average
Market Value of a share of the relevant series of Common Stock during the 20
consecutive Trading Day period ending on (and including) the 5th Trading Day
immediately preceding the date on which the Corporation mails the notice of
exchange to holders of the Series of Common Stock Being Retired).

(iv) ZDNet Stock will exceed the "65% of Total Market Capitalization Trigger"
if the Market Capitalization of the outstanding ZDNet Stock exceeds 65% of the
Total Market Capitalization of both series of Common Stock for 30 Trading Days
during any 60 consecutive Trading Day period. Thereafter, ZDNet Stock will fall
below the "50% of Total Market Capitalization Threshold" if, after exceeding
the 65% of Total Market Capitalization Trigger, the Market Capitalization of
the outstanding ZDNet Stock falls below 50% of the total Market Capitalization
of both series of Common Stock for 30 Trading Days during any 60 consecutive
Trading Day period.

(v) If the Corporation has the right, on the date on which it mails a notice
of exchange as contemplated above, to issue shares of ZD Stock or ZDNet Stock
in exchange for outstanding shares of the other series of Common Stock as
described above, the Corporation will not lose that right if ZDNet Stock
subsequently exceeds the 65% of Total Market Capitalization Trigger or falls
below the 50% of Total Market Capitalization Threshold.

(c) Optional Exchange for Stock of a Subsidiary. (i) At any time at which all
of the assets and liabilities of a Group (and no other assets or liabilities of
the Corporation or any subsidiary thereof) are held directly or indirectly by
one or more wholly owned subsidiaries of the Corporation (the "Group
Subsidiaries"), the Corporation may deliver to holders of the relevant series
of Common Stock their Proportionate Interest in all of the outstanding shares
of the common stock of the Group Subsidiaries in exchange for all of the
outstanding shares of such series of Common Stock.

(ii) If the series of Common Stock being exchanged pursuant to Section
3(c)(i) above is ZD Stock and the Number of Shares Issuable with Respect to
ZD's Retained Interest in ZDNet is greater than zero, the Corporation shall
also issue a number of shares of ZDNet Stock equal to the then current Number
of Shares

4
<PAGE>

Issuable with Respect to ZD's Retained Interest in ZDNet and deliver those
shares to the holders of ZD Stock or to one of the Group Subsidiaries, at the
option of the Corporation.

(iii) If the series of Common Stock being exchanged pursuant to Section
3(c)(i) above is ZDNet Stock and the Number of Shares Issuable with Respect to
ZD's Retained Interest in ZDNet is greater than zero (so that less than all of
the shares of common stock of the Group Subsidiaries are being delivered to the
holders of ZDNet Stock), the Corporation may retain the remaining shares of
common stock of the Group Subsidiaries or distribute those shares as a dividend
on ZD Stock.

(d) General Dividend, Exchange and Redemption Provisions. (i) If the
Corporation completes a Disposition of All or Substantially All of the Assets
of a Group (other than an Exempt Disposition), the Corporation shall, not more
than the 10 Trading Days after the consummation of such Disposition, issue a
press release specifying (w) the Net Proceeds of such Disposition, (x) the
number of shares of the series of Common Stock related to such Group then
outstanding, (y) the number of shares of such series of Common Stock issuable
upon conversion, exchange or exercise of any convertible or exchangeable
securities, options or warrants and the conversion, exchange or exercise prices
thereof and (z) if the Group is ZDNet, the Number of Shares Issuable with
Respect to ZD's Retained Interest in ZDNet. The Corporation shall, not more
than 30 Trading Days after such consummation, announce by press release which
of the actions specified in Section 3(a)(i) of this Article IV(B) it has
determined to take, and upon making that announcement, that determination will
be irrevocable. In addition, the Corporation shall, not more than 30 Trading
Days after such consummation and not less than 10 Trading Days before the
applicable payment date, redemption date or exchange date, send a notice by
first-class mail, postage prepaid, to holders of the relevant series of Common
Stock at their addresses as they appear on the transfer books of the
Corporation, specifying:

(1) if the Corporation has determined to pay a special dividend, (A) the
record date for such dividend, (B) the payment date of such dividend (which
cannot be more than 85 Trading Days after such consummation) and (C) the
aggregate amount and type of property to be paid in such dividend (and the
approximate per share amount thereof);

(2) if the Corporation has determined to undertake a redemption, (A) the
date of redemption (which cannot be more than 85 Trading Days after such
consummation), (B) the aggregate amount and type of property to be paid as
a redemption price (and the approximate per share amount thereof), (C) if
less than all shares of the relevant series of Common Stock are to be
redeemed, the number of shares to be redeemed and (D) the place or places
where certificates for shares of such series of Common Stock, properly
endorsed or assigned for transfer (unless the Corporation waives such
requirement), should be surrendered in return for delivery of the cash,
securities or other property to be paid by the Corporation in such
redemption; and

(3) if the Corporation has determined to undertake an exchange, (A) the
date of exchange (which cannot be more than 85 Trading Days after such
consummation), (B) the number of shares of the other series of Common Stock
to be issued in exchange for each outstanding share of such series of
Common Stock and (C) the place or places where certificates for shares of
such series of Common Stock, properly endorsed or assigned for transfer
(unless the Corporation waives such requirement), should be surrendered in
return for delivery of the other series of Common Stock to be issued by the
Corporation in such exchange.

(ii) If the Corporation has determined to complete any exchange described in
Section 3(b) or (c) of this Article IV(B), the Corporation shall, not less than
10 Trading Days and not more than 30 Trading Days before the exchange date,
send a notice by first-class mail, postage prepaid, to holders of the relevant
series of Common Stock at their addresses as they appear on the transfer books
of the Corporation, specifying (x) the exchange date and the other terms of the
exchange and (y) the place or places where certificates for shares of such
series of Common Stock, properly endorsed or assigned for transfer (unless the
Corporation waives such requirement), should be surrendered for delivery of the
stock to be issued or delivered by the Corporation in such exchange.

5
<PAGE>

(iii) Neither the failure to mail any notice required by this Section 3(d) to
any particular holder nor any defect therein would affect the sufficiency
thereof with respect to any other holder or the validity of any dividend,
redemption or exchange contemplated hereby.

(iv) If the Corporation is redeeming less than all of the outstanding shares
of a series of Common Stock pursuant to Section 3(a)(i) of this Article IV(B),
the Corporation shall redeem such shares pro rata or by lot or by such other
method as the Board of Directors determines to be equitable.

(v) No holder of shares of a series of Common Stock being exchanged or
redeemed shall be entitled to receive any cash, securities or other property to
be distributed in such exchange or redemption until such holder surrenders
certificates for such shares, properly endorsed or assigned for transfer, at
such place as the Corporation shall specify (unless the Corporation waives such
requirement). As soon as practicable after the Corporation's receipt of
certificates for such shares, the Corporation shall deliver to the person for
whose account such shares were so surrendered, or to the nominee or nominees of
such person, the cash, securities or other property to which such person shall
be entitled, together with any fractional payment referred to below, in each
case without interest. If less than all of the shares of Common Stock
represented by any one certificate is exchanged or redeemed, the Corporation
shall also issue and deliver a new certificate for the shares of such Common
Stock not exchanged or redeemed.

(vi) The Corporation shall not be required to issue or deliver fractional
shares of any capital stock or any other fractional securities to any holder of
Common Stock upon any exchange, redemption, dividend or other distribution
described above. If more than one share of Common Stock shall be held at the
same time by the same holder, the Corporation may aggregate the number of
shares of any capital stock that would be issuable or any other securities that
would be distributable to such holder upon any such exchange, redemption,
dividend or other distribution. If there are fractional shares of any capital
stock or any other fractional securities remaining to be issued or distributed
to any holder, the Corporation shall, if such fractional shares or securities
are not issued or distributed to such holder, pay cash in respect of such
fractional shares or securities in an amount equal to the Fair Value thereof
(without interest).

(vii) From and after the date set for any exchange or redemption contemplated
by this Section 3, all rights of a holder of shares of Common Stock being
exchanged or redeemed shall cease except for the right, upon surrender of the
certificates theretofore representing such shares, to receive the cash,
securities or other property for which such shares were exchanged or redeemed,
together with any fractional payment as provided above, in each case without
interest (and, if such holder was a holder of record as of the close of
business on the record date for a dividend not yet paid, the right to receive
such dividend). A holder of shares of Common Stock being exchanged shall not be
entitled to receive any dividend or other distribution with respect to shares
of the other series of Common Stock until after certificates theretofore
representing the shares being exchanged are surrendered as contemplated above.
Upon such surrender, the Corporation shall pay to the holder the amount of any
dividends or other distributions (without interest) which theretofore became
payable with respect to a record date occurring after the exchange, but which
were not paid by reason of the foregoing, with respect to the number of whole
shares of the other series of Common Stock represented by the certificate or
certificates issued upon such surrender. From and after the date set for any
exchange, the Corporation shall, however, be entitled to treat the certificates
for shares of a series of Common Stock being exchanged that were not yet
surrendered for exchange as evidencing the ownership of the number of whole
shares of the other series of Common Stock for which the shares of such Common
Stock should have been exchanged, notwithstanding the failure to surrender such
certificates.

(viii) The Corporation shall pay any and all documentary, stamp or similar
issue or transfer taxes that might be payable in respect of the issue or
delivery of any shares of capital stock and/or other securities on any exchange
or redemption contemplated by this Section 3; provided, however, that the
Corporation shall not be required to pay any tax that might be payable in
respect of any transfer involved in the issue or delivery of any shares of
capital stock and/or other securities in a name other than that in which the
shares so exchanged or

6
<PAGE>

redeemed were registered, and no such issue or delivery will be made unless and
until the person requesting such issue pays to the Corporation the amount of
any such tax, or establishes to the satisfaction of the Corporation that such
tax has been paid.

(ix) The Corporation may, subject to applicable law, establish such other
rules, requirements and procedures to facilitate any dividend, redemption or
exchange contemplated by this Section 3 as the Board of Directors may determine
to be appropriate under the circumstances.

4. Voting Rights.

At every meeting of stockholders, the holders of ZD Stock and the holders of
ZDNet Stock shall vote together as a single class on all matters as to which
common stockholders generally are entitled to vote, unless a separate vote is
required by applicable law. On all such matters for which no separate vote is
required, (a) holders of ZD Stock shall be entitled to one vote per share of ZD
Stock held and (b) holders of ZDNet Stock shall be entitled to a number of
votes per share of ZDNet Stock held (calculated to the nearest five decimal
places) equal to the average Market Value of a share of ZDNet Stock divided by
the average Market Value of a share of ZD Stock during the 20 consecutive
Trading Day period ending on (and including) the 5th Trading Day before the
applicable record date.

5. Liquidation Rights.

In the event of any voluntary or involuntary liquidation, dissolution or
winding-up of the Corporation, holders of ZD Stock and holders of ZDNet Stock
shall be entitled to receive in respect of shares of ZD Stock and shares of
ZDNet Stock their proportionate interests in the net assets of the Corporation,
if any, remaining for distribution to stockholders (after payment of or
provision for all liabilities, including contingent of the Corporation. Neither
the merger nor consolidation of the Corporation with any other entity, nor a
sale, transfer or lease of all or any part of the assets of the Corporation,
would, alone, be deemed a liquidation, dissolution or winding-up for purposes
of this Section 5.

6. Adjustments to Number of Shares Issuable with Respect to ZD's Retained
Interest in ZDNet.

The Number of Shares Issuable with Respect to ZD's Retained Interest in
ZDNet, as in effect from time to time, shall, automatically without action by
the Board of Directors or any other person, be:

(a) adjusted in proportion to any changes in the number of outstanding
shares of ZDNet Stock caused by subdivisions (by stock split,
reclassification or otherwise) or combinations (by reverse stock split,
reclassification or otherwise) of shares of ZDNet Stock or by dividends or
other distributions of shares of ZDNet Stock on shares of ZDNet Stock (and,
in each such case, rounded, if necessary, to the nearest whole number);

(b) decreased by (i) if the Corporation issues any shares of ZDNet Stock
and the Board of Directors attributes that issuance (and the proceeds
thereof) to ZD, the number of shares of ZDNet Stock so issued, and (ii) if
the Board of Directors re-allocates to ZD any cash or other assets
theretofore allocated to ZDNet in connection with a redemption of shares of
ZDNet Stock (as required pursuant to clause (ii) of the proviso to the
definition of ZD below) or in return for a decrease in the Number of Shares
Issuable with Respect to ZD's Retained Interest in ZDNet, the number
(rounded, if necessary, to the nearest whole number) equal to (x) the
aggregate Fair Value of such cash or other assets divided by (y) the Market
Value of one share of ZDNet Stock as of the date of such re-allocation; and

(c) increased by (i) if the Corporation repurchases any shares of ZDNet
Stock and the Board of Directors attributes that repurchase (and the
consideration therefor) to ZD, the number of shares of ZDNet Stock so
repurchased and (ii) if the Board of Directors re-allocates to ZDNet any
cash or other assets theretofore allocated to ZD in return for an increase
in the Number of Shares Issuable with Respect to ZD's Retained Interest in
ZDNet, the number (rounded, if necessary, to the nearest whole number)
equal to (x) the Fair Value of such cash or other assets divided by (y) the
Market Value of one share of ZDNet Stock as of the date of such re-
allocation.

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<PAGE>

Neither the Corporation nor the Board of Directors shall take any action that
would, as a result of any of the foregoing adjustments, reduce the Number of
Shares Issuable with Respect to ZD's Retained Interest in
ZDNet to below zero. Subject to the preceding sentence, the Board of Directors
may attribute the issuance of any shares of ZDNet Stock (and the proceeds
therefrom) or the repurchase of ZDNet Stock (and the consideration therefor) to
ZD or to ZDNet, as the Board of Directors determines in its sole discretion;
provided, however, that the Board of Directors must attribute to ZD the
issuance of any shares of ZDNet Stock that are issued (1) as a dividend or
other distribution on, or as consideration for the repurchase of, shares of ZD
Stock or (2) as consideration to acquire any assets or satisfy any liabilities
attributed to ZD.

