IDG BOOKS WORLDWIDE INC, S-1, 1998-05-22

IDG BOOKS WORLDWIDE INC
S-1, 1998-05-22

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 22, 1998
REGISTRATION NO. 333-
================================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

IDG BOOKS WORLDWIDE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S> <C> <C>
DELAWARE 2731 04-3078409
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>

919 E. HILLSDALE BLVD., SUITE 400
FOSTER CITY, CA 94404
(650) 655-3000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

JOHN J. KILCULLEN
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
IDG BOOKS WORLDWIDE, INC.
919 E. HILLSDALE BLVD., SUITE 400
FOSTER CITY, CA 94404
(650) 655-3000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------

COPIES TO:

<TABLE>
<S> <C>
ALAN K. AUSTIN, ESQ. WINTHROP B. CONRAD, JR., ESQ.
BRIAN C. ERB, ESQ. DAVIS POLK & WARDWELL
WILSON SONSINI GOODRICH & ROSATI 450 LEXINGTON AVENUE
PROFESSIONAL CORPORATION NEW YORK, NY 10017
650 PAGE MILL ROAD (212) 450-4000
PALO ALTO, CA 94304-1050
(650) 493-9300
</TABLE>

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 under 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, please 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 delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [ ]

CALCULATION OF REGISTRATION FEE

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<S> <C> <C>
===============================================================================================================
TITLE OF EACH CLASS OF SECURITIES PROPOSED MAXIMUM AMOUNT OF
TO BE REGISTERED AGGREGATE OFFERING PRICE(1) REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------------
Class A common stock, $0.001 par value............ $50,000,000 $14,750
===============================================================================================================
</TABLE>

(1) Estimated solely for the purpose of computing the amount of the registration
fee pursuant to Rule 457(o).

The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter 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 Commission, acting pursuant to said Section 8(a),
may determine.
================================================================================
<PAGE> 2

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 WE ARE NOT SOLICITING OFFERS TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.

PROSPECTUS (Subject to Completion)

Issued May 22, 1998
Shares

IDG Books Worldwide, Inc.
CLASS A COMMON STOCK idg logo

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

IDG Books Worldwide, Inc. is offering shares of its Class A common stock. Prior
to the offering, no public market existed for the Class A common stock. It is
currently anticipated that the initial public offering price will be between
$ and $ per share.

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

IDG Books Worldwide, Inc. will list the Class A common stock on the Nasdaq
National Market under the symbol "IDGB."

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

INVESTING IN THE CLASS A COMMON STOCK INVOLVES RISKS.
SEE "RISK FACTORS" BEGINNING ON PAGE 10.

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

PRICE $ A SHARE

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

<TABLE>
<CAPTION>
Underwriting
Price to Discounts and Proceeds to
Public Commissions Company
-------- ------------- -----------
<S> <C> <C> <C>
Per Share............................ $ $ $
Total................................ $ $ $
</TABLE>

The Securities and Exchange Commission and state securities regulators have not
approved or disapproved these securities, or determined if this prospectus is
truthful or complete. Any representation to the contrary is a criminal offense.

IDG Books Worldwide, Inc. has granted the underwriters the right to purchase up
to an additional shares of Class A common stock to cover
over-allotments. Morgan Stanley & Co. Incorporated expects to deliver the shares
of Class A common stock to purchasers on , 1998.

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

MORGAN STANLEY DEAN WITTER

GOLDMAN, SACHS & CO.

MERRILL LYNCH & CO.

, 1998
<PAGE> 3

Front Artwork Page:

[Set forth on the outside panel of the front gatefold under the heading "How the
World Knows IDG Books Worldwide" are the Company's logo and photographs of some
of the books that the Company publishes.]

[Set forth on one inside panel of the front gatefold under the heading "The
People You Know" are photographs of some of the authors of the Company's books.]

[Set forth on the second inside panel of the front gatefold under the heading
"The Companies Who Know" are a list of certain retailers who sell books
published by the Company and strategic partners of the Company, and set forth
under the heading "The Numbers to Know" are the Company's annual net revenues
from 1990 to 1997.]

2
<PAGE> 4

TABLE OF CONTENTS

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PAGE
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<S> <C>
Prospectus Summary..................... 5
Risk Factors........................... 11
Use of Proceeds........................ 16
Dividend Policy........................ 16
Capitalization......................... 17
Dilution............................... 18
Selected Financial Data................ 19
Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................... 21
Industry Overview...................... 28
Business............................... 29
</TABLE>

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Management............................. 37
Relationship with IDG and Certain
Transactions......................... 44
Principal Stockholders................. 46
Description of Capital Stock........... 47
Shares Eligible for Future Sale........ 50
Underwriters........................... 52
Legal Matters.......................... 53
Experts................................ 54
Additional Information................. 54
Index to Financial Statements.......... F-1
</TABLE>

Our principal executive offices are located at 919 E. Hillsdale Blvd.,
Suite 400, Foster City, California 94404, and our telephone number is (650)
655-3000. We maintain World Wide Web sites at www.idgbooks.com and
www.dummies.com. The reference to our World Wide Web site addresses does not
constitute incorporation by reference of the information contained therein. In
this prospectus, the "Company," "IDG Books," "we," "us" and "our" refer to IDG
Books Worldwide, Inc. and its predecessor.

You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with information different from that
contained in this prospectus. We are offering to sell, and seeking offers to
buy, shares of Class A common stock only in jurisdictions where offers and sales
are permitted. The information contained in this prospectus is accurate only as
of the date of this prospectus, regardless of the time of delivery of this
prospectus or of any sale of the Class A common stock.

Until , 1998, all dealers that buy, sell or trade Class
A common stock, whether or not participating in this offering, may be required
to deliver a prospectus. This is in addition to the dealers' obligation to
deliver a prospectus when acting as underwriters and with respect to their
unsold allotments or subscriptions.

3
<PAGE> 5

Our logo and certain titles and logos of our publications and products
mentioned in this prospectus are either (i) our trademarks or (ii) trademarks of
International Data Group, Inc. that have been licensed to us. Each trademark,
trade name or service mark of any other company appearing in this prospectus
belongs to its holder.

This prospectus includes statistical data regarding the publishing sector
which was obtained from internal surveys and from industry publications,
including reports generated by the Association of American Publishers,
Cowles/Simba Information ("Simba") and Publishers Weekly. These industry
publications generally indicate that they have obtained information from sources
believed to be reliable, but do not guarantee the accuracy and completeness of
such information. We have not independently verified such data. Similarly, we
have not presented our internal surveys for verification by an independent
party. We have not sought the consent of any of these organizations to refer to
their reports in this prospectus.

4
<PAGE> 6

PROSPECTUS SUMMARY

You should read the following summary together with the more detailed
information regarding our company and the Class A common stock being sold in
this offering and our financial statements and notes thereto appearing elsewhere
in this prospectus. Unless otherwise specifically stated, the information in
this prospectus has been adjusted to reflect the exchange in May 1998 of all of
our unclassified common stock for our Class A common stock and Class B common
stock, but does not take into account the possible issuance of additional shares
of Class A common stock to the underwriters pursuant to their right to purchase
additional shares to cover over-allotments.

We are a leading publisher of computer, business and self-help books
designed to make learning accessible and fun. In 1997, we produced more number
one best-selling computer books than any other publisher, according to
Publishers Weekly. The computer book category has been the fastest growing
sector in the U.S. book industry in each of the past six years. We publish and
market 18 book series under well-known brand names, including our popular
". . . For Dummies(R)" series. These books have created widespread recognition
of our brands by consumers, enabling us to successfully publish across a variety
of categories in technology, business and self-help. Our portfolio of brand
names includes more than 700 active titles. We have approximately 65 million
English-language books in print and have translated our books into 39 languages.
We believe that our readers value and trust our products and brands to help
obtain computer proficiency and professional certification, general business
know-how, career growth and personal enrichment.

Since our founding in 1990, we have grown rapidly. Our net revenue and net
income were $120.7 million and $7.0 million, respectively, in our most recently
completed fiscal year and grew at compound annual growth rates of 46.2% and
20.2%, respectively, from the 1993 to 1997 fiscal years. For the six months
ended March 31, 1998, our net revenue and net income were $71.9 million and $6.9
million, respectively, reflecting increases of 15.1% and 37.8%, respectively,
from the comparable period in the previous year. Our revenue is principally
derived from sales in the United States of computer, business and self-help
books, which accounted for approximately 84% of net revenue in fiscal 1997.

We publish our books in two general publishing groups, ". . . For
Dummies(R)" and IDG Books Technology, which target the distinct needs of
readers. ". . . For Dummies(R)" is a best-selling line of computer, business,
personal finance, study aids, cooking, gardening, do-it-yourself, health and
fitness, and self-help books. The group consists of more than 350 active titles
and approximately 50 million copies in print, as well as extensions into
multimedia, music, on-line information and board games. Windows For Dummies(R)
has more than six million copies in print across all editions, and the current
edition was the best-selling computer book in 1997 according to Publishers
Weekly and USA Today. Other best-selling ". . . For Dummies(R)" titles include
Internet for Dummies(R), Personal Finance For Dummies(R), Golf For Dummies(R)
and Cooking For Dummies(R). Sales of our ". . . For Dummies(R)" books accounted
for approximately 68% of our net revenue in our fiscal year ended September 30,
1997.

The IDG Books Technology group is comprised of an expanding collection of
information technology books published in multiple series under a variety of
brands. These books appeal to a wide range of readers, from beginners to
knowledgeable professionals. These series and brands include 3-D Visual(R), One
Step at a Time, Bible, ". . . Secrets(R)", MCSE Study and Novell Press. For the
fiscal year ended September 30, 1997, sales from our IDG Books Technology group
represented approximately 32% of our net revenue.

The increase in the market for computer related books is attributable to
the increase in the size of the personal computer market, including an increase
in the number of new users of computers at work and on-the-job, the continued
complexity of computer hardware and software applications and an inadequate
supply of information by technology manufacturers. We believe that the number of
personal computers in use in the United States has increased approximately 50%
from 88.6 million in 1995 to 133.8 million in 1997, and the percentage of
households in the United States owning computers grew from 35% to 43% during the
same period, based on studies by our market research affiliate. As a
consequence, the market for books devoted to the use of computer hardware and
software grew from $678.0 million in 1995 to $844.0 million in 1997. We believe
that the increase in the number of new and generally inexperienced personal
computer users is the result of falling personal computer prices, expanding
technology requirements in the workplace and the mass

5
<PAGE> 7

appeal of the Internet. Due to cost considerations, many technology suppliers
have ceased or reduced their supply of product documentation.

Our books compete in the general interest book market covering most
categories, other than fiction, biography and children's books. Because of the
increasing demand on people's time and the increasing complexity of life in
general, we believe people are turning to self-help and similar books to
increase personal productivity, enhance career success and provide competitive
advantages in a rapidly changing economy, as well as to provide personal
enrichment.

OPERATING STRATEGY

We strive to provide a consistent, accessible and rewarding learning
experience to our readers by offering quality products supported by mass
marketing which is timed to coincide with the introduction of new technology or
the emergence of new trends. To implement these objectives, we have adopted the
following operating strategies:

Focus on Branded Content and Mass Marketing. We conceive, acquire and
produce quality products, supported by extensive marketing campaigns which help
build brand recognition. We believe that our valuable name recognition generates
repeat demand for our books. The strength of our brand names also enables us to
extend these brands into additional licensed products and services.

Make Knowledge Accessible and Enjoyable. We believe millions of
individuals, businesses and families are challenged by technologies or are
trying to acquire new skills or enrich their lives. We specifically design our
products to make learning accessible and fun.

Maintain Efficient and Proven Publication Process. We have developed a
successful process to conceive, acquire and produce new and revised titles on a
timely and cost-effective basis. We utilize a dedicated staff of creative
personnel who identify and develop new titles and subject areas and who draw on
a recognized and highly respected list of leading authorities, media celebrities
and experienced computer/Internet authors. This collaboration, in conjunction
with our experienced editorial team, assures brand consistency through high
quality, easy-to-read publications. In addition, our close working relationships
with technology industry leaders enable us to release high quality and well
supported products and services in a timely manner. We believe this strategic
focus has created a competitive advantage for our technology books by enabling
us to anticipate and meet customer needs for information and know-how needs and
bring new and updated titles to market concurrently with the introduction of new
technologies. In addition, because of the popularity and demand for our flagship
brands, we can easily integrate new title and brand launches into our existing
marketing programs.

GROWTH STRATEGY

Building on our operating strategy and upon industry trends, we have
pursued the following strategies to expand our business:

Expand Technology, Business and Self-Help Publishing Programs. We have
identified numerous opportunities to take advantage of our market position in
the technology, business and self-help markets by adding new titles to existing
categories and expanding into new categories. For example, we are releasing
about 20 new and revised books in concert with Microsoft's planned release of
Windows 98 in mid 1998. These books will be supported by aggressive retail
incentives and marketing programs. We have also expanded our ". . . For
Dummies(R)" branded products into other successful categories, such as the
best-selling Golf For Dummies(R) title. We expect to expand this category into
other golf-related book topics.

Increase Distribution Penetration and Expand Network. We are working to
increase our shelf space among our existing retailers and distributors and to
add new retailers, distributors and distribution channels. To increase shelf
space at existing retailers we developed sales and marketing programs that,
unlike those of other book publishers, provide additional compensation to
distributors for sales to the ultimate consumer, the reader. To expand our sales
network, we are also establishing new distribution channels, such as on-line
retailers and other nontraditional channels for the distribution of our books.

6
<PAGE> 8

Develop Business-to-Business Opportunities. We intend to expand sales of
our core products directly to businesses for training purposes. For example, we
plan to expand our custom publishing activities, including production of
documentation and booklets, corporate training and special projects, for a broad
range of customers.

Develop Brand Ventures. We believe that there are numerous opportunities to
extend our brands through domestic and international licensing arrangements,
strategic joint ventures, retail alliances and on-line services.

Selectively Acquire Titles and Companies in the U.S. and
Internationally. We believe that opportunities exist to acquire selected
technology, business and self-help properties that will complement and enhance
our existing portfolio. Such acquisitions would enable us to take advantage of
our efficient operating structure and our focus on brand development.

RELATIONSHIP WITH IDG

We are an indirect subsidiary of International Data Group, Inc. ("IDG"), a
leading global provider of information technology media, research, conferences
and expositions. IDG also publishes directly or through license more than 280
magazines and newspapers, including PC World, Computerworld and Infoworld, in
over 75 countries. In addition, through its International Data Corporation
division, IDG is one of the world's leading providers of information technology
data, analysis and consulting. IDG also produces more than 110 globally branded
conferences and expositions in 33 countries. After completion of this offering,
IDG will own approximately % of the outstanding shares of our Class A common
stock and Class B common stock, combined, and will control approximately % of
our voting power.

7
<PAGE> 9

THE OFFERING

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Class A common stock offered................. shares(1)
Common stock to be outstanding after this
offering:
Class A common stock.................... shares(1)(2)
Class B common stock.................... shares(3)
--------
Total.............................. shares(1)(2)(3)
========
Overallotment option......................... shares
Voting rights
Class A common stock.................... One vote per share
Class B common stock.................... Ten votes per share(3)
Use of proceeds.............................. We intend to use approximately $38.4 million
of the net proceeds from this offering to
repay indebtedness owed to International Data
Group, Inc., our parent company. We incurred
this indebtedness in connection with a
dividend paid in the form of a promissory
note prior to this offering. We currently
intend to use the remaining net proceeds for
general corporate purposes, including working
capital and capital expenditures. For a more
detailed discussion of our intended use of
the proceeds from this offering and of the
dividend we declared prior to this offering,
you should read "Use of Proceeds" and
"Relationship with IDG and Certain
Transactions -- Pre-Offering Dividend."

Dividend policy.............................. We do not intend to pay dividends on our
common stock. We plan to retain any earnings
for use in the operation of our business and
to fund future growth.

Proposed Nasdaq National Market symbol....... IDGB
</TABLE>

- ---------------
(1) Assumes no exercise of the underwriters' over-allotment option.

(2) Based on shares outstanding as of March 31, 1998. Excludes (i) 2,850,000
shares of Class A common stock reserved for issuance pursuant to the
Company's 1998 Stock Plan, of which options to purchase 1,500,000 shares are
currently outstanding but not exercisable, and (ii) 350,000 shares of Class
A common stock reserved for issuance pursuant to the Company's Employee
Stock Purchase Plan. See "Management -- 1998 Stock Plan," "-- Employee Stock
Purchase Plan," "Description of Capital Stock" and note 8 of notes to
financial statements.

(3) Each share of our Class B common stock is convertible, at any time at the
option of the holder, into one share of Class A common stock. In addition,
the Class B common stock will be automatically converted into Class A common
stock upon the occurrence of certain events. See "Description of Capital
Stock."

8
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SUMMARY FINANCIAL AND OTHER DATA

The following statement of income data for the years ended September 30,
1995, 1996 and 1997 are derived from our audited financial statements included
elsewhere in this prospectus. The summary financial data for the years ended
September 30, 1993 and 1994 have been derived from our accounting records and
are unaudited. The statement of income data for the six-month periods ended
March 31, 1997 and 1998 and the balance sheet data as of March 31, 1998 are
derived from our unaudited financial statements which, in our opinion, have been
prepared on the same basis as the audited financial statements and reflect all
adjustments (consisting only of normal recurring adjustments) necessary for a
fair presentation of our results of operations and financial position. Results
for the six months ended March 31, 1998 are not necessarily indicative of
results that may be expected for the entire year. The financial data set forth
below should be read in conjunction with, and are qualified by reference to,
"Selected Financial Data," "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the financial statements and notes
thereto included elsewhere in this prospectus.

<TABLE>
<CAPTION>
SIX MONTHS
ENDED
YEAR ENDED SEPTEMBER 30,(1) MARCH 31,(1)
------------------------------------------------ -----------------
1993 1994 1995 1996 1997 1997 1998
------- ------- ------- ------- -------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Net revenue.............................. $26,419 $49,218 $72,523 $97,847 $120,688 $62,464 $71,916
------- ------- ------- ------- -------- ------- -------
Cost of sales............................ 13,115 23,497 40,598 55,703 63,064 32,075 37,856
Selling, general and administrative
expenses............................... 6,913 13,984 19,573 28,369 42,032 20,218 21,240
Parent corporate services fee............ 277 939 1,464 2,779 3,669 1,836 1,175(2)
------- ------- ------- ------- -------- ------- -------
Total operating costs and expenses..... 20,305 38,420 61,635 86,851 108,765 54,129 60,271
------- ------- ------- ------- -------- ------- -------
Income before provision for income
taxes.................................. 6,114 10,798 10,888 10,996 11,923 8,335 11,645
Provision for income taxes............... 2,321 4,301 4,522 4,508 4,888 3,348 4,775
------- ------- ------- ------- -------- ------- -------
Net income............................... $ 3,793 $ 6,497 $ 6,366 $ 6,488 $ 7,035 $ 4,987 $ 6,870
======= ======= ======= ======= ======== ======= =======
Basic and diluted net income per
share(3)............................... $ .34 $ .59 $ .57 $ .58 $ .63 $ .45 $ .62
======= ======= ======= ======= ======== ======= =======
Weighted average common shares
outstanding(3)......................... 11,100 11,100 11,100 11,100 11,100 11,100 11,100
Pro forma basic and diluted net income
per share(4)........................... $ $
Pro forma weighted average common shares
outstanding(4).........................
OTHER DATA:
EBITDA(5)................................ $ 6,167 $10,978 $11,270 $12,351 $ 13,586 $ 9,047 $13,313
Capital expenditures..................... 302 1,061 1,250 2,430 3,246 681 1,514
Net cash provided (used) by operating
activities............................. 1,625 3,253 (1,858) 1,855 7,820 (1,647) 974
Net cash used in investing activities.... (302) (1,061) (1,250) (2,430) (3,246) (681) (4,953)
Net cash provided (used) by financing
activities............................. (1,229) (2,200) 3,066 614 (4,583) 2,323 3,951
</TABLE>

<TABLE>
<CAPTION>
AS OF MARCH 31, 1998
----------------------------
PRO FORMA
ACTUAL AS ADJUSTED(6)
------- ---------------
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Cash...................................................... $ 46 $
Working capital........................................... 25,025
Total assets.............................................. 73,688
Stockholder's equity...................................... 37,264
</TABLE>

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(1) Our fiscal year ends on the Saturday closest to September 30. Fiscal years
1995, 1996 and 1997 ended on September 30, 1995, September 28, 1996 and
September 27, 1997, respectively. For convenience, fiscal

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<PAGE> 11

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

year-ends are denoted as September 30. Similarly, the 26-week periods ended
March 29, 1997 and March 28, 1998 are referred to as the six months ended
March 31, 1997 and March 31, 1998, respectively.

(2) Effective January 1, 1998, we assumed responsibility for certain corporate
administrative functions, as well as for our own strategic marketing and
brand-building, the costs for which had constituted a significant portion of
the parent corporate services fee. Accordingly, the parent corporate
services fee decreased to $150,000 per quarter as of January 1, 1998.

(3) See note 2 of notes to financial statements for an explanation of shares
used to compute basic and diluted net income per share.

(4) In May 1998, we paid a $38.4 million dividend by issuance of a note payable
to IDG. We intend to repay such note using a portion of the proceeds from
this offering. Unaudited pro forma basic and diluted net income per share
amounts are calculated using common stock outstanding plus the number of
shares whose proceeds are to be used to pay the note.

(5) "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 the Company's operating performance or to cash
flows as a measure of liquidity. We believe that EBITDA is a standard
measure commonly reported and widely used by analysts, investors and other
interested parties in the publishing and media industries, however, EBITDA
as presented herein may not be comparable to similarly titled measures
reported by other companies.

(6) Pro forma as adjusted amounts give effect to the issuance and sale of
shares of Class A common stock in the offering at an assumed
initial public offering price of $ per share and the application of the
net proceeds therefrom (after deducting estimated underwriting discounts and
commissions and offering expenses payable by us) as set forth under "Use of
Proceeds," including the payment of a $38.4 million dividend paid by us to
IDG as though it had been paid as of March 31, 1998. See "Use of Proceeds"
and "Capitalization."

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RISK FACTORS

You should carefully consider the risks described below before making an
investment decision. The risks and uncertainties described below are not the
only ones facing our company. Additional risks and uncertainties not presently
known to us or that we currently deem immaterial may also impair our business
operations. If any of the following risks actually occur, our business,
financial condition or results of operations could be materially adversely
affected. In such case, the trading price of our Class A common stock could
decline, and you may lose all or part of your investment.

This prospectus also contains forward-looking statements that involve risks
and uncertainties. Our actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain factors,
including the risks faced by us described below and elsewhere in this
prospectus.

DEPENDENCE ON THE COMPUTER INDUSTRY

We write many of our books for users of information technology,
particularly personal computers and software. Our technology-related books
accounted for a substantial majority of our net revenue in fiscal 1997, and we
expect that technology books will continue to account for a substantial majority
of our book sales for the foreseeable future. As a result, our future success
depends on the growth and development of the market for personal computers and
related applications. If this market does not continue to grow as we expect, or
if consumer demand for technology-related books declines for any reason, our
future financial results could be adversely affected.

DEPENDENCE ON MICROSOFT PRODUCTS AND COMPETITION WITH MICROSOFT PRESS

Sales of our books devoted to the use of software products sold by
Microsoft Corporation ("Microsoft"), including its Windows operating system,
accounted for approximately half of our net revenue in fiscal 1997. As a result,
our future financial results will depend in large part on continued consumer
demand for Microsoft products. A decline in the use of Microsoft products would
likely result in decreased demand for our books and could adversely affect our
future financial results. Prospective investors should be aware that Microsoft
has announced the planned release of its Windows 98 operating system in mid
1998. We have devoted substantial time and resources to developing and writing
books in anticipation of the release of Windows 98.