7. Additional Definitions.

As used in this Article IV, the following terms shall have the following
meanings (with terms defined in singular having comparable meaning when used in
the plural and vice versa), unless the context otherwise requires:

"All or Substantially All of the Assets" of either Group means a portion of
such assets that represents at least 80% of the then-current Fair Value of the
assets of such Group.

"Available Dividend Amount" for ZD, on any day on which dividends are paid on
shares of ZD Stock, is the amount that would, immediately prior to the payment
of such dividends, be legally available for the payment of dividends on shares
of ZD's common stock under Delaware law if (a) ZD and ZDNet were each a
separate Delaware corporation, (b) ZD had outstanding (i) a number of shares of
common stock, par value $0.01 per share, equal to the number of shares of ZD
Stock that are then outstanding and (ii) a number of shares of preferred stock,
par value $0.01 per share, equal to the number of shares of Preferred Stock
that have been attributed to ZD and are then outstanding, (c) the assumptions
about ZDNet set forth in the next sentence were true and (d) ZD owned a number
of shares of ZDNet common stock equal to the Number of Shares Issuable with
Respect to ZD's Retained Interest in ZDNet. "Available Dividend Amount" for
ZDNet, on any day on which dividends are paid on shares of ZDNet Stock, is the
amount that would, immediately prior to the payment of such dividends, be
legally available for the payment of dividends on shares of ZDNet's common
stock under Delaware law if ZDNet were a separate Delaware corporation having
outstanding (a) a number of shares of common stock, par value $0.01 per share,
equal to the number of shares of ZDNet Stock that are then outstanding plus the
Number of Shares Issuable with Respect to ZD's Retained Interest in ZDNet and
(b) a number of shares of preferred stock, par value $0.01 per share, equal to
the number of shares of Preferred Stock that have been attributed to ZDNet and
are then outstanding.

"Disposition" means a sale, transfer, assignment or other disposition
(whether by merger, consolidation, sale or otherwise) of All or Substantially
All of the Assets of a Group to one or more persons or entities, in one
transaction or a series of related transactions.

"Effective Date" means the date on which this Amended and Restated
Certificate of Incorporation becomes effective under Delaware law.

"Exempt Disposition" means any of the following:

(a) a Disposition in connection with the liquidation, dissolution or
winding-up of the Corporation and the distribution of assets to
stockholders,

(b) a Disposition to any person or entity controlled by the Corporation
(as determined by the Board of Directors in its sole discretion),

(c) a Disposition by either Group for which the Corporation receives
consideration primarily consisting of equity securities (including, without
limitation, capital stock of any kind, interests in a general or limited
partnership, interests in a limited liability company or debt securities
convertible into or exchangeable for, or options or warrants to acquire,
any of the foregoing, in each case without regard to

8
<PAGE>

the voting power or other management or governance rights associated
therewith) of an entity which is primarily engaged or proposes to engage
primarily in one or more businesses similar or complementary to businesses
conducted by such Group prior to the Disposition, as determined by the
Board of Directors in its sole discretion,

(d) a dividend, out of ZDNet's assets, to holders of ZDNet Stock (and a
re-allocation of a corresponding amount of ZDNet's assets to ZD as required
pursuant to clause (ii) of the proviso to the definition of ZD below),

(e) a dividend, out of ZD's assets, to holders of ZD Stock and

(f) any other Disposition, if (i) at the time of the Disposition there
are no shares of ZD Stock outstanding, (ii) at the time of the Disposition
there are no shares of ZDNet Stock outstanding or (iii) before the 30th
Trading Day following the Disposition the Corporation has mailed a notice
stating that it is exercising its right to exchange all of the outstanding
shares of ZD Stock or ZDNet Stock for newly issued shares of the other
series of Common Stock as contemplated under Section 3(b) of this Article
IV.

"Fair Value" means (a) in the case of cash, the amount thereof, (b) in the
case of capital stock that has been Publicly Traded for a period of at least 15
months, the Market Value thereof and (c) in the case of other assets or
securities, the fair market value thereof as the Board of Directors shall
determine in good faith (which determination shall be conclusive and binding on
all stockholders).

"Group" means ZD or ZDNet.

"Market Capitalization" of either series of Common Stock on any date means
the Market Value of a share of such series on such date times the number of
shares of such series outstanding on such date.

"Market Value" of a share of any class or series of capital stock on any
Trading Day means the average of the high and low reported sales prices regular
way of a share of such class or series on such Trading Day or, in case no such
reported sale takes place on such Trading Day, the average of the reported
closing bid and asked prices regular way of a share of such class or series on
such Trading Day, in either case as reported on the New York Stock Exchange
("NYSE") Composite Tape or, if the shares of such class or series are not
listed or admitted to trading on the NYSE on such Trading Day, on the principal
national securities exchange on which the shares of such class or series are
listed or admitted to trading or, if not listed or admitted to trading on any
national securities exchange on such Trading Day, on The Nasdaq National Market
System of the Nasdaq Stock Market ("Nasdaq NMS") or, if the shares of such
class or series are not listed or admitted to trading on any national
securities exchange or quoted on the Nasdaq NMS on such Trading Day, the
average of the closing bid and asked prices of a share of such class or series
in the over-the-counter market on such Trading Day as furnished by any NYSE
member firm selected from time to time by the Corporation or, if such closing
bid and asked prices are not made available by any such NYSE member firm on
such Trading Day, the fair market value of a share of such class or series as
the Board of Directors shall determine in good faith (which determination shall
be conclusive and binding on all stockholders); provided, that, for purposes of
determining the average Market Value of a share of any class or series of
capital stock for any period, (a) the "Market Value" of a share of any class or
series of capital stock on any day prior to any "ex-dividend" date or any
similar date occurring during such period for any dividend or distribution
(other than any dividend or distribution contemplated by clause (b)(ii) of this
sentence) paid or to be paid with respect to such capital stock shall be
reduced by the Fair Value of the per share amount of such dividend or
distribution and (b) the "Market Value" of a share of any class or series of
capital stock on any day prior to (i) the effective date of any subdivision (by
stock split or otherwise) or combination (by reverse stock split or otherwise)
of outstanding shares of such class or series of capital stock occurring during
such period or (ii) any "ex-dividend" date or any similar date occurring during
such period for any dividend or distribution with respect to such capital stock
to be made in shares of such class or series of capital stock shall be
appropriately adjusted, as determined by the Board of Directors, to reflect
such subdivision, combination, dividend or distribution; and provided further,
if (a) the Corporation repurchases outstanding shares of ZDNet Stock and the
Board of Directors attributes that

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<PAGE>

repurchase (and the consideration therefor) to ZDNet and (b) the Board of
Directors determines to re-allocate to ZD cash or other assets theretofore
allocated to ZDNet in order to avoid a change in the Retained Interest
Percentage, the "Market Value" of a share ZDNet Stock used to compute the
corresponding reduction in the Number of Shares Issuable with Respect to ZD's
Retained Interest in ZDNet will equal the Fair Value of the consideration paid
per share of ZDNet Stock so repurchased; and provided further, if the
Corporation redeems
a portion of the outstanding shares of ZDNet Stock (and the Board of Directors
re-allocates to ZD cash or other assets theretofore allocated to ZDNet in the
manner required by clause (ii) of the proviso to the definition of ZD below),
the "Market Value" of a share ZDNet Stock used to compute the corresponding
reduction in the Number of Shares Issuable with Respect to ZD's Retained
Interest in ZDNet will equal the Fair Value of the consideration paid per share
of ZDNet Stock so redeemed.

"Net Proceeds" of a Disposition of any of the assets of a Group means the
positive amount, if any, remaining from the gross proceeds of such Disposition
after any payment of, or reasonable provision (as determined in good faith by
the Board of Directors, which determination will be conclusive and binding on
all stockholders) for, (a) any taxes payable by the Corporation in respect of
such Disposition, (b) any taxes payable by the Corporation in respect of any
resulting dividend or redemption, (c) any transaction costs, including, without
limitation, any legal, investment banking and accounting fees and expenses and
(d) any liabilities (contingent or otherwise) of, attributed to or related to,
such Group, including, without limitation, any liabilities for deferred taxes
or any indemnity or guarantee obligations which are outstanding or incurred in
connection with the Disposition or otherwise, any liabilities for future
purchase price adjustments and any obligations with respect to outstanding
securities (other than ZDNet Stock) attributed to such Group.

"Number of Shares Issuable with Respect to ZD's Retained Interest in ZDNet"
shall initially be a number the Board of Directors designates prior to the time
the Corporation first issues shares of ZDNet Stock as the number of shares of
ZDNet Stock that could be issued by the Corporation for the account of ZD in
respect of its Retained Interest in ZDNet; provided, however, that such number
as in effect from time to time shall automatically be adjusted as required by
Section 6 of this Article IV(B).

"Proportionate Interest" of holders of ZDNet Stock in the Net Proceeds of a
ZDNet Disposition (or in the outstanding shares of common stock of any
subsidiaries holding ZDNet's assets and liabilities) means the amount of such
Net Proceeds (or the number of such shares) times the number of shares of ZDNet
Stock outstanding divided by the Total Number of Notional ZDNet Shares Deemed
Outstanding. "Proportionate Interest" of holders of ZD Stock in the Net
Proceeds of a ZD Disposition (or in the outstanding shares of common stock of
any subsidiaries holding ZD's assets and liabilities) means the amount of such
Net Proceeds (or the number of such shares).

"Publicly Traded" with respect to any security means (a) registered under
Section 12 of the Securities Exchange Act of 1934, as amended (or any successor
provision of law), and (b) listed for trading on the NYSE (or any other
national securities exchange registered under Section 7 of the Securities
Exchange Act of 1934, as amended (or any successor provision of law)) or listed
on the Nasdaq NMS (or any successor market system).

"Retained Interest Percentage" means the Number of Shares Issuable with
Respect to ZD's Retained Interest in ZDNet divided by the Total Number of
Notional ZDNet Shares Deemed Outstanding.

"Total Number of Notional ZDNet Shares Deemed Outstanding" means the number
of shares of ZDNet Stock outstanding plus the Number of Shares Issuable with
Respect to ZD's Retained Interest in ZDNet.

"Trading Day" means each weekday on which the relevant security (or, if there
are two relevant securities, each relevant security) is traded on the principal
national securities exchange on which it is listed or admitted to trading or on
the Nasdaq NMS or, if such security is not listed or admitted to trading on a
national securities exchange or quoted on the Nasdaq NMS, traded in the
principal over-the-counter market in which it trades.

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<PAGE>

"ZD" means (a) all of the businesses, assets and liabilities of the
Corporation and its subsidiaries, other than the businesses, assets and
liabilities that are part of ZDNet, (b) the rights and obligations of ZD under
any inter-Group debt deemed to be owed to or by ZD (as such rights and
obligations are defined in accordance with policies established from time to
time by the Board of Directors) and (c) a proportionate interest in ZDNet
(after giving effect to any options, Preferred Stock, other securities or debt
issued or incurred by the Corporation and attributed to ZDNet) equal to the
Retained Interest Percentage; provided, however, that:

(i) the Corporation may re-allocate assets from one Group to the other
Group in return for other assets or services rendered by that other Group
in the ordinary course of business or in accordance with policies
established by the Board of Directors from time to time, and

(ii) if the Corporation transfers cash, other assets or securities to
holders of shares of ZDNet Stock as a dividend or other distribution on
shares of ZDNet Stock (other than a dividend or distribution payable in
shares of ZDNet Stock), or as payment in a redemption required by Section
3(a) of this Article IV(B), then the Board of Directors shall re-allocate
from ZDNet to ZD cash or other assets having a Fair Value equal to the
aggregate Fair Value of the cash, other assets or securities so transferred
times a fraction, the numerator of which shall equal the Number of Shares
Issuable with Respect to ZD's Retained Interest in ZDNet on the record date
for such dividend or distribution, or on the date of such redemption, and
the denominator of which shall equal the number of shares of ZDNet Stock
outstanding on such date.

"ZDNet" means (a) the online business division of the Corporation, including
all of the businesses, assets and liabilities of the Corporation and its
subsidiaries that the Board of Directors has, as of the Effective Date,
allocated to ZDNet but excluding any ownership interest in the Corporation's
ZDU and ZDTV businesses, (b) any assets or liabilities acquired or incurred by
the Corporation or any of its subsidiaries after the Effective Date in the
ordinary course of business and attributable to ZDNet, (c) any businesses,
assets or liabilities acquired or incurred by the Corporation or any of its
subsidiaries after the Effective Date that the Board of Directors has
specifically allocated to ZDNet or that the Corporation otherwise allocates to
ZDNet in accordance with policies established from time to time by the Board of
Directors and (d) the rights and obligations of ZDNet under any inter-Group
debt deemed to be owed to or by ZDNet (as such rights and obligations are
defined in accordance with policies established from time to time by the Board
of Directors); provided, however, that:

8. Effectiveness of Sections 2 Through 7 of This Article IV(B).

The terms of Sections 2 through 7, inclusive, of this Article IV(B) shall
apply only when there are shares of both series of Common Stock outstanding.

9. Preferred Stock.

Shares of Preferred Stock may be issued in one or more series from time to
time by the Board of Directors, and the Board of Directors is expressly
authorized to fix by resolution or resolutions the designations

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<PAGE>

and the powers, preferences and rights, and the qualifications, limitations and
restrictions thereof, of the shares of each series of Preferred Stock,
including without limitation the following:

(a) the distinctive serial designation of such series which shall
distinguish it from other series;

(b) the number of shares included in such series;

(c) the dividend rate (or method of determining such rate) payable to the
holders of the shares of such series, any conditions upon which such
dividends shall be paid and the date or dates upon which such dividends
shall be payable;

(d) whether dividends on the shares of such series shall be cumulative
and, in the case of shares of any series having cumulative dividend rights,
the date or dates or method of determining the date or dates from which
dividends on the shares of such series shall be cumulative;

(e) the amount or amounts which shall be payable out of the assets of the
Corporation to the holders of the shares of such series upon voluntary or
involuntary liquidation, dissolution or winding up the Corporation, and the
relative rights of priority, if any, of payment of the shares of such
series;

(f) the price or prices at which, the period or periods within which and
the terms and conditions upon which the shares of such series may be
redeemed, in whole or in part, at the option of the Corporation or at the
option of the holder or holders thereof or upon the happening of a
specified event or events;

(g) the obligation, if any, of the Corporation to purchase or redeem
shares of such series pursuant to a sinking fund or otherwise and the price
or prices at which, the period or periods within which and the terms and
conditions upon which the shares of such series shall be redeemed or
purchased, in whole or in part, pursuant to such obligation;

(h) whether or not the shares of such series shall be convertible or
exchangeable, at any time or times at the option of the holder or holders
thereof or at the option of the Corporation or upon the happening of a
specified event or events, into shares of any other class or classes or any
other series of the same or any other class or classes of stock of the
Corporation, and the price or prices or rate or rates of exchange or
conversion and any adjustments applicable thereto; and

(i) whether or not the holders of the shares of such series shall have
voting rights, in addition to the voting rights provided by law, and if so
the terms of such voting rights.