Federal and various state regulators have filed lawsuits against Microsoft
claiming that certain practices by Microsoft with respect to Windows 98 in its
current form violate antitrust laws. Windows 98 is currently scheduled for
release in late June 1998. We have printed our Windows 98 products in
anticipation of the release of Windows 98 in the form now being proposed. If
Microsoft were prevented from releasing Windows 98 or were required to make
significant modifications to Windows 98 as a result of these lawsuits, we may be
required to revise or reprint our Windows 98 books which could cause us to write
off approximately $3.0 million in Windows 98 inventory. In addition, any delay
in the release of Windows 98, or the failure of Windows 98 to gain market
acceptance, due to these lawsuits or for any other reason would adversely affect
sales of our Windows 98 books. In such event, our financial results could be
adversely effected.

In addition to relying on the sales of our books devoted to Microsoft
products, we compete with Microsoft's publishing division, Microsoft Press, for
readers of computer-related books, including books covering Microsoft products.
Microsoft Press has substantially greater financial resources than we do and,
because it is owned by Microsoft, may have better access to planned and new
Microsoft products. As a result, Microsoft Press may have a competitive
advantage over us in providing books devoted to the use of software products
sold by Microsoft.

DEPENDENCE ON " . . . FOR DUMMIES(R)" PUBLICATIONS

We derive a substantial proportion of our net revenue from the sale of our
" . . . For Dummies(R)" family of books. In addition, we have devoted
substantial resources to the publication of these books and the development of
our " . . . For Dummies(R)" brand name. As a result, any change in reader
preferences leading to a decline in demand for our " . . . For Dummies(R)" books
would likely have a material adverse effect on our future financial results.

11
<PAGE> 13

NEW PRODUCT RISKS

Our net revenue derived from the sale of a new book generally decreases
with time. Consequently, our future success depends on our ability to identify
and monitor trends in the technology and business and self-help markets and to
offer new titles, as well as other products and services, that address the
changing needs of our target audiences. To establish market acceptance of a new
publication, we must dedicate significant resources to research and editorial
development, production and sales and marketing. We incur significant costs in
developing, publishing and selling a new book, which often significantly precede
meaningful revenues from its sale. Consequently, new publications can require
significant time and investment to achieve profitability. Prospective investors
should note, however, that there can be no assurance that our efforts to
introduce new publications or other products or services will be successful or
profitable.

We record as an expense the costs related to the development of new
publications and products, other than author advances, as they are incurred. As
a result, our profitability from quarter-to-quarter and from year-to-year may be
adversely affected by the number and timing of new publications and product
launches in any period and the level of acceptance gained by such publications
and products.

RISKS ASSOCIATED WITH FLUCTUATIONS IN PAPER COSTS; SIGNIFICANT SUPPLIER

Paper is the principal raw material used in our business. We generally
purchase paper from merchants representing the paper mills. We do not have
long-term paper supply contracts with these paper merchants. Our arrangements
with merchants are negotiated each year and provide for quarterly price
adjustments. Paper prices have been volatile over the past several years and are
affected by many factors, including demand, mill capacity, pulp supply, energy
costs and general economic conditions, our cost of paper, relative to our net
revenue, can vary from period-to-period. In the past, paper has also been
difficult to obtain due to industry-wide shortages. Significant paper price
increases, sustained over a period of time, could adversely affect our future
financial condition or operating results.

We rely on a number of printing companies to print our books. Our largest
printing supplier accounted for more than 25% of our total printing and binding
purchases in fiscal 1997. If the relationship with this vendor were to be
interrupted, or service from this or any other significant supplier were to be
delayed for any reason, our future financial or operating results could be
adversely affected.

FLUCTUATIONS IN QUARTERLY RESULTS AND CYCLICALITY OF REVENUE

Our operating expenses are relatively fixed in the short-term and are based
on our long-term revenue expectations. Accordingly, we may not be able to adjust
quickly our spending to compensate for any short-term, unexpected shortfall in
revenue. Any shortfall in our revenue would have a direct impact on our results
of operations, and fluctuations in quarterly results could affect the market
price of our Class A common stock in a manner unrelated to our long-term
operating performance. We typically sell more books during our first and second
quarters because of increased sales during the Christmas season. In addition, we
sell more books in quarters in which software manufacturers release new or
updated versions of popular software products. Because a substantial portion of
our selling, general and administrative expenses is incurred evenly throughout
the year, we generally experience relatively lower net profit during quarters
not impacted by increases in net revenue due to seasonal or other factors
discussed above.

In addition, we typically publish books relating to new trends and
technologies. Accordingly, if general economic conditions worsen, people may
defer spending on these new trends and technologies, which could reduce the
number of books that we sell.

RISKS ASSOCIATED WITH PRODUCT DISTRIBUTION CHANNELS; RISK OF PRODUCT RETURNS

We sell our books primarily to large retail chains, large wholesalers,
warehouse clubs, office superstores and computer and electronics superstores. In
fiscal 1997, our three largest customers together accounted for approximately
37% of net revenue. Our future financial results depend in large part on our
relationship with our customers. Any disruption in our relationships with
customers could adversely affect our financial performance. In addition, our
sales policy generally permits our book customers to return any unsold or
damaged books for full credit. We record as revenue all books sold to our
customers in a particular quarter

12
<PAGE> 14

and, at the same time, record a provision for estimated returns. During our
fiscal year 1997, we recorded a provision for returns of approximately 21.0% of
our gross sales. If, during any period, our customers return more books than we
previously estimated, our financial results in that period would be adversely
affected.

COMPETITION

We face competition directly from other book publishers and indirectly from
nonprint media. Competition in book publishing stems from a variety of factors,
including editorial quality, timely introduction of new titles, product
positioning, pricing and brand name recognition. In addition to our company,
Simon & Schuster, Microsoft Press and McGraw-Hill all have a strong market
presence in the United States and internationally in technology publishing. The
principal competitors for our business and self-help titles include Random
House, Simon & Schuster and HarperCollins. Each of these competitors has
substantially greater financial resources than we do.

Nonprint media, such as the Internet and CD-ROMs, may also present
substantial competition. If computer users increase their reliance on
instruction and other information disseminated on-line, our business could be
adversely affected.

RISKS ASSOCIATED WITH SEPARATION FROM IDG; POTENTIAL COMPETITION WITH IDG

We are currently an indirect subsidiary of IDG and have never operated as a
stand-alone company. As a result, we have historically depended on IDG for
corporate administrative functions, as well as for strategic marketing and brand
building, financing, cash management, tax and payroll administration,
property/casualty insurance, employee benefits administration and certain other
services. We have entered into agreements with IDG for the continued provision
of certain of these services after the offering. These agreements may be
terminated under certain circumstances. If these agreements are terminated, we
will be required to provide such services internally or find a third-party
provider of these services. There can be no assurance that, if required, we will
be able to secure the provision of these services on acceptable terms. If we are
unsuccessful in obtaining acceptable provision of services upon termination of
the transitional service agreements, our future financial performance could be
adversely affected.

IDG publishes magazines and on-line services and, to a lesser extent, books
that may be competitive with our publications. Certain of IDG's current
publications and products compete with our books. As a result, we may compete
with IDG for certain readers. IDG has substantially greater resources than we
do. Any increased competition from IDG for readers could have an adverse impact
on our business and operating results.

CONTROL BY IDG; POTENTIAL CONFLICTS OF INTERESTS; BENEFITS TO IDG

IDG owns all of the shares of the Class B common stock, each share of which
is entitled to ten votes per share on most stockholder actions, and will have
approximately % of the combined voting power of both classes of common stock
after this offering. The purchasers of the shares of Class A common stock
offered hereby will be entitled to one vote per share and will have
approximately % of the combined voting power. After the offering, IDG will
have two representatives on our Board of Directors and will have enough votes to
elect all members of the Board of Directors. As a result of its stock ownership
after this offering, IDG will be in a position, without the approval of our
public stockholders, to:

- amend our charter or approve a merger, sale of assets or other major
corporate transaction;

- defeat any non-negotiated takeover attempt that might otherwise benefit
the public stockholders;

- determine the amount and timing of dividends paid to itself and to our
public stockholders; and

- otherwise control our management and operations and the outcome of all
matters submitted for a stockholder vote that could conflict with the
interests of our public stockholders.

In May 1998, we paid a dividend to IDG in the amount of $38.4 million. This
dividend represented substantially all of our retained earnings through April
1998.

13
<PAGE> 15

DEPENDENCE ON KEY PERSONNEL

We rely, and will continue to rely, on our senior executive officers and
other key management personnel. If any of these people leaves our company, the
relationships that these people have with our authors, customers or
manufacturers could be lost, and we would need to find people that could develop
new relationships. In addition, we expect that we will need to hire additional
employees, including senior executive officers for marketing, worldwide sales
and information systems. The competition for employees at all levels of the book
publishing industry is intense and is increasing. In our Northern California
operations, in particular, we have experienced increased turnover of employees
and are experiencing difficulty in attracting new employees. If we do not
succeed in attracting new employees or retaining and motivating our current
employees, our business could suffer significantly.

TRANSITION TO NEW COMPUTER SYSTEM AND NEW DISTRIBUTION SERVICE

We currently intend to upgrade our existing computer system in 1998. We
outsource distribution and fulfillment functions to retail and wholesale
customers through two vendors. Our contracts with these vendors expire in
September 1999. One of these vendors accounted for more than 70% of our
distribution and order fulfillment costs in each of fiscal 1996 and 1997 and in
the six months ended March 31, 1998. We anticipate that we will select a
single-source vendor for distribution and fulfillment. At this time, we have not
identified a replacement vendor. Any difficulties in implementing our new
computer system or transitioning to a new distribution vendor could adversely
impact our day-to-day operating performance and future financial results.

RISKS ASSOCIATED WITH POTENTIAL ACQUISITIONS

As part of our growth strategy, we may make acquisitions of, or significant
investments in, complementary companies, publications or products. If we make an
acquisition, we could have difficulty assimilating the personnel and operations
of the acquired company and could experience disruption of our ongoing business,
the distraction of management and other resources, and difficulty in maintaining
our uniform standards, controls and procedures. There can be no assurance that
we would succeed in overcoming these risks or any other problems encountered in
connection with any acquisitions we may make. In addition, we may be required to
incur debt or issue equity to pay for any future acquisitions.

SHARES ELIGIBLE FOR FUTURE SALE

After this offering, we will have outstanding shares of Class A
common stock ( shares if the underwriters exercise their option to
purchase additional shares of Class A common stock in the offering) and will
have reserved an additional 3,200,000 shares of Class A common stock for
issuance pursuant to our stock option and stock purchase plans. We intend to
register for resale the shares of Class A common stock reserved for issuance
under our stock option and stock purchase plans approximately 180 days after the
date of this prospectus. The federal securities laws impose certain restrictions
on the ability of stockholders to resell their shares. In addition, IDG and the
holders of options to purchase our Class A common stock have agreed that, for a
period of 180 days from the date of this prospectus, they will not sell their
shares. Accordingly, on 1998, approximately shares of our
common stock will be available for immediate resale (subject to certain volume
restrictions imposed on our affiliates, including IDG, by the securities laws).

We and IDG have entered into a registration rights agreement which permits
IDG to include shares of common stock in certain registrations of common stock
made by us. Sales of a substantial number of shares of common stock into the
public market after this offering, or the perception that such sales could
occur, could materially and adversely affect our stock price or could impair our
ability to obtain capital through an offering of equity securities.

14
<PAGE> 16

ABSENCE OF PRIOR MARKET FOR THE SHARES; POSSIBLE VOLATILITY OF SHARE PRICE

Prior to this offering, there has been no public market for our common
stock. The initial public offering price will be determined through negotiations
between the underwriters and us. You may not be able to resell your shares at or
above the initial public offering price due to a number of factors, including:

- actual or anticipated fluctuations in our operating results;

- changes in expectations as to our future financial performance or changes
in financial estimates of securities analysts;

- announcements of new publications or technological innovations; and

- the operating and stock price performance of other comparable companies.