Subject to the rights of the holders of any series of Preferred Stock, the
number of authorized shares of any class or series of Preferred Stock may be
increased or decreased (but not below the number of shares thereof then
outstanding) by the affirmative vote of the holders of a majority of the
outstanding shares entitled to vote, irrespective of the provisions of Section
242(b)(2) of the General Corporation Law of Delaware or any corresponding
provision hereafter enacted.

10. Determinations by the Board of Directors.

Subject to applicable law, any determinations made by the Board of Directors
in good faith under this Amended and Restated Certificate of Incorporation or
in any certificate of designation filed pursuant hereto, including without
limitation any such determinations with respect to the businesses, assets and
liabilities of either Group, transactions between the Groups or the rights of
holders of any series of Common Stock or Preferred Stock made pursuant to or in
the furtherance hereof or thereof, shall be final and binding on all
stockholders of the Corporation. A record of all formal determinations of the
Board of Directors made as contemplated hereby shall be filed with the records
of the actions of the Board of Directors.

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<PAGE>

ARTICLE V

BY-LAWS

The Board of Directors of the Corporation is expressly authorized to adopt,
amend or repeal by-laws of the Corporation. The by-laws of the Corporation may
also be altered or repealed and new by-laws may be adopted (i) at any annual or
special meeting of stockholders, by the affirmative vote of the holders of not
less than a majority of the voting power of all outstanding shares of capital
stock of the Corporation entitled to vote generally in the election of
directors, considered for purposes hereof as a single class, provided, however,
that any proposed alteration or repeal of, or the adoption of any by-law
inconsistent with, Sections 1.2, 1.11 and 1.12 of Article I of the by-laws,
Sections 2.1 and 2.2 of Article II of the by-laws, or this sentence, by the
stockholders shall require the affirmative vote of the holders of not less than
80% of the voting power of all outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors, considered
for purposes hereof as a single class, or (ii) by the affirmative vote of a
majority of the Board of Directors.

ARTICLE VI

BOARD OF DIRECTORS

The number of directors of the Corporation shall be fixed from time to time
pursuant to the by-laws of the Corporation. Commencing with the first annual
meeting of stockholders, the directors of the Corporation shall be divided into
three classes, as nearly equal in number as reasonably possible, as determined
by the Board of Directors, with the initial term of office of the first class
of such directors ("Class I") to expire at the first annual meeting of
stockholders, the initial term of office of the second class of such directors
("Class II") to expire at the second annual meeting of stockholders and the
initial term of office of the third class of such directors ("Class III") to
expire at the third annual meeting of stockholders thereafter, with each class
of directors to hold office until their successors have been duly elected and
qualified. At each annual meeting of stockholders, directors elected to succeed
the directors whose terms expire at such annual meeting shall be elected to
hold office for a term expiring at the annual meeting of stockholders in the
third year following the year of their election and until their successors have
been duly elected and qualified. Elections of directors need not be by written
ballot except and to the extent provided in the by-laws of the Corporation. In
the event of any increase or decrease in the authorized number of directors,
(a) each director then serving as such shall nonetheless continue as a director
of the class of which he is a member until the expiration of his current term,
or his earlier death, retirement, resignation, or removal, and (b) the newly
created or eliminated directorships resulting from such increase or decrease
shall be apportioned by the Board of Directors among the three classes of
directors so as to maintain such classes as nearly equal in number as
reasonably possible. No director may be removed except for cause, provided a
director who is also an officer of the Corporation shall resign or be removed
upon termination of his or her employment as such officer. This Article VI may
not be amended, modified or repealed except by the affirmative vote of the
holders of not less than 80% of the voting power of all outstanding shares of
capital stock of the Corporation entitled to vote generally in the election of
directors, considered for purposes hereof as a single class.

ARTICLE VII

STOCKHOLDER ACTION

Any action required or permitted to be taken by the stockholders of the
Corporation must be taken at a duly called annual or special meeting of such
holders and may not be taken by any consent in writing by such holders. Except
as otherwise provided for herein or required by law, special meetings of
stockholders of the Corporation for any purpose or purposes may be called only
by the Chairman or the Board of Directors pursuant to a resolution stating the
purpose or purposes thereof, and any power of stockholders to call a special
meeting is specifically denied.

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<PAGE>

ARTICLE VIII

DIRECTOR LIABILITY

A director of the Corporation shall not be liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except to the extent that such exemption from liability or limitation thereof
is not permitted under the Delaware General Corporation Law as currently in
effect or as the same may hereafter be amended. No amendment, modification or
repeal of this Article VIII shall adversely affect any right or protection of a
director that exists at the time of such amendment, modification or repeal.

IN WITNESS WHEREOF, I have signed this certificate on this . day of . 1999.

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

<PAGE>

EXHIBIT 10.14

EXECUTION COPY

AMENDMENT NO. 1

AND WAIVER

SECURED GUARANTEED CREDIT AGREEMENT

THIS AMENDMENT NO. 1 AND WAIVER (the "Amendment and Waiver"), dated as
of May 28, 1998 among Ziff-Davis Inc. (the "Borrower"), the banks listed on the
signature pages hereof (each a "Bank") and The Bank of New York, as
Administrative Agent (the "Administrative Agent"),

WITNESSETH:

WHEREAS, the Borrower, the Banks and the Administrative Agent are
parties to the Secured Guaranteed Credit Agreement dated as of May 4, 1998 (the
"Credit Agreement") (capitalized terms used and not otherwise defined herein
shall have the meanings ascribed thereto in the Credit Agreement); and

WHEREAS, the Borrower has requested, and the Banks and the
Administrative Agent have agreed to, the waiver more fully set forth herein; and

WHEREAS, the Borrower, the Banks and the Administrative Agent wish to
amend the Credit Agreement as more fully set forth herein; and

WHEREAS, such waiver and amendment shall be of benefit, either
directly or indirectly, to the Borrower;

NOW, THEREFORE, in consideration of the covenants, conditions and
agreements hereinafter set forth, and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties hereto
hereby agree as follows:

1. Amendments. Upon and after the Amendment Effective Date (as
----------
defined in Section 4 hereof):

(a) Section 10.01(b)(iv) of the Credit Agreement shall be
amended by replacing the phrase "Notice of Assignment" appearing therein with
the phrase "Assignment and Assumption Agreement";

(b) Section 10.10(a)(ii) of the Credit Agreement shall be
amended by restating clause (C) thereof as follows:
<PAGE>

"(C) such assignment shall have been effected pursuant to an
Assignment and Assumption Agreement executed by such Person and such
transferor Bank and acknowledged by the Administrative Agent, the Swing
Line Bank, the Issuing Bank and, if required hereunder, the Borrower,";

(c) Section 11.01 of the Credit Agreement shall be amended by (i)
replacing the phrase "Notice of Assignment" appearing in the definitions of
"Domestic Lending Office" and "Eurodollar Lending Office" appearing therein with
the phrase "Assignment and Assumption Agreement", (ii) deleting in its entirety
the definition of "Notice of Assignment" appearing therein and (iii) adding
thereto, in correct alphabetical order, a definition of "Assignment and
Assumption Agreement" reading in its entirety as follows:

"Assignment and Assumption Agreement" means an Assignment
-----------------------------------
and Assumption Agreement substantially in the form of Exhibit G.";
----------

(d) Schedule 10.10(a) to the Credit Agreement shall be deleted in its
entirety; and

(e) the Credit Agreement shall be amended by adding a new Exhibit G
---------
thereto reading in its entirety as set forth as Exhibit G hereto.
---------

2. Waiver. In connection with the proposed sale by the Borrower of up to
------
3,870,000 additional shares of its common stock pursuant to the exercise of the
over-allotment option with respect to the Offering (the "Over-Allotment
Option"), the Required Banks hereby waive the provisions of Section 4.05,
Section 4.08 and Section 4.13 of the Credit Agreement to the extent that the
Borrower would otherwise be in breach thereof as a result of the purchase by the
Borrower from SOFTBANK Holdings Inc. of up to 3,870,000 shares of the Borrower's
common stock (the "SOFTBANK Shares") so long as (i) the Borrower shall have
received net cash proceeds from the exercise of the Over-Allotment Option in an
amount not less than the amount paid to SOFTBANK Holdings Inc. for the purchase
of the SOFTBANK Shares either prior to or simultaneously with such purchase and
(ii) such exercise of the Over-Allotment Option and the receipt of such cash
proceeds by the Borrower shall occur on or before June 8, 1998.

As provided in Section 10.07 of the Credit Agreement, the foregoing waiver
shall be effective only in the specific instance and for the specific purpose
for which it is given.

3. Representations and Warranties. In order to induce the Administrative
------------------------------
Agent and the Banks to agree to the waiver under, and the amendments to, the
Credit Agreement set forth herein, the Borrower hereby represents and warrants
that the Borrower and each Guarantor has the power, and has taken all necessary
action (including any necessary stockholder action) to authorize it, to execute,
deliver and perform in accordance with their respective terms, this Amendment
and Waiver and the Credit Agreement as amended by this Amendment and Waiver.
This Amendment and Waiver has been duly executed and delivered by the duly
authorized officers of the Borrower and each Guarantor and is, and the Credit
Agreement as amended thereby is, the legal, valid and binding obligation of the
Borrower and each Guarantor enforceable in accordance with its terms, except as
enforceability may be limited by any

2
<PAGE>

applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally. The execution,
delivery and performance in accordance with their terms by the Borrower and each
Guarantor of this Amendment and Waiver and the Credit Agreement as amended by
this Amendment and Waiver, do not and (absent any change in any Applicable Law
or applicable Contract) will not (a) require any Governmental Approval,
Governmental Registration or any other consent or approval, including any
consent or approval of the stockholders of the Borrower or any Guarantor, other
than Governmental Approvals, Governmental Registration and other consents and
approvals that have been obtained, are final and not subject to review on appeal
or to collateral attack, are in full force and effect and, in the case of any
such consents or approvals required under any Applicable Law or Contract as in
effect on the Effective Date, are listed on Schedule 3.03 to the Credit
-------------
Agreement or (b) violate, conflict with, result in a breach of, constitute a
default under, or result in or require the creation of any Lien upon any assets
of the Borrower or any Affiliate under (i) any Contract to which the Borrower or
any Affiliate is a party or by which the Borrower or any Affiliate or any of
their respective properties may be bound or (ii) any Applicable Law.

4. Effectiveness. This Amendment and Waiver shall become effective as of
-------------
the date first referenced above on the date (the "Amendment Effective Date") on
which the Administrative Agent shall have received this Amendment and Waiver
executed and delivered by the Borrower, the Administrative Agent and the
Required Banks.

5. Payment of Expenses. The Borrower hereby agrees to pay all reasonable
-------------------
costs and expenses incurred by the Administrative Agent in connection with the
preparation, execution and delivery of this Amendment and Waiver and any other
documents or instruments which may be delivered in connection herewith.

6. Counterparts. This Amendment and Waiver may be executed in counter-
------------
parts and by different parties hereto in separate counterparts, each of which,
when so executed and delivered, shall be deemed to be an original and all of
which, when taken together, shall constitute one and the same instrument.

7. Ratification. The Credit Agreement, as amended by this Amendment and
------------
Waiver, is and shall continue to be in full force and effect and is hereby in
all respects confirmed, approved and ratified.

8. Governing Law. The rights and duties of the Borrower, the Banks and
-------------
the Administrative Agent under this Amendment and Waiver shall, in accordance
with New York General Obligations Law Section 5-1401, be governed by the law of
the State of New York.

9. Reference to Agreement. From and after the Amendment Effective Date,
----------------------
each reference in the Credit Agreement to "this Agreement," "hereof,"
"hereunder" or words of like import, and all references to the Credit Agreement
in any and all agreements, instruments, documents, notes, certificates and other
writings of every kind and nature, shall be deemed to mean the Credit Agreement
as modified and amended by this Amendment and Waiver.

3
<PAGE>

IN WITNESS WHEREOF, the parties have caused this Amendment and Waiver
to be duly executed as of the date first written above.

ZIFF-DAVIS INC.