In addition, the stock market in general has experienced extreme volatility
that often has been unrelated to the operating performance of particular
companies. These broad market and industry fluctuations may adversely affect the
trading price of our Class A common stock, regardless of our actual operating
performance.

You should read the "Underwriters" section for a more complete discussion
of the factors to be considered in determining the initial public offering
price.

IMMEDIATE AND SUBSTANTIAL DILUTION TO NEW INVESTORS

The initial public offering price is substantially higher than the net
tangible book value per share of the outstanding common stock immediately after
the offering. Accordingly, if you purchase Class A common stock in the offering,
you will incur immediate dilution of approximately $ in the net tangible
book value per share of Class A common stock from the price you pay for the
Class A common stock.

15
<PAGE> 17

USE OF PROCEEDS

The Company will use approximately $38.4 million of the net proceeds from
this offering for the repayment of indebtedness owed to IDG. The indebtedness
was incurred by the Company in connection with the dividend declared by the
Company prior to this offering that was paid in the form of a promissory note.
See "Dividend Policy" and "Relationship with IDG and Certain
Transactions -- Pre-Offering Dividend." The Company currently expects to use the
remaining $ million of net proceeds for general corporate purposes, including
investments in working capital and capital expenditures. A portion of the net
proceeds from this offering may also be used to acquire or invest in
complementary businesses, publications or products, or to invest in geographic
expansion. The Company has no agreements or commitments with respect to any such
transactions. Pending use of the net proceeds for the above purposes, the
Company intends to invest such funds in short-term, interest-bearing, investment
grade obligations.

DIVIDEND POLICY

Although the Company has paid dividends with respect to its capital stock
to IDG from time to time, the Company does not intend to pay any cash dividends
with respect to its common stock for the foreseeable future after this offering.
After consummation of the offering, the Company intends to retain any earnings
for use in the operation of its business and to fund future growth. Prior to
this offering, the Company paid a $38.4 million dividend to its sole
stockholder, IDG. Any determination to pay dividends in the future will be at
the discretion of the Company's Board of Directors and will depend upon the
Company's financial condition and results of operations and capital
requirements. See "Use of Proceeds" and "Relationship with IDG and Certain
Transactions -- Pre-Offering Dividend."

16
<PAGE> 18

CAPITALIZATION

The following table sets forth the total capitalization of the Company at
March 31, 1998: (i) on an actual basis; (ii) on a pro forma basis after giving
retroactive effect to a dividend paid in May 1998 to IDG in the form of a note
payable and the reclassification of the Company's common stock; and (iii) as
adjusted to reflect the issuance and sale of shares of Class
A common stock offered hereby by the Company at an initial public offering price
of $ per share, after deducting underwriting discounts and commissions and
estimated offering expenses, and the application of the estimated net proceeds
therefrom to pay the note payable to IDG and settle the intercompany balance
with IDG. See "Use of Proceeds" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations." This table should be read in
conjunction with the Financial Statements and Notes thereto appearing elsewhere
in this prospectus.

<TABLE>
<CAPTION>
MARCH 31, 1998
----------------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
------- -------------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Note payable to IDG(1)................................... $ -- $38,400 --
======= ======= =======
Stockholders' equity:
Preferred stock, $.001 par value; 5,000,000 shares
authorized actual, no shares authorized or
outstanding pro forma and pro forma as adjusted..... -- -- --
Undesignated common stock, $.001 par value; 25,000,000
shares authorized and 11,100,000 shares outstanding
actual, no shares authorized or outstanding pro
forma and pro forma adjusted........................ 11 -- --
Class A common stock, $.001 par value; no shares
authorized or outstanding actual, 25,000,000 shares
authorized pro forma and pro forma as adjusted;
shares outstanding pro forma,
shares outstanding pro forma as adjusted............ -- 11 --
Class B common stock, $.001 par value; no shares
authorized or outstanding actual, 400,000 shares
authorized pro forma and pro forma as adjusted;
394,251 shares outstanding pro forma and pro forma
as adjusted......................................... -- -- --
Additional paid-in capital............................. -- --
Retained earnings (deficit)............................ 37,634 (766)
Advances due (from) Parent(2).......................... (381) (381) --
------- ------- -------

Total stockholders' equity (deficit).............. $37,264 $(1,136) $
------- ------- -------

Total capitalization........................... $37,264 $(1,136) $
======= ======= =======
</TABLE>

- ---------------
(1) In May 1998, the Company paid a $38.4 million dividend by issuance of a note
payable to IDG. The Company intends to pay such note using a portion of the
proceeds from this offering. This dividend represented substantially all of
the Company's retained earnings through April 1998.

(2) Advances due (from) Parent are included as a component of stockholder's
equity, as no interest was charged for such balances and there was no
scheduled repayment. The Company intends to settle such balance in
connection with a planned initial public offering.

17
<PAGE> 19

DILUTION

The pro forma net tangible book value (deficit) of the Company as of March
31, 1998 was $(4,969,000) or $(.45) per share of common stock. Pro forma net
tangible book value per share is determined by dividing the tangible net worth
of the Company (total assets less intangible assets of $3,833,000 for publishing
rights and less total liabilities) after giving retroactive effect to the
dividend paid to IDG in the form of a note payable by the aggregate number of
shares of common stock outstanding. After giving effect to the sale by the
Company of the shares of Class A Common stock offered hereby (at an assumed
initial public offering price of $ per share, the midpoint of the range set
forth on the cover page of this Prospectus) and the receipt and application of
the net proceeds therefrom, the Company's pro forma net tangible book value at
March 31, 1998 would have been $ or $ per share. This represents an
immediate increase in pro forma net tangible book value to existing stockholders
of $ per share and an immediate dilution to new investors of $ per
share. The following table illustrates this per share dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share............. $
Pro forma net tangible book value (deficit) per share as
of March 31, 1998...................................... $
Increase in pro forma net tangible book value per share
attributable to new investors..........................
-------
Pro forma net tangible book value per share after this
offering..................................................
-------
Dilution per share to new investors(1)...................... $
=======
</TABLE>

- ---------------
(1) Dilution is determined by subtracting pro forma net tangible book value per
share after the offering from the initial public offering price per share.

The following table sets forth, on a pro forma basis, as of March 31, 1998,
the number of shares of common stock purchased from the Company, the total
consideration paid (or to be paid), and the average price per share paid (or to
be paid) by existing stockholders and by the new investors, at an assumed
initial public offering price of $ per share (the midpoint of the range set
forth on the cover page of this Prospectus), before deducting estimated
underwriting discounts and commissions and offering expenses payable by the
Company:

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
------------------ -------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
-------- ------- --------- -------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders........................ % $ % $
New investors................................
-------- --- -------- ----
Total.............................. 100% $ 100%
======== === ======== ====
</TABLE>

The foregoing table assumes no exercise of the underwriters' over-allotment
option. See "Underwriters." The foregoing table also excludes (i) 2,850,000
shares of Class A common stock reserved for issuance pursuant to the Company's
1998 Stock Plan, of which options to purchase 1,500,000 shares are currently
outstanding but not exercisable, and (ii) 350,000 shares of Class A common stock
reserved for issuance pursuant to the Company's Employee Stock Purchase Plan.
See "Management -- 1998 Stock Plan," "-- Employee Stock Purchase Plan,"
"Description of Capital Stock" and Note 8 of Notes to Financial Statements.

18
<PAGE> 20

SELECTED FINANCIAL DATA

The following statement of income data for the years ended September 30,
1995, 1996 and 1997 and the balance sheet data as of September 30, 1996 and 1997
are derived from the financial statements of the Company included elsewhere in
this prospectus, which have been audited by Deloitte & Touche LLP, independent
auditors. The balance sheet data as of September 30, 1995 are derived from
audited financial statements not included herein. The selected financial data as
of and for the years ended September 30, 1993 and 1994 have been derived from
the accounting records of the Company and are unaudited. The statement of income
data for the six-month periods ended March 31, 1997 and 1998 and the balance
sheet data as of March 31, 1998 are derived from the Company's unaudited
financial statements which, in the opinion of management, have been prepared on
the same basis as the audited financial statements and reflect all adjustments
(consisting only of normal recurring adjustments) necessary for a fair
presentation of the Company's results of operations and financial position.
Results for the six months ended March 31, 1998 are not necessarily indicative
of results that may be expected for the entire year. The selected financial data
set forth below should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the Company's
financial statements, including the notes thereto, appearing elsewhere in this
prospectus.

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED SEPTEMBER 30,(1) MARCH 31,(1)
------------------------------------------------ -----------------
1993 1994 1995 1996 1997 1997 1998
------- ------- ------- ------- -------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Net revenue............................ $26,419 $49,218 $72,523 $97,847 $120,688 $62,464 $71,916
------- ------- ------- ------- -------- ------- -------
Cost of sales.......................... 13,115 23,497 40,598 55,703 63,064 32,075 37,856
Selling, general and administrative
expenses............................. 6,913 13,984 19,573 28,369 42,032 20,218 21,240
Parent corporate services fee.......... 277 939 1,464 2,779 3,669 1,836 1,175(2)
------- ------- ------- ------- -------- ------- -------
Total operating costs and expenses... 20,305 38,420 61,635 86,851 108,765 54,129 60,271
------- ------- ------- ------- -------- ------- -------
Income before provision for income
taxes................................ 6,114 10,798 10,888 10,996 11,923 8,335 11,645
Provision for income taxes............. 2,321 4,301 4,522 4,508 4,888 3,348 4,775
------- ------- ------- ------- -------- ------- -------
Net income............................. $ 3,793 $ 6,497 $ 6,366 $ 6,488 $ 7,035 $ 4,987 $ 6,870
======= ======= ======= ======= ======== ======= =======
Basic and diluted net income per
share(3)............................. $ .34 $ .59 $ .57 $ .58 $ .63 $ .45 $ .62
======= ======= ======= ======= ======== ======= =======
Weighted average common shares
outstanding(3)....................... 11,100 11,100 11,100 11,100 11,100 11,100 11,100
Pro forma basic and diluted net income
per share(4)......................... $ $
Pro forma weighted average common
shares outstanding(4)................
OTHER DATA:
EBITDA(5).............................. $ 6,167 $10,978 $11,270 $12,351 $ 13,586 $ 9,047 $13,313
Capital expenditures................... 302 1,061 1,250 2,430 3,246 681 1,514
Net cash provided (used) by operating
activities........................... 1,625 3,253 (1,858) 1,855 7,820 (1,647) 974
Net cash used in investing
activities........................... (302) (1,061) (1,250) (2,430) (3,246) (681) (4,953)
Net cash provided (used) by financing
activities........................... (1,229) (2,200) 3,066 614 (4,583) 2,323 3,951
</TABLE>

<TABLE>
<CAPTION>
AS OF SEPTEMBER 30,(1)
------------------------------------------------ AS OF
1993 1994 1995 1996 1997 MARCH 31, 1998
------- ------- ------- ------- -------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash................................... $ 94 $ 86 $ 44 $ 83 $ 74 $ 46
Working capital........................ 2,911 5,377 13,662 18,778 18,708 25,025
Total assets........................... 8,549 20,199 39,101 43,636 57,163 73,688
Stockholder's equity................... 3,160 7,457 16,889 23,991 26,443 37,264
</TABLE>

- ---------------
(1) The Company's fiscal year ends on the Saturday closest to September 30.
Fiscal years 1995, 1996 and 1997 ended on September 30, 1995, September 28,
1996 and September 27, 1997, respectively. For convenience, fiscal year-ends
are denoted as September 30. Similarly, the 26-week periods ended March 29,
1997 and March 28, 1998 are referred to as the six months ended March 31,
1997 and March 31, 1998, respectively.

19
<PAGE> 21

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

(2) Effective January 1, 1998, the Company assumed responsibility for certain
corporate administrative functions, as well as for its own strategic
marketing and brand-building, the costs for which had constituted a
significant portion of the parent corporate services fee. Accordingly, the
parent corporate services fee decreased to $150,000 per quarter as of
January 1, 1998.

(3) See Note 2 of Notes to Financial Statements for an explanation of shares
used to compute basic and diluted net income per share.

(4) In May 1998, the Company paid a $38.4 million dividend by issuance of a note
payable to IDG. The Company intends to pay such note using a portion of the
proceeds from this offering. Unaudited pro forma basic and diluted net
income per share amounts are calculated using common shares outstanding plus
the number of shares whose proceeds are to be used to pay such note.

(5) "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 the Company's operating performance or to cash
flows as a measure of liquidity. The Company 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,
however, EBITDA as presented herein may not be comparable to similarly
titled measures reported by other companies.

20
<PAGE> 22

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

OVERVIEW

IDG Books is a leading publisher of computer, business and self-help books
designed to make learning accessible and fun. In 1997, the Company produced more
number one best-selling computer books than any other publisher, according to
Publishers Weekly. The Company publishes and markets 18 book series under
well-known brand names, including its popular ". . . For Dummies(R)" series.
These books have created widespread recognition of the Company's brands by
consumers enabling it to successfully publish across a variety of categories in
technology, business and self-help. The Company's portfolio of brand names
includes more than 700 active titles. The Company has approximately 65 million
English-language books in print and has translated its books into 39 languages.
The Company believes that its readers value and trust its products and brands to
help obtain computer proficiency and professional certification, general
business know-how, career growth and personal enrichment. The computer book
category grew 8.2% in 1997 according to Simba and has been the fastest growing
sector in the U.S. book industry in each of the past six years.

The Company's principal source of revenue is from sales of books through
its two general publishing groups, ". . . For Dummies(R)" and IDG Books
Technology. For the six months ended March 31, 1998, the Company derived
approximately 63.9% of its net revenue from sales of books through its
". . . For Dummies(R)" group and approximately 32.9% from sales through the IDG
Books Technology group. For the six months ended March 31, 1998, other revenue,
principally licensing, accounted for 3.2% of total revenue.

Sales of technology-related books account for a substantial majority of the
Company's net revenue. In this regard, sales of books devoted to the use of
software products sold by Microsoft, including its Windows operating system,
accounted for approximately one-half of the Company's net revenue in fiscal
1997. The Company expects to continue to depend upon sales of technology books,
particularly those related to Microsoft products, for a substantial majority of
the Company's net revenue for the foreseeable future. Federal and various state
regulators have raised legal issues with respect to Windows 98 in its current
form. The Company has printed Windows 98 products in anticipation of the form of
Windows 98 now being proposed to be released. Any significant modification in
Windows 98 as a result of these regulatory concerns could cause the Company to
write off approximately $3.0 million in Windows 98 inventory.

The Company's customers consist principally of national retail chain
booksellers, wholesale distributors, office superstores, membership clubs and
computer/electronic superstores located primarily in the United States and
Canada. Over the last several years, there has been significant consolidation in
the distribution channels for books, including retail outlets, although
alternative distribution channels have emerged. As a result, the Company expects
that this trend will lead to increased concentration within each distribution
channel. During the six months ended March 31, 1998, the Company's top three
customers accounted for approximately 40.0% of the Company's net revenue, and
the Company's top ten customers accounted for approximately 65.6% of the
Company's net revenue.

The Company's sales policy, consistent with industry practice, generally
permits book distributors to return any unsold or damaged books for full credit.
The Company records a provision for estimated returns using historical
experience and other industry factors. Net revenue includes gross product sales,
less a provision for estimated future returns. For the six months ended March
31, 1998 and for the year ended September 30, 1997, the Company's provision for
returns accounted for approximately 23.0% and 21.0% of gross sales,
respectively.

The principal components of the Company's cost of net revenue are paper and
printing, royalty expense, product development, fulfillment and inventory
obsolescence costs. Paper is the principal raw material used in the Company's
business. The Company does not have long-term paper supply contracts, and its
arrangements are negotiated each year and provide for quarterly price
adjustments. Paper prices have been volatile over the past several years and are
affected by many factors, including demand, mill capacity, pulp supply, energy
costs, and general economic conditions. Consequently, the Company's cost of
paper, relative to net revenue, can vary from period-to-period. Product
development comprises editorial, production and pre-publication costs. The

21
<PAGE> 23

Company generally must dedicate significant resources to research and editorial
development, production and sales and marketing. The Company incurs significant
costs in developing, publishing and selling a new book, which often
significantly precede meaningful revenues from its sale. Consequently, new
publications can require significant time and investment to achieve
profitability. The Company anticipates that product development costs will
increase as a percentage of the total cost of net revenue, as the volume of both
new and revised products increases due to accelerated changes in technology and
related software. The other principal operating costs for the Company are
selling, general and administrative expenses, which include applicable salaries,
benefits, sales commissions, travel and entertainment, advertising and
promotion, customer incentives, occupancy and depreciation. Selling, general and
administrative expenses comprised approximately 35% of the Company's total
operating expenses for the six months ended March 31, 1998.

The Company has historically depended on IDG, the Company's parent, for
corporate administrative functions, as well as for strategic marketing and brand
building, financing, cash management, tax and payroll administration, insurance,
employee benefits administration and certain other services. The fees for these
services have been charged to the Company through a corporate services fee based
on a percentage of budgeted net revenue plus a fixed charge. These costs were
1.9% of the Company's total operating expenses for the six months ended March
31, 1998. The Company and IDG have agreed to continue certain of these services
on a cost-for-services basis after the offering. The Company will perform the
remainder of these services independently after the offering. The Company
currently expects that the costs for these services to be paid to IDG will
initially amount to approximately $600,000 per year. Because IDG has provided
the Company with cash management and financing requirements, the Company has
historically not had interest income or expense. The Company anticipates that
its seasonal working capital requirements may require short-term borrowings and
that it will earn interest income on cash balances. See "Relationship with IDG
and Certain Transactions -- Intercompany Agreements."

The Company's fiscal year ends on the Saturday closest to September 30.
Fiscal years 1995, 1996 and 1997 ended on September 30, 1995, September 28, 1996
and September 27, 1997, respectively. For convenience, throughout this
Management's Discussion and Analysis of Financial Condition and Results of
Operations, fiscal year-ends are denoted as September 30. Similarly, the 26-week
periods ended March 29, 1997 and March 28, 1998 are referred to as the six
months ended March 31 and the 13-week periods comprising each fiscal quarter are
denoted by the last day of the calendar month.

RESULTS OF OPERATIONS

The following table summarizes historical results of operations as a
percentage of net revenue for the periods shown.

<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED SEPTEMBER 30, ENDED MARCH 31,
-------------------------- ----------------
1995 1996 1997 1997 1998
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Net Revenue:
". . . For Dummies(R)"............................. 67.6% 69.9% 68.1% 72.0% 65.2%
IDG Books Technology............................... 32.4 30.1 31.9 28.0 34.8
----- ----- ----- ----- -----
Total Net Revenue.................................. 100.0% 100.0% 100.0% 100.0% 100.0%
===== ===== ===== ===== =====

Cost of sales...................................... 56.0% 56.9% 52.3% 51.3% 52.6%
Selling, general and administrative expenses....... 27.0 29.0 34.8 32.4 29.5
Parent corporate services fee...................... 2.0 2.8 3.0 2.9 1.6
Income before provision for income taxes........... 15.0 11.2 9.9 13.3 16.2
Net income......................................... 8.8 6.6 5.8 8.0 9.6
</TABLE>

22
<PAGE> 24

SIX MONTHS ENDED MARCH 31, 1998 COMPARED TO SIX MONTHS ENDED MARCH 31, 1997

Net Revenue. Net revenue increased $9.5 million, or 15.1%, to $71.9 million
for the six months ended March 31, 1998 from $62.4 million for the six months
ended March 31, 1997. This increase was the result of an increase in net sales
of $7.6 million, or 43.2%, for the IDG Technology Group and $1.9 million, or
4.2%, for the Company's ". . . For Dummies(R)" group. Of the Company's net
revenue in the first six months of 1998, $10.2 million was attributable to sales
of new titles first published during that period as compared to $6.7 million for
new titles first published during the same period for 1997.

Cost of Sales. Cost of sales increased $5.8 million, or 18.0%, to $37.9
million for the six months ended March 31, 1998 from $32.1 million for the six
months ended March 31, 1998. Cost of sales as a percentage of net revenue was
52.6% and 51.3% for the six month periods ended March 31, 1998 and March 31,
1997, respectively. Product development costs increased as a percentage of net
revenue to 11.3% for the six months ended March 31, 1998 from 9.7% for the six
months ended March 31, 1997, reflecting the Company's planned increase in title
output for the remainder of 1998. Paper and printing costs as a percentage of
net revenue remained unchanged at approximately 17.0% for both periods.
Fulfillment expense decreased as a percentage of net revenue to 7.0% for the six
months ended March 31, 1998 from 8.1% for the six months ended March 31, 1997 as
a result of efficiencies achieved in the Company's distribution facilities.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $1.0 million, or 5.1%, to $21.2 million for
the six months ended March 31, 1998 from $20.2 million for the six months ended
March 31, 1997. This increase was primarily attributable to increased general
and administrative expenses, primarily depreciation of fixed assets and
amortization of publishing rights. Selling expenses were relatively unchanged in
absolute dollars on a period-to-period basis. Selling, general and
administrative expenses decreased as a percentage of net revenue to 29.5% for
the six months ended March 31, 1998 from 32.4% for the six months ended March
31, 1997. The Company's selling and marketing costs decreased to 17.0% of net
revenue for the six months ended March 31, 1998 compared to 19.6% for the same
period the prior year primarily as a result of increased efficiencies.

Parent Corporate Services Fee. Parent corporate services fee decreased $.6
million, or 36.0%, to $1.2 million for the six months ended March 31, 1998 from
$1.8 million for the six months ended March 31, 1997. Effective January 1, 1998,
the Company assumed responsibility for certain corporate administrative
functions, as well as for its own strategic marketing and brand-building, the
costs for which had constituted a significant portion of the parent corporate
services fee.

Income Before Provision for Income Taxes. Income before provision for
income taxes increased $3.3 million, or 39.7%, to $11.6 million for the six
months ended March 31, 1998 from $8.3 million for the six months ended March 31,
1997. Income before provision for income taxes increased as a percentage of net
revenue to 16.2% in the six months ended March 31, 1998 from 13.3% for the same
period the prior year due to an increase in sales and decreases in selling,
general and administrative expenses as a percentage of net revenue as described
above.

Net Income. Net income of $6.9 million for the six months ended March 31,
1998 increased $1.9 million, or 37.8%, from net income of $5.0 million for the
six months ended March 31, 1997. This increase was primarily the result of
increases in sales and decreases in selling, general and administrative expenses
as described above.

YEAR ENDED SEPTEMBER 30, 1997 COMPARED TO YEAR ENDED SEPTEMBER 30, 1996

Net Revenue. Net revenue increased $22.8 million, or 23.3%, to $120.7
million for the year ended September 30, 1997 from $97.8 million for the year
ended September 30, 1996. This increase was the result of an increase in sales
of $9.0 million, or 30.6%, for the IDG Technology group and $13.8 million, or
20.2%, for the Company's ". . . For Dummies(R)" group. $19.6 million of the
Company's net revenue in fiscal 1997 was attributable to sales of new titles
first published during that period, as compared to $25.8 million for new titles
first published during fiscal 1996.