By: /s/ Thomas L. Wright
-------------------------------------
Name: Thomas L. Wright
Title: Vice President and Treasurer

THE BANK OF NEW YORK,
as Administrative Agent, Issuing Bank,
Swing Line Bank and a Bank

By: /s/ Brendan T. Nedzi
-------------------------------------
Name: Brendan T. Nedzi
Title: Senior Vice President

MORGAN STANLEY SENIOR FUNDING, INC.,
as a Bank

By: /s/ Henry F. D'Alessandro
-------------------------------------
Name: Henry F. D'Alessandro
Title: Vice President

THE CHASE MANHATTAN BANK, as a Bank

By: /s/ John P. Haltmaier
-------------------------------------
Name: John P. Haltmaier
Title: Vice President

DLJ CAPITAL FUNDING, INC., as a Bank

By: /s/ Harold J. Phillips
-------------------------------------
Name: Harold J. Phillips
Title: Managing Director

<PAGE>

BANK OF AMERICA NT&SA, as a Bank

By: /s/ Carl F. Salas
----------------------------------
Name: Carl F. Salas
Title: Vice President

CREDIT SUISSE FIRST BOSTON, as a Bank

By: /s/ Judith E. Smith
----------------------------------
Name: Judith E. Smith
Title: Director

By: /s/ Todd C. Morgan
----------------------------------
Name: Todd C. Morgan
Title: Director

FIRST UNION NATIONAL BANK, as a Bank

By: /s/ Jim F. Redman
----------------------------------
Name: Jim F. Redman
Title: Senior Vice President

MELLON BANK, N.A., as a Bank

By: /s/ David McGowan
----------------------------------
Name: David McGowan
Title: Vice President

<PAGE>

MERITA BANK LTD, New York Branch, as a
Bank

By: /s/ Frank Maffei
------------------------------------------
Name: Frank Maffei
Title: Vice President

By: /s/ Clifford Abramsky
------------------------------------------
Name: Clifford Abramsky
Title: Vice President

PNC BANK, NATIONAL ASSOCIATION, as a
Bank

By: /s/ Steffen W. Crowther
------------------------------------------
Name: Steffen W. Crowther
Title: Vice President

BANK LEUMI USA, as a Bank

By: /s/ Joung Hee Hong
------------------------------------------
Name: Joung Hee Hong
Title: Vice President

THE BANK OF NOVA SCOTIA, as a Bank

By: /s/ Vincent J. Fitzgerald Jr.
------------------------------------------
Name: Vincent J. Fitzgerald Jr.
Title: Authorized Signatory
<PAGE>

BANK OF TOKYO-MITSUBISHI TRUST
COMPANY, as a Bank

By: /s/ Emile Elnems
-----------------------------------
Name: Emile Elnems
Title: Assistant Vice President

CRESTAR BANK, as a Bank

By: /s/ La Tarnya B. Mason
-----------------------------------
Name: La Tarnya B. Mason
Title: Assistant Vice President

KEY CORPORATE CAPITAL INC., as a Bank

By: /s/ Michael Stark
-----------------------------------
Name: Michael Stark
Title: Assistant Vice President

USTRUST, as a Bank

By: /s/ Thomas F. Macina
-----------------------------------
Name: Thomas F. Macina
Title: Vice President

MITSUBISHI TRUST AND BANKING
CORPORATION, as a Bank

By: /s/ Toshihiro Hayashi
-----------------------------------
Name: Toshihiro Hayashi
Title: Senior Vice President
<PAGE>

ABN AMRO, as a Bank

By: /s/ Frances O. Logan
----------------------------------
Name: Frances O. Logan
Title: Group Vice President

By: /s/ William S. Bennett
----------------------------------
Name: William S. Bennett
Title: Vice President

THE LONG TERM CREDIT BANK OF JAPAN,
LTD., as a Bank

By: /s/ Ken Yoshizaki
----------------------------------
Name: Ken Yoshizaki
Title: Deputy General Manager

NORTHERN LIFE INSURANCE COMPANY, as
a Bank

By: /s/ James V. Wittich
----------------------------------
Name: James V. Wittich
Title: Assistant Treasurer

RELIASTAR LIFE INSURANCE COMPANY, as
a Bank

By: /s/ James V. Wittich
----------------------------------
Name: James V. Wittich
Title: Authorized Representative

<PAGE>

SECURITY CONNECTICUT LIFE INSURANCE
COMPANY, as a Bank

By: /s/ James V. Wittich
------------------------------------
Name: James V. Wittich
Title: Assistant Treasurer

RELIASTAR UNITED SERVICES LIFE
INSURANCE COMPANY, as a Bank

By: /s/ James V. Wittich
------------------------------------
Name: James V. Wittich
Title: Assistant Treasurer

GENERAL ELECTRIC CAPITAL CORP., as a
Bank

By: /s/ Holly Kaczmarczyk
------------------------------------
Name: Holly Kaczmarczyk
Title: Duly Authorized Signatory

BANKBOSTON, N.A., as a Bank

By: /s/ Daniel M. Kortick
------------------------------------
Name: Daniel M. Kortick
Title: Director

<PAGE>

EXHIBIT G
---------

ASSIGNMENT AND ASSUMPTION AGREEMENT

AGREEMENT dated as of _________________, among [ASSIGNOR] (the "Assignor")
and [ASSIGNEE] (the "Assignee").

WITNESSETH

WHEREAS, this Assignment and Assumption Agreement (the "Agreement") relates
to the Secured Guaranteed Credit Agreement dated as of May 4, 1998 among
Ziff-Davis Inc., the Banks listed on the signature pages thereof, Morgan Stanley
Senior Funding, Inc., as Syndication Agent, The Chase Manhattan Bank and DLJ
Capital Funding, Inc., as Co-Documentation Agents, The Bank of New York, as
Administrative Agent, and the Guarantors party thereto (the "Credit Agreement");

WHEREAS, as provided under the Credit Agreement, the Assignor [has an RC
Commitment to make RC Loans to the Borrower] [and has made [Term A] [Term B]
Loans to the Borrower]/1/;

WHEREAS, [Term A] [Term B] [RC] Loans made to the Borrower by the Assignor
under the Credit Agreement in the aggregate principal amount of $__________ /2/
are outstanding at the date hereof;

WHEREAS, the Assignor proposes to assign to the Assignee all of the rights
of the Assignor under the Credit Agreement in respect of a portion of its [RC
Commitment thereunder] [Term A Loans] [Term B Loans] in an amount equal to
$_________ (the "Assigned Amount[s]"), together with a corresponding portion of
its outstanding [RC] Loans, and the Assignee proposes to accept assignment of
such rights and assume the corresponding obligations from the Assignor on such
terms;

NOW, THEREFORE, in consideration of the foregoing and the mutual agreements
contained herein, the parties hereto agree as follows:

SECTION 1. Definitions. All capitalized terms not otherwise defined herein
-----------
shall have the respective meanings set forth in the Credit Agreement.

SECTION 2. Assignment. The Assignor hereby assigns and sells to the
----------
Assignee all the rights of the Assignor under the Credit Agreement to the extent
of the Assigned Amount[s],

_______________________
/1/ Include as appropriate.

/2/ For assignments of multiple Loans (e.g., Term B and RC), include breakdown
of outstandings by Loan.

/3/ For assignments of multiple Commitments (e.g., Term B and RC), include
breakdown of assigned portions by Commitment type.
<PAGE>

and the Assignee hereby accepts such assignment from the Assignor and assumes
all of the obligations of the Assignor under the Credit Agreement to the extent
of the Assigned Amount[s], including the purchase from the Assignor of the
corresponding portion of the principal amount of the [Term A] [Term B] [RC]
Loans made by the Assignor outstanding at the date hereof. Upon the execution
and delivery hereof by the Assignor, the Assignee, [the Borrower,] /4/ the
Administrative Agent, the Issuing Bank and the Swing Line Bank and the payment
of the amounts specified in Section 3 hereof required to be paid on the date
hereof (i) the Assignee shall, as of the date hereof, succeed to the rights and
be obligated to perform the obligations of a Bank under the Credit Agreement
with [an RC Commitment] [Term A Loans] [Term B Loans] /5/ in [an amount]
[amounts] /6/ equal to the Assigned Amount[s], and (ii) the [RC Commitment] of
the Assignor shall, as of the date hereof, be reduced by a like amount and the
Assignor released from its obligations under the Credit Agreement to the extent
such obligations have been assumed by the Assignee. The assignment provided for
herein shall be without recourse to the Assignor.

Section 3. Payments. As consideration for the assignment and sale
--------
contemplated in Section 2 hereof, the Assignee shall pay to the Assignor on the
date hereof in immediately available funds an amount mutually agreed between
them./7/ It is understood that any fees accrued to the date hereof are for the
account of the Assignor and such fees accruing from and including the date
hereof are for the account of the Assignee. Each of the Assignor and the
Assignee hereby agrees that if it receives any amount under the Credit Agreement
which is for the account of the other party hereto, it shall receive the same
for the account of such other party to the extent of such other party's interest
therein and shall promptly pay the same to such other party.

Section 4. Consent of [the Borrower,]/8/ the Administrative Agent, the
-----------------------------------------------------------
Issuing Bank and the Swing Line Bank. This Agreement is conditioned upon the
- ------------------------------------
consent of [the Borrower,] the Administrative Agent, the Issuing Bank and the
Swing Line Bank pursuant to Section 10.10(a)(ii) of the Credit Agreement. The
execution of this Agreement by [the Borrower,] the Administrative Agent, the
Issuing Bank and the Swing Line Bank is evidence of such consent.

Section 5. Non-Reliance on Assignor. The Assignor makes no
------------------------
representation or warranty in connection with, and shall have no responsibility
with respect to, the solvency, financial condition, or statements of the
Borrower or any Guarantor, or the validity and enforceability of the obligations
of the Borrower or any Guarantor in respect of the Credit Agreement or any Note.
The Assignee acknowledges that it has, independently and without reliance on the
Assignor, and based on such documents and information as it has deemed

__________________

/4/ Include consent of Borrower unless not required in accordance with Section
10.10(a)(ii)(A) of the Credit Agreement.

/5/ Include as appropriate.

/6/ Include as appropriate.

/7/ Amount should combine principal together with accrued interest and breakage
compensation, if any, to be paid by the Assignee, net of any portion of any
fees to be paid by the Assignor to the Assignee.

/8/ Include consent of Borrower unless not required in accordance with Section
10.10(a)(ii)(A) of the Credit Agreement.

<PAGE>

appropriate, made its own credit analysis and decision to enter into this
Agreement and will continue to be responsible for making its own independent
appraisal of the business, affairs and financial condition of the Borrower and
the Guarantors.

Section 6. Governing Law. The rights and obligations of the parties hereto
-------------
shall, pursuant to New York General Obligations Law Section 5-1401, be governed
by the laws of the State of New York.

Section 7. Counterparts. This Agreement may be signed in any number of
------------
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.

Section 8. No Amendment. This Agreement is not an amendment of the Credit
------------
Agreement, and, except as expressly set forth in Section 2, shall not affect the
respective rights or obligations of any of the parties to the Credit Agreement.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered by their duly authorized officers as of the date first above
written.

[ASSIGNOR]

By:____________________________________
Name:
Title:

[ASSIGNEE]

By:____________________________________
Name:
Title:

[The Assignee's Lending Offices and address for notices are as follows:

Domestic Lending Office:

Eurodollar Lending Office:

Notice Address:]/9/

___________________________________
/9/ Omit if the Assignee is a Bank.

3
<PAGE>

Assignment and release consented to:

[ZIFF-DAVIS INC.]/10/

By:_______________________________
Name:
Title:

THE BANK OF NEW YORK,
as Administrative Agent

By:_______________________________
Name:
Title:

[SWING LINE BANK]

By:_______________________________
Name:
Title:

[ISSUING BANK]

By:_______________________________
Name:
Title:

_________________
/10/ Include consent of Borrower unless not required in accordance with Section
10.10(a)(ii)(A) of the Credit Agreement.

<PAGE>

EXHIBIT 10.15

EXECUTION COPY
AMENDMENT NO. 2

SECURED GUARANTEED CREDIT AGREEMENT

THIS AMENDMENT NO. 2 (the "Amendment"), dated as of June 8, 1998 among
---------
Ziff-Davis Inc. (the "Borrower"), the banks listed on the signature pages hereof
--------
(each a "Bank") and The Bank of New York, as Administrative Agent (the
----
"Administrative Agent"),
--------------------

W I T N E S S E T H:

WHEREAS, the Borrower, the Banks and the Administrative Agent are parties
to the Secured Guaranteed Credit Agreement dated as of May 4, 1998, as amended
by Amendment No. 1, dated as of May 28, 1998 (as so amended, the "Credit
------
Agreement") (capitalized terms used and not otherwise defined herein shall have
- ---------
the meanings ascribed thereto in the Credit Agreement); and

WHEREAS, the Borrower, the Banks and the Administrative Agent wish to amend
the Credit Agreement as more fully set forth herein; and

WHEREAS, such amendment shall be of benefit, either directly or indirectly,
to the Borrower;

1. Amendment. Upon and after the Amendment Effective Date (as defined in
---------
Section 4 hereof) the aggregate amount of the Term B Commitments (including the
aggregate Term B Commitments in effect on the Agreement Date) shall be increased
to $500,000,000, the aggregate amount of the RC Commitments shall be reduced to
$400,000,000, and Annex A to the Credit Agreement shall be restated in its
-------
entirety as set forth as Annex A hereto.
-------

2. Funding of Term B Loans; Purchase and Sale of Loans. On the Amendment
---------------------------------------------------
Effective Date (as defined in Section 4 hereof), (a) each Bank agrees to make,
upon the terms and subject to the conditions of the Credit Agreement, a Term B
Loan to the Borrower in an amount equal to the difference between such Bank's
Term B Commitment (as set forth on Annex A hereto) and such Bank's Term B Loans
-------
outstanding on such date and (b) the Banks shall effect such purchases and sales
of such Term A Loans, Term B Loans and RC Loans as the Administrative Agent
shall specify such that the applicable Loans of each Bank outstanding as of
such date shall equal such Bank's pro rata share of the aggregate applicable
Loans outstanding

1
<PAGE>

based on such Bank's Term A Commitment, Term B Commitment and RC Commitment as
set forth on Annex A hereto, as the case may be.
-------

3. Representations and Warranties. In order to induce the Administrative
------------------------------
Agent and the Banks to agree to the amendments to the Credit Agreement set forth
herein, the Borrower hereby represents and warrants that the Borrower and each
Guarantor has the power, and has taken all necessary action (including any
necessary stockholder action) to authorize it, to execute, deliver and perform
in accordance with their respective terms, this Amendment and the Credit
Agreement as amended by this Amendment. This Amendment has been duly executed
and delivered by the duly authorized officers of the Borrower and each
Guarantor and is, and the Credit Agreement as amended thereby is, the legal,
valid and binding obligation of the Borrower and each Guarantor enforceable in
accordance with its terms, except as enforceability may be limited by any
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally. The execution,
delivery and performance in accordance with their terms by the Borrower and each
Guarantor of this Amendment and the Credit Agreement as amended by this
Amendment, do not and (absent any change in any Applicable Law or applicable
Contract) will not (a) require any Governmental Approval, Governmental
Registration or any other consent or approval, including any consent or approval
of the stockholders of the Borrower or any Guarantor, other than Governmental
Approvals, Governmental Registration and other consents and approvals that have
been obtained, are final and not subject to review on appeal or to collateral
attack, are in full force and effect and, in the case of any such consents or
approvals required under any Applicable Law or Contract as in effect on the
Effective Date, are listed on Schedule 3.03 to the Credit Agreement or (b)
-------------
violate, conflict with, result in a breach of, constitute a default under, or
result in or require the creation of any Lien upon any assets of the Borrower or
any Affiliate under (i) any Contract to which the Borrower or any Affiliate is a
party or by which the Borrower or any Affiliate or any of their respective
properties may be bound or (ii) any Applicable Law.