23
<PAGE> 25

Cost of Sales. Cost of sales increased $7.4 million, or 13.2%, to $63.0
million for the year ended September 30, 1997 from $55.7 million for the year
ended September 30, 1996. Cost of sales as a percentage of net revenue was 52.3%
and 56.9% for the years ended September 30, 1997 and September 30, 1996,
respectively. Costs of sales as a percentage of net revenue decreased primarily
because paper costs, fulfillment expenses and inventory obsolescence all
decreased as a percentage of net revenue, though royalty expenses and, to a
lesser extent, product development costs increased as a percentage of net
revenue. Royalty expense increased as a percentage of net revenue to 10.6% for
the year ended September 30, 1997 from 9.7% for the year ended September 30,
1996, reflecting additions to reserves for paid but unearned author advances.
Product development costs increased as a percentage of net revenue to 11.3% for
the year ended September 30, 1997 from 11.2% for the year ended September 30,
1996. Paper and printing costs as a percentage of net revenue decreased to 15.9%
for the year ended September 30, 1997 from 18.1% for the year ended September
30, 1996 due to lower paper costs and better printing rates resulting from
higher volumes. Fulfillment expenses decreased as a percentage of net revenue to
8.3% for the year ended September 30, 1997 from 9.8% for the prior year as a
result of efficiencies achieved in distribution, including increased shipments
in carton quantities, a renegotiated fulfillment contract with a third party
vendor and lower returns and related handling fees. Inventory obsolescence
decreased to 4.3% of net revenue for the year ended September 30, 1997 from 6.9%
for the year ended September 30, 1996.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased by $13.6 million, or 48.2%, to $42.0 million
for the year ended September 30, 1997 from $28.4 million for the year ended
September 30, 1996. Selling, general and administrative expenses as a percentage
of net revenue increased to 34.8% for the year ended September 30, 1997 from
29.0% for the year ended September 30, 1996. Selling expenses increased as a
percentage of net revenue to 20.5% for the year ended September 30, 1997 from
15.7% for the year ended September 30, 1996, and general and administrative
expenses increased to 14.3% of net revenue for the year ended September 30, 1997
from 13.3% for the year ended September 30, 1996. These increases in selling,
general and administration expenses were attributable to increased selling
expenses of approximately $9.3 million, resulting primarily from more aggressive
customer incentive programs, and increased general and administrative expenses
of approximately $4.3 million, which reflected increased investments in
infrastructure (salaries and bonuses for additional headcount, occupancy and
depreciation).

Income before Provision for Income Taxes. Income before provision for
income taxes increased $.9 million, or 8.4%, to $11.9 million for the year ended
September 30, 1997 from $11.0 million for the year ended September 30, 1996.
Income before provision for income taxes decreased as a percentage of net
revenue to 9.9% from 11.2% for the same periods due to an increase in sales
offset by higher selling, general and administrative expenses.

Net Income. Net income of $7.0 million for the year ended September 30,
1997 increased $.5 million, or 8.4%, from net income of $6.5 million for the
year ended September 30, 1996. This increase was primarily the result of
increased sales partially offset by increased selling, general and
administrative expenses as described above.

YEAR ENDED SEPTEMBER 30, 1996 COMPARED TO YEAR ENDED SEPTEMBER 30, 1995

Net Revenue. Net revenue increased $25.3 million, or 35%, to $97.8 million
for the year ended September 30, 1996 from $72.5 million for the year ended
September 30, 1995. This increase was the result of an increase in sales of $6.0
million, or 25.4%, for the IDG Technology Group and $19.3 million, or 39.5%, for
the Company's ". . . For Dummies(R)" group. Of the Company's net revenue in
fiscal 1996, $25.8 million was attributable to sales of new titles first
published during that period as compared to $20.8 million for new titles first
published during fiscal 1995.

Cost of Sales. Cost of sales increased by $15.1 million, or 37%, to $55.7
million for the year ended September 30, 1996 from $40.6 million for the year
ended September 30, 1995. Cost of sales as a percentage of net revenue was 56.9%
and 56.0% for the years ended September 30, 1996 and September 30, 1995,
respectively. Paper and printing costs as a percentage of net revenue decreased
to 18.1% for the year ended

24
<PAGE> 26

September 30, 1996 from 18.7% for the year ended September 30, 1995 due to a
decrease in paper prices in 1996. Product development costs increased to 11.2%
of net revenue for the year ended September 30, 1996 from 9.8% for the prior
year as a result of the Company's efforts to increase title output in 1996.
Fulfillment expenses increased as a percentage of net revenue to 9.8% for the
year ended September 30, 1996 from 8.7% for the year ended September 30, 1995
primarily due to a large increase in book returns and the related processing
costs in 1996.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased by $8.8 million, or 44.9%, to $28.3 million
for the year ended September 30, 1996 from $19.5 million for the year ended
September 30, 1995. Selling, general and administrative expenses as a percentage
of net revenue increased to 29.0% for the year ended September 30, 1996 from
27.0% for the year ended September 30, 1995. General and administrative expenses
increased to 13.3% of net revenue for the year ended September 30, 1996 from
10.3% for the year ended September 30, 1995. Selling and marketing expenses
decreased to 15.7% of net revenue for the year ended September 30, 1996 from
16.6% for the year ended September 30, 1995, primarily as a result of a bad debt
write-off for a bankrupt wholesaler of the Company's books in 1995. The increase
in selling, general and administrative expenses from 1995 to 1996 were
attributable to increased general and administrative expenses of approximately
$5.5 million, reflecting increased investments in infrastructure (salaries and
bonuses for additional headcount, occupancy and depreciation) and increased
selling expenses of approximately $3.3 million.

Income before Provision for Income Taxes. Income before provision for
income taxes increased by $.1 million, or 1.0%, to $11.0 million for the year
ended September 30, 1996 from $10.9 million for the year ended September 30,
1995.

Net Income. Net income of $6.5 million for the year ended September 30,
1996 increased by $.1 million, or 1.9%, from net income of $6.4 million for the
year ended September 30, 1995.

LIQUIDITY AND CAPITAL RESOURCES

Historically, the financing requirements of the Company were funded through
intercompany advances from IDG, the Company's parent, while excess cash
generated by the Company was remitted to IDG. Accordingly, the Company
maintained minimal cash balances. In addition, balances owed to or due from IDG
were non-interest bearing and periodic settlements of the net amounts have not
been made. Accordingly, such amounts are reflected as a component of
stockholders' equity. The Company intends to settle any outstanding balance owed
to or due from IDG concurrently with this offering.

Working capital was $25.0 million and $18.7 million at March 31, 1998 and
September 30, 1997, respectively. The increase in working capital at March 31,
1998 was seasonal in nature and reflected a $7.0 million increase in accounts
receivable resulting from increased billings due to increased selling volume
during the Company's first and second quarters of fiscal 1998.

The Company's net cash provided by operations was $1.0 million for the six
months ended March 31, 1998 compared to cash used by operations of $1.6 million
for the six months ended March 31, 1997. The increase was primarily due to
increased net income and a smaller increase in accounts receivable and inventory
partially offset by a smaller increase in accrued liabilities. Net cash provided
by operations was $7.8 million for the year ended September 30, 1997, which was
primarily the result of net income of $7.0 million and an increase of accrued
liabilities ($10.9 million) partially offset by increases in accounts receivable
($5.6 million), inventory ($1.8 million) and deferred tax assets ($4.0 million).
The Company's net cash provided by operations was $1.9 million in fiscal year
1996 and net cash used by operations was $1.9 million in fiscal year 1995.

The Company's net cash used in investing activities for the six months
ended March 31, 1998 was $4.9 million and included $3.4 million used to acquire
certain publishing rights and $1.5 million used for capital expenditures,
including computer equipment and leasehold improvements. The Company's net cash
used in investing activities was $3.2 million, $2.4 million and $1.3 million in
fiscal year 1997, 1996 and 1995, respectively.

25
<PAGE> 27

The Company's cash flows from financing activities related solely to
changes in the net amount of intercompany advances from IDG or excess cash
generated by the Company and retained by IDG. The Company's net cash used by
financing activities was $4.6 million in fiscal year 1997, and the Company's net
cash provided by financing activities was $.6 million and $3.1 million in fiscal
years ended 1996 and 1995, respectively. Subsequent to March 31, 1998, the
Company declared a dividend of $38.4 million, payable to IDG in the form of a
promissory note, which the Company intends to repay with a portion of the net
proceeds from the offering. See "Use of Proceeds" and "Relationship with IDG and
Certain Transactions -- Pre-Offering Dividend."

The Company is currently in discussion with banks regarding a proposed
revolving credit facility in an amount of up to $15.0 million, which would be
available to the Company for seasonal working capital requirements and general
corporate purposes.

The net proceeds to be received by the Company from the sale of the Class A
common stock in the offering, after deducting estimated expenses of $
and underwriting discounts and commissions, are estimated to be approximately
$ million (approximately $ million if underwriters' over-
allotment option is exercised in full), at an assumed initial public offering
price of $ per share. The Company will use approximately $38.4 million of
the net proceeds from this offering for the repayment of indebtedness owed to
IDG. The Company currently expects to use the remaining $ million of
net proceeds for general corporate purposes, including investments in working
capital and capital expenditures. The Company believes that the net proceeds
from this offering, together with any cash generated from its operations and any
funds available under any future credit facilities, will be sufficient to meet
its liquidity requirements for the foreseeable future. The Company's future
capital requirements will depend on many factors, including, but not limited to,
the levels at which the Company maintains inventory, the market acceptance of
the Company's products, the levels of promotional activities and advertising
required to launch the Company's products and any future acquisitions. To the
extent that the funds generated by this offering, together with existing
resources and future earnings, are insufficient to fund the Company's future
activities, the Company may need to raise additional funds through public or
private financing. No assurance can be given that any such additional funding
will be available or that, if available, it can be obtained on terms favorable
to the Company.

SEASONALITY AND FLUCTUATIONS IN QUARTERLY OPERATING RESULTS

Historically, the Company's business has been seasonal. The Company's net
revenue and net income has been higher during fiscal quarters when major
software manufacturers release new or revised versions of its popular products,
such as the Company's fiscal quarter ending December 31, 1995 and the fiscal
quarter ending March 31, 1997, corresponding to the release of Microsoft's
Office '95 and Office '97 products. In addition, personal computer sales,
especially to entry-level users, are traditionally higher during the Christmas
selling season and the Company has benefited from increased purchases of its
products during the Christmas season, as well as in the immediately following
months, generally resulting in higher net revenue and net income during the
Company's first two fiscal quarters. Because a substantial portion of the
Company's selling, general and administrative expenses are incurred evenly
throughout the year, the Company generally experiences relatively lower net
profit during quarters not impacted by increases in sales due to seasonal or
other factors discussed above.

26
<PAGE> 28

The following table sets forth certain unaudited quarterly statement of
operations data for each of the ten quarters in the period ended March 31, 1998.
In the opinion of the Company's management, the unaudited information has been
prepared on a basis consistent with the audited financial statements of the
Company 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 financial
statements and notes thereto.

<TABLE>
<CAPTION>
QUARTERS ENDED
-------------------------------------------------------------------------------------------------------------
DEC. 31, MAR. 31, JUNE 30, SEPT. 30, DEC. 31, MAR. 31, JUNE 30, SEPT. 30, DEC. 31, MAR. 31,
1995 1996 1996 1996 1996 1997 1997 1997 1997 1998
-------- -------- -------- --------- -------- -------- -------- --------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Revenue.......... $25,065 $24,534 $23,568 $24,680 $26,676 $35,788 $26,210 $32,014 $32,971 $38,945
Percent of total net
revenue year ended
September 30....... 25.6% 25.1% 24.1% 25.2% 22.1% 29.7% 21.7% 26.5%
Net Income........... $ 1,941 $ 1,851 $ 1,438 $ 1,258 $ 1,536 $ 3,381 $ 1,236 $ 882 $ 2,535 $ 4,335(1)
Percent of total net
income year ended
September 30....... 29.9% 28.5% 22.2% 19.4% 21.8% 48.1% 17.6% 12.5%
</TABLE>

- ------------------------
(1) The net income for the quarter ended March 31, 1998 was favorably impacted
by the reduction in the parent corporate services fee.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In June 1997, the Financial Accounting Standards Board issued SFAS No. 130,
Reporting Comprehensive Income, which requires that an enterprise report, by
major components and as a single total, the change in its net assets during the
period from nonowner sources; and No. 131, Disclosures about Segments of an
Enterprise and Related Information, which establishes annual and interim
reporting standards for an enterprise's operating segments and related
disclosures about its products, services, geographic areas and major customers.
Management has not yet determined the Company's SFAS 131 reporting segments.
These statements will not affect the Company's financial position, results of
operations or cash flows. Both statements are effective for the Company in
fiscal year 1999, with earlier application permitted.