4. Effectiveness. This Amendment shall become effective as of the date
-------------
first referenced above on the date (the "Amendment Effective Date") on which the
------------------------
Administrative Agent shall have received this Amendment executed and delivered
by the Borrower, the Administrative Agent and each Bank.

5. Payment of Expenses. The Borrower hereby agrees to pay all reasonable
--------------------
costs and expenses incurred by the Administrative Agent in connection with the
preparation, execution and delivery of this Amendment and any other documents
or instruments which may be delivered in connection herewith.

6. Counterparts. This Amendment may be executed in counterparts and by
------------
different parties hereto in separate counterparts, each of which, when so
executed and delivered, shall be deemed to be an original and all of which, when
taken together, shall constitute one and the same instrument.

7. Ratification. The Credit Agreement, as amended by this Amendment, is
------------
and shall continue to be in full force and effect and is hereby in all respects
confirmed, approved and ratified.

<PAGE>

8. Governing Law. The rights and duties of the Borrower, the Banks and
-------------
the Administrative Agent under this Amendment shall, in accordance with New York
General Obligations Law Section 5-1401, be governed by the law of the State of
New York.

3
<PAGE>

IN WITNESS WHEREOF, the parties have caused this Amendment to be duly
executed as of the date first written above.

ZIFF-DAVIS INC.

By: /s/ Thomas L. Wright
----------------------------
Name: Thomas L. Wright
Title: Vice President and
Treasurer

THE BANK OF NEW YORK,
as Administrative Agent,
Issuing Bank, Swing Line Bank
and a Bank

By: /s/ Brendan T. Nedzi
----------------------------
Name: Brendan T. Nedzi
Title: Senior Vice President

MORGAN STANLEY SENIOR FUNDING,
INC., as a Bank

By: /s/ Morgan Stanley Senior
Funding, Inc.
----------------------------
Name:
Title:

THE CHASE MANHATTAN BANK, as a
Bank

By: /s/ John P. Haltmaier
----------------------------
Name: John P. Haltmaier
Title: Vice President

DLJ CAPITAL FUNDING, INC., as a
Bank

By: /s/ Harold J. Philipps
----------------------------
Name: Harold J. Philipps
Title: Managing Director

<PAGE>

BANK OF AMERICA NT&SA, as a Bank

By: /s/ Carl F. Salas
---------------------------------
Name: Carl F. Salas
Title: Vice President

CREDIT SUISSE FIRST BOSTON, as a Bank

By: /s/ Judith E. Smith
---------------------------------
Name: Judith E. Smith
Title: Director

By: /s/ Todd C. Morgan
---------------------------------
Name: Todd C. Morgan
Title: Director

FIRST UNION NATIONAL BANK, as a Bank

By: /s/ Mark M. Harden
---------------------------------
Name: Mark M. Harden
Title: Senior Vice President

MELLON BANK, N.A., as a Bank

By: /s/ David McGowan
---------------------------------
Name: David McGowan
Title: Vice President

3
<PAGE>

MERITA BANK LTD, New York Branch, as a Bank

By: /s/ Frank Maffei
----------------------------------------
Name: Frank Maffei
Title: Vice President

By: /s/ Clifford Abramsky
----------------------------------------
Name: Clifford Abramsky
Title: Vice President

PNC BANK, NATIONAL ASSOCIATION, as a Bank

By: /s/ Steffen W. Crowther
----------------------------------------
Name: Steffen W. Crowther
Title: Vice President

BANK LEUMI USA, as a Bank

By: /s/ Gloria Bucher
----------------------------------------
Name: Gloria Bucher
Title: First Vice President

THE BANK OF NOVA SCOTIA, as a Bank

By: /s/ Vincent J. Fitzgerald, Jr.
----------------------------------------
Name: Vincent J. Fitzgerald, Jr.
Title: Authorized Signatory

4
<PAGE>

BANK OF TOKYO-MITSUBISHI TRUST COMPANY, as a Bank

By: /s/ Emile Elnems
------------------------------------------------
Name: Emile Elnems
Title: Assistant Vice President

CRESTAR BANK, as a Bank

By: /s/ La Tarnya B. Mason
------------------------------------------------
Name: La Tarnya B. Mason
Title: Assistant Vice President

KEY CORPORATE CAPITAL INC., as a Bank

By: /s/ Michael Stark
------------------------------------------------
Name: Michael Stark
Title: Assistant Vice President

USTRUST, as a Bank

By: /s/ Thomas F. Nacina
------------------------------------------------
Name: Thomas F. Nacina
Title: Vice President

MITSUBISHI TRUST AND BANKING CORPORATION, as a Bank

By: /s/ Toshihiro Hayashi
------------------------------------------------
Name: Toshihiro Hayashi
Title: Senior Vice President

5
<PAGE>

ABN AMRO, as a Bank

By: /s/ Frances O. Logan
-----------------------------------
Name: Frances O. Logan
Title: Group Vice President

By: /s/ David Carrington
-----------------------------------
Name: David Carrington
Title: Vice President

THE LONG TERM CREDIT BANK OF JAPAN,
LTD., as a Bank

By: /s/ Yutaka Teral
-----------------------------------
Name: Yutaka Teral
Title: General Manager

NORTHERN LIFE INSURANCE COMPANY,
as a Bank

By: /s/ James V. Wittich
-----------------------------------
Name: James V. Wittich
Title: Assistant Treasurer

RELIASTAR LIFE INSURANCE COMPANY,
as a Bank

By: /s/ James V. Wittich
-----------------------------------
Name: James V. Wittich
Title: Authorized Representative

<PAGE>

SECURITY CONNECTICUT LIFE INSURANCE
COMPANY, as a Bank

By: /s/ James V. Wittich
-----------------------------------
Name: James V. Wittich
Title: Assistant Treasurer

RELIASTAR UNITED SERVICES LIFE
INSURANCE COMPANY, as a Bank

By: /s/ James V. Wittich
-----------------------------------
Name: James V. Wittich
Title: Assistant Treasurer

GENERAL ELECTRIC CAPITAL CORP., as a
Bank

By: /s/ Holly Kaczmarczyk
-----------------------------------
Name: Holly Kaczmarczyk
Title: Duly Authorized Signatory

BANKBOSTON, N.A., as a Bank

By: /s/ Daniel M. Kortick
-----------------------------------
Name: Daniel M. Kortick
Title: Director

<PAGE>

ANNEX A

BANKS, LENDING OFFICES AND NOTICE ADDRESSES

<TABLE>
<CAPTION>
Banks, Lending Offices
and Notice Addresses Term A Commitment Term B Commitment RC Commitment
- -------------------- ----------------- ----------------- -------------
<S> <C> <C> <C>
THE BANK OF NEW YORK $49,680,308.46 $148,121,445.61 $44,160,271.25

Domestic Lending Office:

The Bank of New York
One Wall Street
New York, NY 10286

Eurodollar Lending Office:

The Bank of New York
One Wall Street
New York, NY 10286

Notice Address:

The Bank of New York
One Wall Street
New York, NY 10286

Telecopy No.: (212) 635-8593/8595
Telephone No.: (212) 635-8628
Attention: Mr. Brendan T. Nedzi
</TABLE>

1
<PAGE>

<TABLE>
<CAPTION>
Banks, Lending Offices
and Notice Addresses Term A Commitment Term B Commitment RC Commitment
- -------------------- ----------------- ----------------- -------------
<S> <C> <C> <C>
MORGAN STANLEY SENIOR
FUNDING, INC. $49,680,308.46 $148,121,445.61 $44,160,271.25
</TABLE>

Domestic Lending Office:

Morgan Stanley Senior Funding, Inc.
1585 Broadway
New York, NY 10036

Eurodollar Lending Office:

Morgan Stanley Senior Funding, Inc.
1585 Broadway
New York, NY 10036

Notice Address:

Morgan Stanley Senior Funding, Inc.
1585 Broadway
New York, NY 10036

Telecopy No.: (212) 761-0592
Telephone No.: (212) 761-4866
Attention: Mr. James Morgan

and

Telecopy No.: (212) 761-3932
Telephone No.: (212) 761-4000
Attention: Mr. Henry D'Alessandro

2
<PAGE>

<TABLE>
<CAPTION>
Banks, Lending Offices
and Notice Addresses Term A Commitment Term B Commitment RC Commitment
- -------------------- ----------------- ----------------- -------------
<S> <C> <C> <C>
THE CHASE MANHATTAN BANK $48,260,869.14 $101,878,554.39 $42,898,551.15
</TABLE>

Domestic Lending Office:

The Chase Manhattan Bank
270 Park Avenue, 5/th/ Floor
New York, NY 10017

Eurodollar Lending Office:

The Chase Manhattan Bank
270 Park Avenue, 5/th/ Floor
New York, NY 10017

Notice Address:

The Chase Manhattan Bank
270 Park Avenue, 5/th/ Floor
New York, NY 10017

Telecopy No: (212) 270-4164
Telephone NO: (212) 270-1786
Attention: Ms. Joan Fitzgibbon

3
<PAGE>

<TABLE>
<CAPTION>
Banks, Lending Offices
and Notice Addresses Term A Commitment Term B Commitment RC Commitment
- -------------------- ----------------- ----------------- -------------
<S> <C> <C> <C>
DLJ CAPITAL FUNDING, INC. $48,260,869.14 $101,878,554.39 $42,898,551.15
</TABLE>

Domestic Lending Office:

DLJ Capital Funding, Inc.
277 Park Avenue, 17th Floor
New York, NY 10172

Eurodollar Lending Office:

DLJ Capital Funding, Inc.
277 Park Avenue, 17th Floor
New York, NY 10172

Notice Address:

DLJ Capital Funding, Inc.
277 Park Avenue, 17th Floor
New York, NY 10172

Telecopy No.: (212)892-7542
Telephone No.: (212)892-3292
Attention: Mr. Gene Martin

4
<PAGE>

<TABLE>
<CAPTION>
Banks, Lending Offices
and Notice Addresses Term A Commitment Term B Commitment RC Commitment
- -------------------- ----------------- ----------------- -------------
<S> <C> <C> <C>
BANK OF AMERICA, NT&SA $23,823,529.20 $0 $21,176,470.80
</TABLE>

Domestic Lending Office:

Bank of America NT&SA
335 Madison Avenue, 5th Floor
New York, NY 10017

Eurodollar Lending Office:

Bank of America NT&SA
335 Madison Avenue, 5th Floor
New York, NY 10017

Notice Address:

Bank of America NT&SA
335 Madison Avenue, 5th Floor
New York, NY 10017

Telecopy No.: (212)503-7173
Telephone No.: (212)503-8425
Attention: Carl Salas

5
<PAGE>

Banks, Lending Offices
and Notice Addresses Term A Commitment Term B Commitment RC Commitment
- -------------------- ----------------- ----------------- -------------

CREDIT SUISSE FIRST BOSTON $7,941,176.40 $0 $7,058,823.60

Domestic Lending Office:

Credit Suisse First Boston
Eleven Madison Avenue, 20/th/ Floor
New York, NY 10010-3629

Eurodollar Lending Office:

Credit Suisse First Boston
Eleven Madison Avenue, 20/th/ Floor
New York, NY 10010-3629

Notice Address:

Credit Suisse First Boston
Eleven Madison Avenue, 20/th/ Floor
New York, NY 10010-3629

Telecopy No.: (212) 325-8314
Telephone No.: (212) 325-0785
Attention: Guy Baron

<PAGE>

Banks, Lending Offices
and Notice Addresses Term A Commitment Term B Commitment RC Commitment
- -------------------- ----------------- ----------------- -------------
<S> <C> <C> <C>
FIRST UNION NATIONAL BANK $13,235,294.00 $0 $11,764,706.00
</TABLE>

Domestic Lending Office:

First Union National Bank
One First Union Center
301 College Street - DC 5
Charlotte, NC 28288-0735

Eurodollar Lending Office:

First Union National Bank
One First Union Center
301 College Street - DC 5
Charlotte, NC 28288-0735

Notice Address:

First Union National Bank
One First Union Center
301 College Street - DC 5
Charlotte, NC 28288-0735

Telecopy No.: (704) 374-4092
Telephone No.: (704) 383-0311
Attention: Russ Herakovich

<PAGE>

Banks, Lending Offices
and Notice Addresses Term A Commitment Term B Commitment RC Commitment
- -------------------- ----------------- ----------------- -------------

MELLON BANK, N.A. $23,823,529.20 $0 $21,176,470.80

Domestic Lending Office:

Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258-0001

Eurodollar Lending Office:

Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258-0001

Notice Address:

Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258-0001

Telecopy No.: (412) 234-6375
Telephone No.: (412) 236-2790
Attention: Jennifer Livengood

<PAGE>

Banks, Lending Offices
and Notice Addresses Term A Commitment Term B Commitment RC Commitment
- -------------------- ----------------- ----------------- -------------

MERITA BANK LTD,
NEW YORK BRANCH $13,235,294.00 $0 $11,764,706.00

Domestic Lending Office:

Merita Bank Ltd, New York Branch
437 Madison Avenue
New York, NY 10022

Eurodollar Lending Office:

Merita Bank Ltd, New York Branch
437 Madison Avenue
New York, NY 10022

Notice Address:

Merita Bank Ltd, New York Branch
437 Madison Avenue
New York, NY 10022

Telecopy No.: (212) 318-9318
Telephone No.: (212) 318-9561
Attention: Frank Maffei

<PAGE>

Banks, Lending Offices
and Notice Addresses Term A Commitment Term B Commitment RC Commitment
- -------------------- ----------------- ----------------- -------------

MITSUBISHI TRUST AND
BANKING CORPORATION $13,235,294.00 $0 $11,764,706.00

Domestic Lending Office:

Mitsubishi Trust and Banking Corporation
520 Madison Avenue
New York, NY 10022

Eurodollar Lending Office:

Mitsubishi Trust and Banking Corporation
520 Madison Avenue
New York, NY 10022

Notice Address:

Mitsubishi Trust and Banking Corporation
520 Madison Avenue
New York, NY 10022

Telecopy No.: (212) 755-2349
Telephone No.: (212) 891-8383
Attention: Bea Kossodo

<PAGE>

<TABLE>
<CAPTION>
Banks, Lending Offices
and Notice Addresses Term A Commitment Term B Commitment RC Commitment
- ---------------------- ----------------- ----------------- -------------
<S> <C> <C> <C>
PNC BANK, NATIONAL
ASSOCIATION $23,823,529.20 $ 0 $21,176,470.80
</TABLE>

Domestic Lending Office:

PNC Bank, National Association
1600 Market Street, 21/st/ Floor
Philadelphia, PA 19103

Eurodollar Lending Office:

PNC Bank, National Association
1600 Market Street, 21/st/ Floor
Philadelphia, PA 19103

Notice Address:

PNC Bank, National Association
1600 Market Street, 21/st/ Floor
Philadelphia, PA 19103

Telecopy No.: (215) 585-6680
Telephone No.: (215) 585-6376
Attention: Steffen Crowther

11
<PAGE>

<TABLE>
<CAPTION>
Banks, Lending Offices
and Notice Addresses Term A Commitment Term B Commitment RC Commitment
- ---------------------- ----------------- ----------------- -------------
<S> <C> <C> <C>
ABN AMRO $23,823,529.20 $ 0 $21,176,470.80
</TABLE>

Domestic Lending Office:

ABN Amro
500 Park Avenue
New York, NY 10022

Eurodollar Lending Office:

ABN Amro
500 Park Avenue
New York, NY 10022

Notice Address:

ABN Amro
500 Park Avenue
New York, NY 10022

Telecopy No.: (212) 446-4203
Telephone No.: (212) 446-4158
Attention: Laura Fazio

12
<PAGE>

<TABLE>
<CAPTION>
Banks, Lending Offices
and Notice Addresses Term A Commitment Term B Commitment RC Commitment
- -------------------- ----------------- ----------------- -------------
<S> <C> <C> <C>
BANK LEUMI USA $7,941,176.40 $0 $7,058,823.60
</TABLE>

Domestic Lending Office:

Bank Leumi USA
579 Fifth Avenue
New York, NY 10017

Eurodollar Lending Office:

Bank Leumi USA
579 Fifth Avenue
New York, NY 10017

Notice Address:

Bank Leumi USA
579 Fifth Avenue
New York, NY 10017

Telecopy No.: (212) 407-4317
Telephone No.: (212) 407-4313
Attention: Gloria Bucher

13
<PAGE>

<TABLE>
<CAPTION>
Banks, Lending Offices
and Notice Addresses Term A Commitment Term B Commitment RC Commitment
- -------------------- ----------------- ----------------- -------------
<S> <C> <C> <C>
THE BANK OF NOVA SCOTIA $13,235,294.00 $0 $11,764,706.00
</TABLE>

Domestic Lending Office:

The Bank of Nova Scotia
One Liberty Plaza, 26/th/ Floor
New York, NY 10006

Eurodollar Lending Office:

The Bank of Nova Scotia
One Liberty Plaza, 26/th/ Floor
New York, NY 10006

Notice Address:

The Bank of Nova Scotia
One Liberty Plaza, 26/th/ Floor
New York, NY 10006

Telecopy No.: (212)225-5090
Telephone No.: (212)225-5639
Attention: Stuart Malakoff

14
<PAGE>

<TABLE>
<CAPTION>
Banks, Lending Offices
and Notice Addresses Term A Commitment Term B Commitment RC Commitment
- -------------------- ----------------- ----------------- -------------
<S> <C> <C> <C>
BANK OF TOKYO -
MITSUBISHI TRUST
COMPANY $13,235,294.00 $0 $11,764,706.00
</TABLE>

Domestic Lending Office:

Bank of Tokyo - Mitsubishi Trust Company
1251 Avenue of the Americas, 12/th/ Floor
New York, NY 10020-1104

Eurodollar Lending Office:

Bank of Tokyo - Mitsubishi Trust Company
1251 Avenue of the Americas, 12/th/ Floor
New York, NY 10020-1104

Notice Address:

Bank of Tokyo - Mitsubishi Trust Company
1251 Avenue of the Americas, 12/th/ Floor
New York, NY 10020-1104

Telecopy No.: (212)782-4935
Telephone No.: (212)782-4310
Attention: Emile Elnems

15
<PAGE>

<TABLE>
<CAPTION>
Banks, Lending Offices
and Notice Addresses Term A Commitment Term B Commitment RC Commitment
- -------------------- ----------------- ----------------- -------------
<S> <C> <C> <C>
CRESTAR BANK $7,941,176.40 $0 $7,058,823.60
</TABLE>

Domestic Lending Office:

Crestar Bank
919 East Main Street
Richmond, VA 23219

Eurodollar Lending Office:

Crestar Bank
919 East Main Street
Richmond, VA 23219

Notice Address:

Crestar Bank
919 East Main Street
Richmond, VA 23219

Telecopy No.: (804)782-5413
Telephone No.: (804)782-5833
Attention: Tom Palmer

16
<PAGE>

<TABLE>
<CAPTION>
Banks, Lending Offices
and Notice Addresses Term A Commitment Term B Commitment RC Commitment
- -------------------- ----------------- ----------------- -------------
<S> <C> <C> <C>
KEY CORPORATE CAPITAL
INC. $13,235,294.00 $0 $11,764,706.00
</TABLE>

Domestic Lending Office:

Key Corporate Capital Inc.
Mailcode OH-01-27-0602
127 Public Square
Cleveland, OH 44114

Eurodollar Lending Office:

Key Corporate Capital Inc.
Mailcode OH-01-27-0602
127 Public Square
Cleveland, OH 44114

Notice Address:

Key Corporate Capital Inc.
Mailcode OH-01-27-0602
127 Public Square
Cleveland, OH 44114

Telecopy No: (216) 689-4666
Telephone No: (216) 689-4447
Attention: Mike Stark

17
<PAGE>

LONG TERM CREDIT BANK
OF JAPAN, LTD. $7,941,176.40 $0 $7,058,823.60
</TABLE>

Domestic Lending Office:

Long Term Credit Bank of Japan, Ltd.
165 Broadway
New York, NY 10006

Eurodollar Lending Office:

Long Term Credit Bank of Japan, Ltd.
165 Broadway
New York, NY 10006

Notice Address:

Long Term Credit Bank of Japan, Ltd.
165 Broadway
New York, NY 10006

Telecopy No: (212) 608-2371
Telephone No: (212) 336-4453
Attention: Hisao Inagawa

18
<PAGE>

<TABLE>
<CAPTION>
Banks, Lending Offices
and Notice Addresses Term A Commitment Term B Commitment RC Commitment
- ---------------------- ----------------- ----------------- -------------
<S> <C> <C> <C>
NORTHERN LIFE INSURANCE
COMPANY $ 557,275.50 $ 0 $4,705,882.40
</TABLE>

Domestic Lending Office:

c/o Reliastar Investment Research, Inc.
1000 Washington Avenue South, Suite 800
Minneapolis, MN 55401-2121

Eurodollar Lending Office:

c/o Reliastar Investment Research, Inc.
1000 Washington Avenue South, Suite 800
Minneapolis, MN 55401-2121

Notice Address:

c/o Reliastar Investment Research, Inc.
1000 Washington Avenue South, Suite 800
Minneapolis, MN 55401-2121

Telecopy No.: (612) 372-5368
Telephone No.: (612) 372-5258
Attention: Tim Warrick

19
<PAGE>

<TABLE>
<CAPTION>
Banks, Lending Offices
and Notice Addresses Term A Commitment Term B Commitment RC Commitment
- -------------------- ----------------- ----------------- -------------
<S> <C> <C> <C>
RELIASTAR LIFE INSURANCE
COMPANY $1,900,000.00 $0 $0
</TABLE>

Domestic Lending Office:

c/o Reliastar Investment Research, Inc.
1000 Washington Avenue South, Suite 800
Minneapolis, MN 55401-2121

Eurodollar Lending Office:

c/o Reliastar Investment Research, Inc.
1000 Washington Avenue South, Suite 800
Minneapolis, MN 55401-2121

Notice Address:

c/o Reliastar Investment Research, Inc.
1000 Washington Avenue South, Suite 800
Minneapolis, MN 55401-2121

Telecopy No.: (612) 372-5368
Telephone No.: (612) 372-5258
Attention: Tim Warrick

20
<PAGE>

<TABLE>
<CAPTION>
Banks, Lending Offices
and Notice Addresses Term A Commitment Term B Commitment RC Commitment
- -------------------- ----------------- ----------------- -------------
<S> <C> <C> <C>
RELIASTAR UNITED SERVICES
LIFE INSURANCE COMPANY $1,886,842.10 $0 $0
</TABLE>

Domestic Lending Office:

c/o Reliastar Investment Research, Inc.
1000 Washington Avenue South, Suite 800
Minneapolis, MN 55401-2121

Eurodollar Lending Office:

c/o Reliastar Investment Research, Inc.
1000 Washington Avenue South, Suite 800
Minneapolis, MN 55401-2121

Notice Address:

c/o Reliastar Investment Research, Inc.
1000 Washington Avenue South, Suite 800
Minneapolis, MN 55401-2121

Telecopy No.: (612) 372-5368
Telephone No.: (612) 372-5258
Attention: Tim Warrick

<PAGE>

<TABLE>
<CAPTION>
Banks, Lending Offices
and Notice Addresses Term A Commitment Term B Commitment RC Commitment
- -------------------- ----------------- ----------------- -------------
<S> <C> <C> <C>
SECURITY CONNECTICUT
LIFE INSURANCE COMPANY $950,000.00 $0 $0
</TABLE>

Domestic Lending Office:

c/o Reliastar Investment Research, Inc.
1000 Washington Avenue South, Suite 800
Minneapolis, MN 55401-2121

Eurodollar Lending Office:

c/o Reliastar Investment Research, Inc.
1000 Washington Avenue South, Suite 800
Minneapolis, MN 55401-2121

Notice Address:

c/o Reliastar Investment Research, Inc.
1000 Washington Avenue South, Suite 800
Minneapolis, MN 55401-2121

Telecopy No.: (612) 372-5368
Telephone No.: (612) 372-5258
Attention: Tim Warrick

<PAGE>

Banks, Lending Offices
and Notice Addresses Term A Commitment Term B Commitment RC Commitment
- -------------------- ----------------- ----------------- -------------

USTRUST $7,941,176.40 $0 $7,058,823.60

Domestic Lending Office:

USTrust
40 Court Street
Boston, MA 02108

Eurodollar Lending Office:

USTrust
40 Court Street
Boston, MA 02108

Notice Address:

USTrust
40 Court Street
Boston, MA 02108

Telecopy No.: (617) 695-4185
Telephone No.: (617) 726-7356
Attention: Tony Wilson

<PAGE>

Banks, Lending Offices
and Notice Addresses Term A Commitment Term B Commitment RC Commitment
- ---------------------- ----------------- ----------------- --------------

GENERAL ELECTRIC
CAPITAL CORP. $ 13,235,294.00 $0 $11,764,706.00

Domestic Lending Office:

General Electric Capital Corporation
3379 Peachtree Road, N.E., Suite 600
Atlanta, GA 30326

Euordollar Lending Office:

General Electric Capital Corporation
3379 Peachtree Road, N.E., Suite 600
Atlanta, GA 30326

Notice Address:

General Electric Capital Corporation
3379 Peachtree Road, N.E., Suite 600
Atlanta, GA 30326

Telecopy No.: (404) 842-1533
Telephone No.: (404) 814-2604
Attention: Holly Kaczmarcyk

24
<PAGE>

Banks, Lending Offices
and Notice Addresses Term A Commitment Term B Commitment RC Commitment
- -------------------- ----------------- ----------------- -------------

BANKBOSTON, N.A. $21,176,470.40 $0 $18,823,529.60

Domestic Lending Office:

BankBoston, N.A.
100 Federal Street
Mail Drop 010808
Boston, MA 02110

Eurodollar Lending Office:

BankBoston, N.A.
100 Federal Street
Mail Drop 010808
Boston, MA 02110

Notice Address:

BankBoston, N.A.
100 Federal Street
Mail Drop 010808
Boston, MA 02110

Telecopy No.: (617) 434-3401
Telephone No.: (617) 434-6757
Attention: Dan Kortick

<PAGE>

EXECUTION DRAFT
11 DEC.98

AMENDMENT NO.3

amending and restating the

SECURED GUARANTEED CREDIT AGREEMENT

dated as of May 4, 1998

THIS AMENDMENT NO.3 (the "Amendment"), dated as of December 30, 1998,
---------
among Ziff-Davis Inc. (the "Borrower"), the banks listed on the signature pages
--------
hereof (each a "Bank") and The Bank of New York, as Administrative Agent (the
----
"Administrative Agent"),
--------------------

W I T N E S S E T H:

WHEREAS, the Borrower, the Banks and the Administrative Agent are parties
to the Secured Guaranteed Credit Agreement dated as of May 4, 1998, as amended
by Amendment No. 1, dated as of May 28, 1998 and Amendment No. 2, dated as of
June 8, 1998 (as so amended, the "Credit Agreement") (capitalized terms used and
----------------
not otherwise defined herein shall have the meanings ascribed thereto in the
Credit Agreement); and

WHEREAS, the Borrower, the Banks and the Administrative Agent wish to amend
the Credit Agreement as more fully set forth herein; and

WHEREAS, each of such amendments shall be of benefit, either directly or
indirectly, to the Borrower;