YEAR 2000 COMPLIANCE

The Company uses and is installing a number of computer software programs
and operating systems, including applications for its internal electronic
communications network and for various administrative and billing functions. The
Company has assessed the scope of the Company's risks related to problems these
computer systems may have related to the year 2000 and believes such risks are
not significant.

The Company has identified all of its significant internal software
applications which contain source codes that may be unable to appropriately
interpret the year 2000 and has already begun to modify or replace those
applications. The estimated costs to modify or replace these applications are
not material to the Company.

In addition, the Company is in the process of inquiring of its vendors and
business partners about their progress in identifying and addressing problems
related to the year 2000. All major vendors with whom the Company exchanges
electronic information or on whose internal software applications the Company
may be dependent, have committed to the Company that plans are in place to be
compliant before processing of information related to calendar year 2000 would
be required. No assurance can be given that all of these third party systems
will be year 2000 compliant.

FORWARD-LOOKING STATEMENTS

"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and other sections of this prospectus contain forward-looking
statements which are subject to various risks and uncertainties. Actual results
could differ materially from those discussed herein. Important factors that
could cause or contribute to such differences include those discussed under
"Risk Factors" as well as those discussed elsewhere in this prospectus.

27
<PAGE> 29

INDUSTRY OVERVIEW

The increase in the market for computer-related books is attributable to
the increase in the size of the personal computer market, an increase in the
number of new users of computers at work and on-the-job, the continued
complexity of computer hardware and software applications and an inadequate
supply of information by technology manufacturers. The Company believes that the
number of personal computers in use in the United States has increased
approximately 50% from 88.6 million in 1995 to 133.8 million in 1997, and the
percentage of households in the United States owning computers grew from 35% to
43% during the same period, based on studies by the Company's market research
affiliate. As a consequence, the market for books devoted to the use of computer
hardware and software grew from $678.0 million in 1995 to $844.0 million in
1997. The Company believes that the increase in the numbers of new and generally
inexperienced personal computer users is the result of falling personal computer
prices, expanding technology requirements in the workplace and the mass appeal
of the Internet. Although much computer-related technology is becoming more
user-friendly, it remains complex for new users and the abundance of new
technology products with added features is often too complex even for the more
experienced users. Due to cost considerations, many technology suppliers have
ceased or reduced their supply of product documentation. Moreover, typical
product documentation provided by technology manufacturers is itself often too
complex to be of much help to the end user. In addition, software more
frequently reaches end users through organization-wide installation, pre-
installation by the OEM and downloading from the Internet than through retail
purchases where software is generally accompanied with better explanatory
information.

The Company's books compete in the general interest book market covering
most categories, other than fiction, biography and children's books. Because of
the increasing demand on people's time and the increasing complexity of life in
general, the Company believes people are turning to self-help and similar books
to increase personal productivity, enhance career success and provide
competitive advantages in a rapidly changing economy, as well as to provide
personal enrichment.

Books are traditionally distributed to large distributors and directly to
retail chains and independent book stores. More recently, books are being
distributed through the Internet, as well as to new outlets such as general mass
merchant retailers. As a result of the continuing trend of consolidation among
book distributors and retailers, increased competition will force these
distributors and retailers to focus more sharply on ways to increase
profitability.

28
<PAGE> 30

BUSINESS

OVERVIEW

The Company publishes its books in two general publishing groups,
". . . For Dummies(R)" and IDG Books Technology, which target the distinct needs
of readers.

". . . For Dummies(R)." ". . . For Dummies(R)" is a best-selling line of
computer, business, personal finance, study aids, cooking, gardening,
do-it-yourself, health and fitness, and self-help books. The group consists of
more than 350 active titles and approximately 50 million copies in print, as
well as extensions into multimedia, music, on-line information and board games.
Windows For Dummies(R) has more than six million copies in print across all
editions, and the current edition was the best-selling computer book in 1997
according to Publishers' Weekly and USA Today. Other best-selling ". . . For
Dummies(R)" titles include Internet for Dummies(R), Personal Finance For
Dummies(R), Golf For Dummies(R) and Cooking For Dummies(R). Sales of the
Company's ". . . For Dummies(R)" books accounted for approximately 68% of the
Company's net revenue in the Company's fiscal year ended September 30, 1997.

IDG Books Technology. The IDG Books Technology group is comprised of an
expanding collection of information technology books published in multiple
series under a variety of brands. These books appeal to a wide range of readers,
from beginners to knowledgeable professionals, including:

- 3-D Visual(R) -- an exclusive, award winning, four-color computer
hardware and software learning system packaged primarily in the
Simplified(R) series and the Teach Yourself VISUALLY(R) and Master
VISUALLY(R) sub-series;

- One Step at a Time series -- self-paced, step-by-step lessons in a book
combined with a computer-based training CD ROM;

- Bible series -- comprehensive tutorial/reference on all major computing
topics; positioned as "100% comprehensive, 100% authoritative, 100% of
what you need";

- ". . . Secrets(R)" -- featuring key leading authorities targeted to
knowledgeable information technology professionals with over 20 titles
and two million books in print;

- MCSE Study series -- quality books and learning materials for both core
courses and electives for Microsoft certification training; and

- Novell Press -- the only official series of Novell product training and
user guides authorized and approved by Novell.

For the year ended September 30, 1997, IDG Books Technology group book sales
accounted for approximately 32% of the Company's net revenue.

The Company's revenue is principally derived from sales in the United
States, which accounted for approximately 83% of sales in fiscal 1997. The
Company also markets its books in numerous countries throughout the world and
licenses its established brands and titles to third parties. Export sales of
English-

29
<PAGE> 31

language books accounted for approximately 14% of the Company's sales in fiscal
1997, while licensing and custom publishing revenue contributed 3% of sales in
fiscal 1997.

OPERATING STRATEGY

The Company strives to provide a consistent, accessible and rewarding
learning experience to readers by offering quality products supported by mass
marketing which is timed to coincide with the introduction of new technology or
the emergence of new trends. To implement these objectives, the Company has
adopted the following operating strategies:

Focus on Branded Content and Mass Marketing. The Company conceives,
acquires and produces quality products, supported by extensive marketing
campaigns which help build brand recognition. The Company believes its valuable
name recognition generates repeat demand for its books. The strength of its
brand names also enables it to extend these brands into additional licensed
products and services.

Make Knowledge Accessible and Enjoyable. The Company believes millions of
individuals, businesses and families are challenged by technologies or are
trying to acquire new skills or enrich their lives. The Company specifically
designs its products to make learning accessible and fun.

Maintain Efficient and Proven Publication Process. The Company has
developed a successful process to conceive, acquire and produce new and revised
titles on a timely and cost-effective basis. The Company utilizes a dedicated
staff of creative personnel who identify and develop new titles and subject
areas and who draw on a recognized and highly respected list of leading
authorities, media celebrities and experienced computer/Internet authors. This
collaboration, in conjunction with the Company's experienced editorial team,
assures brand consistency through high quality, easy-to-read publications. The
Company's close working relationships with technology industry leaders enable
the Company to release high quality and well supported products and services in
a timely manner. The Company believes this strategic focus has created a
competitive advantage for its technology books by enabling the Company to
anticipate and meet customer needs for information and know-how needs and bring
new and updated titles concurrently with the introduction of new technologies.
In addition, because of the popularity and demand for its flagship brands, the
Company can easily integrate new title and brand launches into its existing
marketing programs.

GROWTH STRATEGY

Building on its operating strategy and upon industry trends, the Company
has pursued the following strategies:

Expand Technology, Business and Self-Help Publishing Programs. The Company
has identified numerous opportunities to take advantage of its market position
in technology, business and self-help markets by adding new titles to existing
categories and expanding into new categories. For example, the Company is
releasing approximately 20 new and revised books in concert with Microsoft's
planned release of Windows 98 in mid 1998. These books will be supported by
aggressive retail incentives and marketing programs. The Company has also
expanded its ". . . For Dummies(R)" branded products into other successful
categories, such as the best-selling Golf For Dummies(R) title. The Company
expects to expand this category into other golf-related book topics. The Company
believes that the existing audiences for its brands and brand extensions,
together with its publishing, branding and operating experience, gives it a
competitive advantage in conceiving, identifying, acquiring and developing new
brands, products and services. For example, the Company launched its One Step at
a Time(R) series and, as a result of the success of the first book, has expanded
the imprint to six titles, and additional titles in that series are planned by
mid-1999.

Increase Distribution Penetration and Expand Network. The Company is
working to increase its shelf space among its existing retailers and
distributors and to add new retailers, distributors and distribution channels.
To increase shelf space at existing retailers, the Company developed sales and
marketing programs that, unlike those of other book publishers, provide
additional compensation to distributors for sales to the ultimate consumer, the
reader. The Company has identified opportunities for further expansion in other
retail outlets, including retail stores that do not traditionally sell books. To
expand its sales network, the Company is

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<PAGE> 32

also establishing new distribution channels, such as on-line retailers and other
nontraditional channels for the distribution of the Company's books. For
example, the Company recently developed a cross promotion with John Deere's
Homelite division to sell and merchandise Lawn Care for Dummies(R) through John
Deere's distribution network, which includes outlets for gardening equipment,
hardware stores and nurseries.

Develop Business-to-Business Opportunities. The Company intends to expand
sales of its core products directly to businesses for training purposes. The
Company also plans to expand its custom publishing activities, including
production of documentation and booklets, corporate training and special
projects, for a broad range of customers. For example, in late 1997 the Company
produced a custom book for Siemens to be included as the primary documentation
with Siemens's PCS cellular phones.

Develop Brand Ventures. The Company believes that there are numerous
opportunities to extend its brands through domestic and international licensing
arrangements, strategic joint ventures, retail alliances and online services.
The Company has recently licensed the ". . . For Dummies(R)" brand name to
Angel/EMI Records for use on compact disc multimedia music recordings and to
Pressman Toys for board games.

Selectively Acquire Titles and Companies in the U.S. and
Internationally. Management believes that opportunities exist to acquire
selected technology, business and self-help properties that will complement and
enhance its existing portfolio. Such acquisitions would enable the Company to
take advantage of its efficient operating structure and the Company's focus on
brand development. For example, in December 1997, the Company acquired the
rights for MIS:Press and M&T Books, specialty technology book series. These
imprints include two successful series, the Teach Yourself (TM) and In Plain
English series, and hundreds of other popular titles covering a variety of
computer networking, operating systems and programming topics.

PUBLICATIONS

The Company publishes 18 branded computer and general interest book series
and sub-series for readers at a variety of learning levels and styles.