1. Amendments. Upon and after the Amendment Effective Date (as defined in
----------
Section 2 hereof) the Credit Agreement shall be amended as follows:

(a) Section 1.15(a) of the Credit Agreement shall be amended by restating
the table set forth therein in its entirety as follows:

<TABLE>
<CAPTION>
Applicable RC Commitment
"Leverage Ratio Fee Percentage
----------------------- ------------------------
<S> <C>
greater than or equal to 5.00 : 1.00 0.500%
less than 5.00 : 1.00 0.375%";
</TABLE>

1
<PAGE>

(b) Section 4.05 of the Credit Agreement shall be amended by inserting the
following proviso at the end of clause (a) thereof;

";provided that so long as the maximum Leverage Ratio permitted pursuant to
--------
Section 4.17 shall be greater than 6.25:1.00, (x) the aggregate outstanding
Indebtedness of the Borrower and its Consolidated Subsidiaries under
clauses (ii) (other than the Guaranteed Obligations and Letters of Credit),
(iv) and (v) of this clause (a) shall not at any time exceed (A) in the
case of such Indebtedness of the Borrower outstanding pursuant to the Bill
of Sale and Agreement dated May 30, 1997, with respect to the purchase by
the Borrower of certain ownership interests in Interactive Enterprises,
LLC, a Delaware limited liability company, $15,000,000 and (B) otherwise,
$5,000,000, (y) New Subordinated Indebtedness shall not at any time exceed
$300,000,000 in the aggregate outstanding and (z) all proceeds of New
Subordinated Indebtedness shall be used to prepay the Term A Loans and the
Term B Loans, ratably in accordance with the then outstanding amounts of
the Term A Loans and the Term B Loans.";

(c) Section 4.08 of the Credit Agreement shall be amended by inserting at
the beginning of each of clauses (b) and (c) thereof the phrase "so long as the
maximum Leverage Ratio permitted pursuant to Section 4.17 shall be 6.25:1.00 or
lower,";

(d) Section 4.10 of the Credit Agreement shall be amended by inserting a
new proviso at the end of the first sentence thereof, reading in its entirety
as follows:

"; and provided, further, that so long as the maximum Leverage Ratio
-------- -------
permitted pursuant to Section 4.17 shall be greater than 6.25:1.00, the
fair market value of all assets disposed of by the Borrower and its
Consolidated Subsidiaries since the Agreement Date pursuant to clause (d)
hereof shall not exceed $25,000,000";

(e) Section 4.11 of the Credit Agreement shall be amended by (i) inserting
a new proviso at the end of the first sentence thereof, reading in its entirety
as follows:

"; and provided, further, that so long as the maximum Leverage Ratio
-------- -------
permitted pursuant to Section 4.17 shall be greater than 6.25:1.00, the
aggregate Investment Amount of Investments described in clause (i) hereof
made after December 10, 1998 shall not exceed $50,000,000 in the aggregate
at any time", and

(ii) deleting the word "and" appearing immediately before clause (j)
thereof and inserting a new clause (k) reading in its entirety as follows:

", and (k) Investments in ZDTV or ZDTP by the Borrower after the Restated
Agreement Date in aggregate amount not exceeding the lesser of (i) the Net
Cash Proceeds from the sale by the Borrower of a minority interest in ZDTV
or ZDTP to Vulcan Programming, Inc., or an Affiliate thereof, and (ii)
$54,000,000", and

(iii) restating the final proviso thereto in its entirety as follows:

"and provided, further, that in each case other than clauses (d), (f), (g),
-------- -------
(h), (i) (to the extent constituting the Investment Amount over
$100,000,000 with respect to the
<PAGE>
exercise by the Borrower of the ZDTV Option) and (k), the aggregate
Investment Amount with respect to such Investments in Affiliates (other
than ZDTV and ZDTP) shall not exceed $25,000,000 outstanding at any time.";

(f) Section 4.17 of the Credit Agreement shall be amended by (i) restating
the table set forth therein its entirety as follows:

"Period Ratio
------ -----
Restated Agreement Date through March 30, 1999 6.50:1.00
March 31, 1999 through September 29, 1999 6.75:1.00
September 30, 1999 through March 30, 2000 6.00:1.00
March 31, 2000 through December 30, 2000 5.50:1.00
December 31, 2000 through June 30, 2001 4.75:1.00
Thereafter 4.50:1.00",and

(ii) adding a proviso at the end thereof reading in its entirety as
follows:

"Provided, that at any time on or before September 29, 1999, the Borrower
--------
may, upon five Business Days' prior written notice to the Administrative
Agent, request that the maximum Leverage Ratio permitted pursuant to this
Section 4.17 be reduced to 6.25:1.00, whereupon from and after the date
specified in such notice the maximum Leverage Ratio shall be reduced to
such amount for the period from such date to but excluding September 30,
1999.";

(g) Section 4.18 of the Credit Agreement shall be amended by restating the
table set forth therein in its entirety as follows:

"Period Ratio
------ -----
Restated Agreement Date through September 29, 1999 5.25:1.00
September 30, 1999 through March 30, 2000 4.75:1.00
March 31, 2000 through December 30, 2000 4.00:1.00
December 31, 2000 through June 30, 2001 3.75:1.00
Thereafter 3.50:1.00";

(h) Section 4.19 of the Credit Agreement shall be restated in its entirety
as follows:

"Section 4.19 Ratio of Consolidated EBITDA to Consolidated Interest
-----------------------------------------------------
Expense. Permit the ratio of Consolidated EBITDA to Consolidated Interest
-------
Expense for the four consecutive fiscal quarters of the Borrower most
recently completed, as at the end of any fiscal quarter of the Borrower, to
be less than (a) for the period from the Restated Agreement Date through
December 31, 1999, 1.75:1.00 and (b) thereafter, 2.00:1.00.";

(i) Section 11.01 of the Credit Agreement shall be amended by (i) adding
thereto definitions of "Contingent Acquisition Obligation", "Restated Agreement
--------------------------------- ------------------
Date" and "Restructuring Charge", in correct alphabetical order and each reading
- ---- --------------------
in its entirety as follows:

"'Contingent Acquisition Obligation' means, with respect to any Person,
-----------------------------------
contingent payment obligations of such Person arising out of acquisitions
by such Person and owed

<PAGE>

to the applicable sellers in respect thereof, and based upon the
achievement of certain performance criteria in respect of the acquired
businesses, so long as such payment obligations are not required under
Generally Accepted Accounting Principles to be reflected as liabilities on
the balance sheet of such Person.",

"`Restated Agreement Date' means the `Amendment Effective Date', as such
-----------------------
term is defined in Amendment No. 3 to this Agreement, dated as of December
30, 1998.", and

"`Restructuring Charge' means certain non-recurring expenses incurred by
--------------------
the Borrower with respect to the post-Reorganization events and actions
described in the Borrower's press release dated October 8, 1998.",

(ii) adding a proviso at the end of the definition of "Consolidated
------------
Interest Expense" appearing therein, reading in its entirety as follows:
- ----------------

",provided, that, with respect to periods prior to the effective date of
--------
the Reorganization, Consolidated Interest Expense shall be calculated
giving pro forma effect to the consummation of the Reorganization",

(iii) adding a parenthetical phrase at the end of clause (c) of the
definition of "Consolidated Fixed Charges" appearing therein, reading in its
--------------------------
entirety as follows:

"(excluding, however, any expenditures by the Borrower directly related to
the move of its chief executive offices from One Park Avenue, New York,
New York 10016 to 28E. 28/th/ Street, New York, New York 10016, on or
before December 31, 1999, to the extent not exceeding $55,000,000 in the
aggregate)",

(iv) replacing the period at the end of clause (v) of subparagraph (b) of
the definition of "EBITDA" appearing therein with "; and", and adding to the end
------
of such subparagraph (b) a new clause (vi) reading in its entirety as follows:

"(vi) with respect to the calculation of EBITDA of the Borrower, the
Restructuring Charge, to the extent not in excess of $60,000,000.";

(v) restating in their entirety the first sentence and the table set
forth in the respective definitions of "Base Rate Margin" and "Eurodollar Rate
---------------- ---------------
Margin" appearing therein, as follows:
- ------

"`Base Rate Margin' means with respect to (a) Base Rate Loans that
----------------
are Term B Loans outstanding (i) at any time that the Leverage Ratio for
the four fiscal quarters of the Borrower most recently completed shall be
greater than or equal to 6.25 : 1.00, 2.375% and (ii) at any other time,
2.125% and (b) Base Rate Loans that are RC Loans or Term A Loans (i)
outstanding during any period on or before the date three Business Days
after the delivery of the financial statements of the Borrower pursuant to
Section 5.01(a) for the quarterly period ending September 30, 1998, 0.500%
and (ii) outstanding during any period thereafter, such percentage as set
forth in the following table opposite the applicable Leverage Ratio for the
four fiscal quarters of the Borrower most recently completed prior to such
period:
<PAGE>

<TABLE>
<CAPTION>
Applicable Base
Leverage Ratio Rate Margin
-------------- ---------------
<S> <C>
greater than/or equal to 6.25:1.00 1.875%
greater than 5.75:1.00 but less than 6.25 : 1.00 1.625%
greater than/or equal to 5.50:1.00 but less than 5.75:1.00 1.375%
greater than/or equal to 5.00:1.00 but less than 5.50:1.00 1.125%
greater than/or equal to 4.50:1.00 but less than 5.00:1.00 0.875%
greater than/or equal to 4.00:1.00 but less than 4.50:1.00 0.625%
greater than/or equal to 3.50:1.00 but less than 4.00:1.00 0.375%
less than 3.50:1.00 0.125%
</TABLE>

"Eurodollar Rate Margin" means, with respect to (a) Eurodollar Rate Loans
----------------------
that are Term B Loans outstanding (i) at any time that the Leverage Ratio
for the four fiscal quarters of the Borrower most recently completed shall
be greater than or equal to 6.25:1.00, 3.375% and (ii) at any other time,
3.125% and (b) Eurodollar Rate Loans that are RC Loans or Term A Loans, (i)
outstanding during any period on or before the date three Business Days
after the delivery of the financial statements of the Borrower pursuant to
Section 5.01(a) for the quarterly period ending September 30, 1998, 1.500%
and (ii) outstanding during any period thereafter, such percentage as set
forth in the following table opposite the applicable Leverage Ratio for the
four fiscal quarters of the Borrower most recently completed prior to such
period:

<TABLE>
<CAPTION>
Applicable Eurodollar
Leverage Ratio Rate Margin
-------------- ---------------------
<S> <C>
greater than/or equal to 6.25:1.00 2.875%
greater than 5.75:1.00 but less than 6.25 : 1.00 2.625%
greater than/or equal to 5.50:1.00 but less than 5.75:1.00 2.375%
greater than/or equal to 5.00:1.00 but less than 5.50:1.00 2.125%
greater than/or equal to 4.50:1.00 but less than 5.00:1.00 1.875%
greater than/or equal to 4.00:1.00 but less than 4.50:1.00 1.625%
greater than/or equal to 3.50:1.00 but less than 4.00:1.00 1.375%
less than 3.50:1.00 1.125%"; and
</TABLE>

(vi) adding immediately following the phrase "the deferred purchase price
of property or services" in clause (c) of the definition of "Indebtedness"
------------
appearing therein, the parenthetical phrase "(excluding the aggregate amount of
Contingent Acquisition Obligations of such Person)".

2. Effectiveness. This Amendment shall become effective as of the date
-------------
first referenced above on the date (the "Amendment Effective Date") on which the
------------------------
Administrative Agent shall have received (a) this Amendment executed and
delivered by the Borrower, the Administrative Agent and Required Banks, (b) such
documents, certificates, opinions of counsel

<PAGE>

and other Information as the Administrative Agent shall reasonably request on or
before December 16, 1998, and (c) payment by the Borrower, no later than
December 17, 1998, of an amendment fee for the account of each Bank that has
agreed to the amendments set forth in this Amendment and has delivered an
executed copy of this Amendment in original or telecopied form to Winthrop,
Stimson, Putnam & Roberts on or before 5:00 p.m. (New York time) on December 16,
1998, in an amount equal to 0.25% of such Bank's aggregate Commitments.

3. Payment of Expenses. The Borrower hereby agrees to pay all reasonable
-------------------
costs and expenses incurred by the Administrative Agent in connection with the
preparation, execution and delivery of this Amendment and any other documents or
instruments which may be delivered in connection herewith.

4. Counterparts. This Amendment may be executed in counterparts and by
------------
different parties hereto in separate counterparts, each of which, when so
executed and delivered, shall be deemed to be an original and all of which,
when taken together, shall constitute one and the same instrument.

5. Ratification. The Credit Agreement, as amended by this Amendment, is
------------
and shall continue to be in full force and effect and is hereby in all respects
confirmed, approved and ratified, and as of the Amendment Effective Date shall
be deemed to be amended and restated in its entirety as amended hereby.

6. Governing Law. The rights and duties of the Borrower, the Banks and
-------------
the Administrative Agent under this Amendment shall, in accordance with New York
General Obligations Law Section 5-1401, be governed by the law of the State of
New York.

7. Reference to Agreement. From and after the Amendment Effective Date,
----------------------
each reference in the Credit Agreement to "this Agreement," "hereof,"
"hereunder" or words of like import, and all references to the Credit Agreement
in any and all agreements, instruments, documents, notes, certificates and other
writings of every kind and nature, shall be deemed to mean the Credit Agreement
as modified and amended by this Amendment.

IN WITNESS WHEREOF, the parties have caused this Amendment to be duly
executed as of the date first written above.

ZIFF-DAVIS INC.

By: /s/ Thomas L. Wright
--------------------------
Name: Thomas L. Wright
Title: Vice President and
Treasurer
6

<PAGE>

THE BANK OF NEW YORK
as Administrative Agent, Issuing Bank,
Swing Line Bank and a Bank

By: /s/ Brendan T. Nedzi
---------------------------------
Name: Brendan T. Nedzi
Title: Senior Vice President

MORGAN STANLEY SENIOR FUNDING, INC.,
as a Bank

By: /s/ Henry F. D'Alessandro
---------------------------------
Name: Henry F. D'Alessandro
Title: Vice President

THE CHASE MANHATTAN BANK, as a Bank

By: /s/ John P. Haltmaier
---------------------------------
Name: John P. Haltmaier
Title: Vice President

And all other Banks:

DLJ CAPITAL FUNDING, INC., as a Bank

By: /s/ Dana F. Klein
---------------------------------
Name: Dana F. Klein
Title: Vice President

BANK OF AMERICA NT&SA, as a Bank

By: /s/ Thomas J. Kane
---------------------------------
Name: Thomas J. Kane
Title: Vice President

7
<PAGE>

CREDIT SUISSE FIRST BOSTON, as a Bank

By: /s/ Judith E. Smith
---------------------------------
Name: JUDITH E. SMITH
Title: DIRECTOR

By: /s/ Chris T. Horgan
---------------------------------
Name: CHRIS T. HORGAN
Title: VICE PRESIDENT

FIRST UNION NATIONAL BANK, as a Bank

By: /s/ Jim F. Redman
---------------------------------
Name: Jim F. Redman
Title: Senior Vice President

MELLON BANK, N.A., as a Bank

By: /s/ Stephen D. Lackey
---------------------------------
Name: Stephen D. Lackey
Title: Senior Vice President

MERITA BANK LTD, New York Branch, as a
Bank

By: /s/ Clifford Abramsky
---------------------------------
Name: Clifford Abramsky
Title: Vice President

By: /s/ Frank Maffei
---------------------------------
Name: Frank Maffei
Title: Vice President

8
<PAGE>

PNC BANK, NATIONAL ASSOCIATION, as a
Bank

By: /s/ Steffen W. Crowther
-----------------------------------
Name: Steffen W. Crowther
Title: Vice President

BANK LEUMI USA, as a Bank

By: /s/ Joung Hee Hong
---------------------------------
Name: Joung Hee Hong
Title: Vice President

THE BANK OF NOVA SCOTIA, as a Bank

By: /s/ Vincent J. Fitzgerald, Jr.
---------------------------------
Name: Vincent J. Fitzgerald, Jr.
Title: Authorized Signatory

BANK OF TOKYO-MITSUBISHI TRUST
COMPANY, as a Bank

By: /s/ Emile Elnems
---------------------------------
Name: Emile Elnems
Title: Vice President

CRESTAR BANK, as a Bank

By: /s/ La Tarnya B. Mason
---------------------------------
Name: La Tarnya B. Mason
Title: Assistant Vice President

9
<PAGE>

KEY CORPORATE CAPITAL INC., as a Bank

By: /s/ Michael Stark
---------------------------------
Name: Michael Stark
Title: Vice President

USTRUST, as a Bank

By: /s/ Thomas F. Macina
---------------------------------
Name: Thomas F. Macina
Title: Vice President

MITSUBISHI TRUST AND BANKING
CORPORATION,as a Bank

By: /s/ Beatrice E. Kossodo
---------------------------------
Name: Beatrice E. Kossodo
Title: Senior Vice President

ABN AMRO, as a Bank

By: /s/ Frances O. Logan
---------------------------------
Name: Frances O. Logan
Title: Group Vice President

By: /s/ Thomas T. Rogers
---------------------------------
Name: Thomas T. Rogers
Title: Vice President

THE LONG TERM CREDIT BANK OF JAPAN,
LTD., as a Bank

By: /s/ Ken Yoshizaki
---------------------------------
Name: Ken Yoshizaki
Title: Deputy General Manager

10
<PAGE>

NORTHERN LIFE INSURANCE COMPANY, as
a Bank

By: /s/ James V. Wittich
--------------------------------
Name: JAMES V. WITTICH
Title: ASSISTANT TREASURER

RELIASTAR LIFE INSURANCE COMPANY, as
a Bank

By: /s/ James V. Wittich
--------------------------------
Name: JAMES V. WITTICH
Title: AUTHORIZED REPRESENTATIVE

SECURITY CONNECTICUT LIFE INSURANCE
COMPANY, as a Bank

By: /s/ James V. Wittich
--------------------------------
Name: JAMES V. WITTICH
Title: ASSISTANT TREASURER

RELIASTAR UNITED SERVICES LIFE
INSURANCE COMPANY, as a Bank

By: /s/ James V. Wittich
--------------------------------
Name: JAMES V. WITTICH
Title: ASSISTANT TREASURER

FIRST SOURCE FINANCIAL LLP., as a Bank
By: First Financial, Inc., Its Agent/Manager

By: /s/ Gregory R. Cooper
---------------------------------
Name: Gregory R. Cooper
Title: Senior Vice President

11
<PAGE>

BANKBOSTON, N.A., as a Bank

By: /s/ Daniel M. Kortick
---------------------------------
Name: Daniel M. Kortick
Title: Director

ALLSTATE INSURANCE COMPANY

By: /s/ Jerry D. Zinkula
----------------------------------

By: /s/ Patricia W. Wilson
---------------------------------
Name: Patricia W. Wilson
Title: Authorized Signatories

ALLSTATE LIFE INSURANCE COMPANY

By: /s/ Jerry D. Zinkula
----------------------------------

By: /s/ Jeffrey H. Aronson
---------------------------------
Name: Jeffrey H. Aronson
Title:

AG CAPITAL FUNDING PARTNERS, L.P.
By: Angelo, Gordon & Co., L.P., as Investment
Advisor

By: /s/ Jeffrey H. Aronson
---------------------------------
Name: Jeffrey H. Aronson
Title:

GCB INVESTMENT PORTFOLIO
By: CitiBank N.A.

By: /s/ Steven Kaufman
---------------------------------
Name: Steven Kaufman
Title: Vice President

12
<PAGE>

FIRST DOMINION FUNDING 1

By: /s/ First Dominion 1
---------------------------------
Name:
Title:

TORONTO DOMINION (Texas), INC.

By: /s/ Anne C. Favoriti
---------------------------------
Name: Anne C. Favoriti
Title: Vice President

KZH SHOSHONE LLC

By: /s/ Virginia Conway
---------------------------------
Name: Virginia Conway
Title: Authorized Agent

MERRILL LYNCH PRIME RATE PORTFOLIO
By: Merrill Lynch Asset Management, L.P.
as Investment Advisor

By: /s/ Joseph P. Matteo
---------------------------------
Name: Joseph P. Matteo
Title: Authorized Signatory

MERRILL LYNCH SENIOR FLOATING RATE
FUND, INC.

By: /s/ Joseph P. Matteo
---------------------------------
Name: Joseph P. Matteo
Title: Authorized Signatory

13
<PAGE>

OCTAGON LOAN TRUST
By: Octagon Credit Investors, its Manager

By: /s/ Joyce C. Delucca
---------------------------------
Name: JOYCE C. DELUCCA
Title: MANAGING DIRECTOR

PIMCO Total Return Fund (Acct 700)
By: Pacific Investment Management Company,
as Investment Advisor, acting through Investors
Fiduciary Trust Company in the Nominee
Name of IFTCO

By: /s/ Raymond Kennedy
---------------------------------
Name: Raymond Kennedy
Title: Senior Vice President

KZH-SOLEIL-2 CORPORATION

By: /s/ Virginia Conway
---------------------------------
Name: Virginia Conway
Title: Authorized Agent

TRANSAMERICA LIFE INSURANCE AND
ANNUITY COMPANY

By: /s/ John M. Casparian
---------------------------------
Name: John M. Casparian
Title: Investment Officer

14
<PAGE>

THE TRAVELERS INSURANCE COMPANY

By: /s/ The Travelers Insurance Company
------------------------------------
Name:
Title:

OXFORD STRATEGIC INCOME FUND
By: Eaton Vance Management
as Investment Advisor

By: /s/ Payson Swaffield
-------------------------------------
Name: Payson Swaffield
Title: Vice President

EATON VANCE SENIOR INCOME TRUST

By: Eaton Vance Management
as Investment Advisor

By: /s/ Payson Swaffield
-------------------------------------
Name: Payson Swaffield
Title: Vice President

KZH-ING-2 LLC

By: /s/ Virginia Conway
-------------------------------------
Name: Virginia Conway
Title: Authorized Agent

KZH-ING-3 LLC

By: /s/ Virginia Conway
-------------------------------------
Name: Virginia Conway
Title: Authorized Agent

15
<PAGE>

STRATA FUNDING LTD.

By: /s/ John H. Cullinane
---------------------------
Name: JOHN H. CULLINANE
Title: DIRECTOR

AERIES FINANCE LTD.

By: /s/ Andrew Ian Wignall
---------------------------
Name: Andrew Ian Wignall
Title: Director

CERES FINANCE LTD.

By: /s/ John H. Cullinane
---------------------------
Name: JOHN H. CULLINANE
Title: DIRECTOR

CAPTIVA FINANCE LTD.

By: /s/ John H. Cullinane
---------------------------
Name: JOHN H. CULLINANE
Title: DIRECTOR

CAPTIVA II FINANCE LTD.

By: /s/ John H. Cullinane
---------------------------
Name: JOHN H. CULLINANE
Title: DIRECTOR

16
<PAGE>

CAPTIVA FINANCE III, LTD., as advised by
Pacific Investment Management Company

By: /s/ John H. Cullinane
---------------------------
Name: John H. Cullinane
Title:

AMARA-1 FINANCE

By: /s/ Andrew Ian Wignall
---------------------------
Name: Andrew Ian Wignall
Title: Director

OASIS COLLATERIZED HIGH INCOME
PORTFOLIOS-1, LTD.

By: /s/ Andrew Ian Wignall
---------------------------
Name: Andrew Ian Wignall
Title: Director

THE FUJI BANK, LIMITED, NEW YORK BRANCH

By: /s/ Kazuyuki Nishimura
---------------------------
Name: Kazuyuki Nishimura
Title: Senior Vice President

BHF BANK AKTIENGESELLSCHAFT

By: /s/ Hans J. Schloz
---------------------------
Name: Hans J. Schloz
Title: Assistant Vice President

By: /s/ John Sykes
---------------------------
Name: John Sykes
Title: Vice President

17
<PAGE>

US AIR INC. MASTER TRUST STOCKSPLUS
By: Pacific Investment Management Company,
as Investment Advisor, acting through Wachovia Bank
and Trust Company in the Nominee Name INCE & Co.

By: /s/ Raymond Kennedy
----------------------------
Name: RAYMOND KENNEDY
Title: SR. VICE PRESIDENT

STOCKSPLUS LP SUBFUND B (Acct. 400)
By: Pacific Investment Management Company,
as Investment Advisor, acting through Investors
Fiduciary Trust Company in the Nominee.
Name of IFTCO

By: /s/ Raymond Kennedy
----------------------------
Name: RAYMOND KENNEDY
Title: SR. VICE PRESIDENT

BELLSOUTH GLOBAL BOND UK20
By: Pacific Investment Management Company,
as Investment Advisor, acting through State Street
Bank and Trust in the Nominee Name of Marine Crew
& Co.

By: /s/ Raymond Kennedy
----------------------------
Name: RAYMOND KENNEDY
Title: SR. VICE PRESIDENT

MMM COMPANY - TOTAL RETURN
By: Pacific Investment Management Company,
as Investment Advisor, acting through Mellon Trust
in the Nominee Name of Bost & Co.

By: /s/ Raymond Kennedy
----------------------------
Name: RAYMOND KENNEDY
Title: SR. VICE PRESIDENT

18
<PAGE>

GENERAL ELECTRIC CAPITAL CORPORATION

By: /s/ Holly Kaczmarczyk
--------------------------------
Name: Holly Kaczmarczyk
Title: Duly Authorized Signatory

GOLDMAN SACHS CREDIT PARTNERS, L.P.

By: /s/ Stephen J. McGuinness
--------------------------------
Name: Stephen J. McGuinness
Title: Authorized Signatory

MORGAN STANLEY DEAN WITTER
PRIME INCOME TRUST

By: /s/ Sheila Finnerty
--------------------------------
Name: Sheila Finnerty
Title: Vice President

VAN KAMPEN SENIOR INCOME TRUST

By: /s/ Jeffrey W. Mahlet
--------------------------------
Name: Jeffrey W. Mahlet
Title: Senior Vice President & Director

19
<PAGE>

KZH CYPRESSTREE-1 LLC

By: /s/ Virginia Conway
--------------------------------
Name: Virginia Conway
Title: Authorized Agent

KZH III LLC

By: /s/ Virginia Conway
--------------------------------
Name: Virginia Conway
Title: Authorized Agent

BANKERS TRUST COMPANY

By: /s/ Rosemary F. Dunne
--------------------------------
Name: ROSEMARY F. DUNNE
Title: VICE PRESIDENT

19
<PAGE>

Each Guarantor hereby acknowledges the foregoing Amendment No. 3, and confirms
and ratifies its Guaranty of the Guaranteed Obligations pursuant to Section 9.01
of the Credit Agreement, as amended by each of Amendment No. 1 thereto, dated as
of May 28, 1998. Amendment No. 2 thereto, dated as of June 8, 1998, and this
Amendment No. 3.

ACKNOWLEDGED AND AGREED TO, December __, 1998.

ZD INC.

By: /s/ Thomas L. Wright
---------------------------
Name: Thomas L. Wright
Title: Treasurer

ZD EVENTS INC.

By: /s/ Thomas L. Wright
---------------------------
Name: Thomas L. Wright
Title: Treasurer

<PAGE>

Exhibit 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-1 or our reports dated December 17, 1998;
relating to the combined financial statements of ZD, the combined financial
statements of ZD Publishing and the combined financial statements of ZDNet,
which appear in such Prospectus. We also consent to the references to us under
the headings "Experts" in such Prospectus.

/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
New York, NY
February 10, 1999

<PAGE>

Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-1 of our reports dated February 17, 1998;
relating to the combined financial statements of Ziff-Davis Inc. and ZD COMDEX
and Forums Inc., and the consolidated financial statements of Ziff-Davis Inc.
(formerly Ziff-Davis Publishing Company), which appear in such Prospectus. We
also consent to the references to us under the headings "Experts" in such
Prospectus.

/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
New York, NY
February 10, 1999