Technology titles in the Company's flagship ". . . For Dummies(R)" series
offer practical, fun and easy-to-use reference books that present topics with
humor and entertainment and are filled with "plain English" explanations,
helpful icons and cartoons. Sub-series include: MORE . . . For Dummies(R)
(sequel titles); Dummies 101(R) (tutorial); . . . For Dummies(R) Quick
Reference; Dummies Guides to Family Computing(R) and . . . For Teachers(R). The
following list sets forth the top ten best-selling books, each of which has more
than one million copies in print over the past six years, in the ". . . For
Dummies(R)" series:

<TABLE>
<CAPTION>
TITLE EDITIONS
----- --------
<S> <C>
Windows For Dummies................................. 5
DOS For Dummies..................................... 3
Internet For Dummies................................ 5
PCs For Dummies..................................... 5
Quick Reference/Windows For Dummies................. 5
Word Perfect For Dummies............................ 5
Word For Dummies.................................... 4
Excel For Dummies................................... 4
MACS For Dummies.................................... 5
Microsoft Office For Dummies........................ 3
</TABLE>

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<PAGE> 33

Business and self-help ". . . For Dummies(R)" titles cover personal
finance, business, real estate, study aids, automotive, health and fitness,
cooking, do-it-yourself, and other self-help and reference topics. Reference
titles are the fastest growing category of books in the ". . . For Dummies(R)"
line. The top ten best-selling books in the Company's first three years of
publishing books in the business and self-help market, each of which has been
printed in excess of 150,000 copies, are set forth below:

<TABLE>
<CAPTION>
TITLE EDITIONS
----- --------
<S> <C>
Personal Finance For Dummies........................ 2
Golf For Dummies.................................... 1
Taxes For Dummies................................... 4
Investing For Dummies............................... 1
Wine For Dummies.................................... 1
Gardening For Dummies............................... 1
Sex For Dummies..................................... 1
Cooking For Dummies................................. 1
Mutual Fund$ For Dummies............................ 1
Selling For Dummies................................. 1
</TABLE>

IDG Books Technology titles target a broad range of computer users, and
each series is positioned to meet the needs of a specific target audience, from
beginning through advanced level users, including information technology
professionals and software developers. Set forth below are the Company's top ten
IDG Books Technology publications, each of which has more than 200,000 copies in
print over the past eight years:

<TABLE>
<CAPTION>
TITLE EDITIONS
----- --------
<S> <C>
Windows Secrets..................................... 4
Windows Simplified.................................. 3
Computers Simplified................................ 3
Teach Yourself Windows Visually..................... 2
Internet and WWW Simplified......................... 2
Macworld(R) Macintosh Secrets....................... 4
Word Simplified..................................... 4
Photoshop Bible..................................... 5
Excel Simplified.................................... 3
Windows Visual Pocket Guide......................... 2
</TABLE>

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<PAGE> 34

The following presents a list of the Company's IDG Books Technology
brands/services, a description of the distinguishing features of the product
line and the target audience:

<TABLE>
<CAPTION>
SERIES/BRAND DESCRIPTION/KEY FEATURES USER LEVEL
------------ ------------------------ ----------
<S> <C> <C>
3-D Visual(R)
- . . . Simplified(R)......... Full color visual learning Beginner
system; topics explained simply
- . . . Teach Yourself
VISUALLY(TM)............... Full color visual learning Beginner to intermediate
system; step-by-step graphics
- . . . Master VISUALLY(TM)... Comprehensive visual learning Beginner to advanced
system
Teach Yourself(R)............... Tutorial and reference guide to Beginner to intermediate
popular software
One Step at a Time.............. Step-by-step lessons with Beginner to intermediate
interactive software support
Bible........................... Comprehensive reference/tutorial Intermediate
with software
. . . In Plain English(TM)...... Quick reference for Intermediate to professional
professionals with A-Z directory
. . . Studio Secrets(TM)........ Full color undocumented tips on Intermediate to advanced
graphic design from the pros
. . . Secrets(R)................ Comprehensive undocumented tips Intermediate to advanced
and techniques from the pros
Microsoft Certification (MCSE,
MCSD)......................... Study guides and exam question Intermediate to professional
preparation
Novell Press.................... Authorized test preparation Intermediate to professional
guides for CNE and CNA
certification; user and
administrator guides
Professional Guides............. In-depth examination of advanced Advanced to professional
topics with software code
</TABLE>

EXPORT AND FOREIGN EDITIONS

The Company has licensed more than 3,400 of its titles for translation and
publication by third-party publishers in 39 languages throughout the world. The
Company serves the international English-language market and exports U.S.
editions through third-party distributors and booksellers throughout the world
and by licensing reprint rights to a third-party publisher in India. The
Company's publication of special editions for English markets outside the United
States has been initiated with Personal Finance For Dummies(R) for Canadians.

SALES AND MARKETING

The Company organizes its sales and marketing activities around customer
types to implement the Company's operating and growth strategies, focus on
building brands and expand the breadth and depth of its distribution network.
More than one quarter of the Company's employees are employed in its sales and
marketing organization.

Sales

The Company's domestic sales force consists of: (i) a national account
group working directly with national bookstore chains; (ii) a wholesale and mass
market group working with the centralized buying offices of national
wholesalers, memberships clubs, office superstores, mass merchandisers and
computer/electronic superstores; (iii) a field sales and new business
development group servicing regional and independent booksellers and wholesalers
who develop new channels of distribution for selected titles; and (iv) a special
markets group which services the education, corporate, government, on-line
retailer, catalog and custom

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<PAGE> 35

publishing channels. With respect to certain customers, primarily non-bookstore
accounts, the Company also utilizes commissioned sales representatives to
support its own sales force.

The Company believes that booksellers have not traditionally been rewarded
for sales of books to the consumer, but rather on their purchases from book
publishers. The Company's sales and marketing efforts take advantage of the
Company's brand recognition with the consumer to create innovative sales
programs directed to the readers of the Company's books. Accordingly, the
Company has developed sales and marketing programs that, unlike those of other
book publishers, reward distributors and retailers for sales to the ultimate
consumer, the reader.

During fiscal 1997, Barnes and Noble, Inc., Ingram Book Company and Borders
Group, Inc. each accounted for more than 10%, and together accounted for
approximately 37%, of the Company's net revenue.

Marketing

The Company organizes its marketing activities around its brands to support
its sales efforts and brand identity. The Company's marketing professionals
engage in a variety of marketing promotions and activities, including: (i)
developing consumer-focused point of purchase and display materials; (ii)
creating account-focused promotional programs; (iii) coordinating cooperative
advertising spending strategies; and (iv) maximizing media exposure. In
addition, the Company's marketing staff host three sales and training seminars
per year and produces eight product catalogs annually.

Sales and Marketing Awards

The Company's marketing activities have earned numerous industry awards
including:

- The 1997 Publisher's Marketing Association awards for "Overall Excellence
in Editorial, Design and Independent Publishing";

- The 1997 Inc. magazine Marketing Masters Award in the Communications
Services Category; and

- Being listed by Advertising Age magazine as one of the Top 100 Companies
in the United States for Marketing Excellence.

In addition to its traditional sales and marketing efforts, the Company
maintains World Wide Web sites (www.idgbooks.com and www.dummies.com) where
individual consumers can learn about and purchase the Company's titles.

PRODUCTION, DISTRIBUTION AND FULFILLMENT

The Company's own staff edits the manuscripts of the authors of the books
it publishes. Freelance resources are utilized when workload exceeds in-house
capacity. Outside experts are used when necessary to ensure technical accuracy
of content and compatibility with final published software. The Company employs
state-of-the-art desktop publishing technology to graphically design book
content, create graphics and prepare the typographic layout for the book. Final
electronic files for all text and cover material are delivered to printers for
reproduction via direct line and Internet connection.

Distribution and fulfillment services to both retail and wholesale
customers are outsourced by the Company to two vendors. The Company's contracts
with these vendors expire in September 1999. One of these vendors accounted for
more than 70% of the Company's distribution and fulfillment costs in each of
fiscal 1996 and 1997 and in the six months ended March 31, 1998. It is
anticipated that a single-source vendor will be selected for distribution and
fulfillment services to take advantage of the efficiencies provided by the
Company's new management information system and order entry function.

PRINTING AND RAW MATERIALS

The Company utilizes a number of outside printers to print and bind its
books. Printing prices are negotiated annually with vendors who perform all
printing and binding in their plants. Due to the significant

34
<PAGE> 36

increase in printing volume from year-to-year, the Company does not believe it
is strategically beneficial to negotiate multi-year printing contracts.

The Company's principal raw material is paper. The Company purchases paper
as needed from intermediaries representing paper mills and supplies it to its
printers. Paper accounts for approximately 50% of total inventory costs. Prior
to 1996, printers supplied paper to the Company for the books they printed. The
Company currently purchases paper from suppliers as needed and does not maintain
significant inventories of paper. Paper prices have been volatile over the past
several years and are affected by many factors, including demand, mill capacity,
pulp supply, energy, and general economic conditions. In the past, paper has
been difficult to obtain due to industry-wide shortages. Paper supply agreements
are negotiated annually. Paper prices have been volatile over the past several
years. Currently, the Company has quarterly "price protection" (prices cannot be
increased within a quarter after an initial increase) and price caps per
quarter. Significant increases in paper prices could adversely affect the
Company's future financial condition or results of operations. The Company
believes that the existing arrangements providing for the supply of paper are
adequate and that, in any event, alternative sources are available.

INTELLECTUAL PROPERTY

The Company regards its copyrights, trademarks, trade dress, trade secrets
and similar intellectual property rights in general, and its ". . . For
Dummies(R)" related trademarks, logos and trade dress in particular, as critical
to its success. The Company relies on copyright, trademark and trade secrets
laws and licensing and confidentiality agreements to protect its intellectual
property rights.

The Company registers each of its publications with the United States
Copyright Office, and all of the Company's publications are protected by
copyright laws. The Company pursues the registration of its material trademarks
in the United States and, based upon anticipated use, in certain other
countries. Effective trademark, copyright and trade secret protection, however,
may not be available in every country in which the Company's products are
available. Although individual book titles are generally not subject to
trademark protection, the Company has registered trademarks of certain series of
its books, such as ". . . For Dummies(R)", ". . . Simplified(R)", "Teach
Yourself(R)", "3-D Visual(R)" and ". . . Secrets(R)" in the United States and
numerous other countries.

The Company has licensed in the past, and it expects that it may license in
the future, elements of its trademarks, trade dress and similar proprietary
rights to third parties, including in connection with the international editions
of the Company's books that may be controlled operationally by third parties.
While the Company attempts to ensure that the quality of its brands is
maintained by such licensees, there can be no assurance that such licensees will
not take actions that might materially and adversely affect the value of the
Company's proprietary rights or the reputation of its products, either of which
could have a material adverse effect on the Company's business. Moreover, while
the Company believes that it has the right to use ". . . For Dummies(R)" and its
other marks in connection with its business and generally to prohibit others
from using such marks in certain fields of use, there can be no assurance that
the Company will be able to maintain such rights.

The Company may be subject to claims of alleged infringement by it or its
licensees of trademarks and other intellectual property rights from time to time
in the ordinary course of business. The Company 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 the Company's business, financial
condition or results of operations.

Certain of the trademarks and trade names used by the Company are the
property of and are licensed from IDG. See "Relationship with IDG and Certain
Transactions."

EMPLOYEES AND AUTHORS

As of March 31, 1998, the Company had a total of 436 employees. None of the
Company's employees is represented by a labor union, and the Company has never
experienced a work stoppage. The Company considers its relations with employees
to be good. The Company also relies on a recognized and highly

35
<PAGE> 37

respected author list of leading authorities, media celebrities and
computer/Internet experts. The Company generally does not have long-term
contracts with its authors.

COMPETITION

The Company faces competition in each of its areas of publication directly
from other publishers and indirectly from nonprint media and expects that
competition will remain intense in the future.

The Company competes on the basis of editorial quality, timely introduction
of new titles, product positioning, pricing and brand name recognition. In
addition to the Company, Simon & Schuster, Microsoft Press and McGraw-Hill all
share a strong market presence in the United States and internationally in
technology publishing. The principal competitors for the Company's
business/self-help/lifestyle titles include Random House, Simon & Schuster and
HarperCollins. Each of these competitors have substantially greater financial
resources than the Company.

Nonprint media, such as the Internet, CD-ROMs and instructional video
tapes, may also present substantial competition to the Company. Computer users
increase their reliance on instructions and information disseminated online. The
Company's business could be adversely affected.

FACILITIES

The Company's headquarters are in Foster City, California, and the Company
has editorial, production and sales offices in Indianapolis, Chicago and New
York. The Company leases all of its offices pursuant to leases terminating in
1998 through 2000. The Company believes that its properties are in good
operating condition and adequately serve the Company's current business
operations. The Company also anticipates that suitable additional or alternative
space, including those under lease options, will be available at commercially
reasonable terms for future expansion.

LEGAL PROCEEDINGS

The Company from time to time is a party to various litigation matters
incidental to the conduct of its business. There is no pending or threatened
legal proceeding to which the Company is a party that, in the opinion of the
Company's management, is likely to have a material adverse effect on the
Company's future financial results.

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<PAGE> 38

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The following table sets forth certain information regarding the executive
officers and directors of the Company as of May 22, 1998:

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
John J. Kilcullen....... 39 Chairman of the Board of Directors and Chief
Executive Officer
Steven H. Berkowitz..... 39 President and Publisher
John P. Ball............ 51 Executive Vice President, Operations and
Administration, and Secretary
Brenda L. McLaughlin.... 37 Senior Vice President and Publisher, IDG Books
Technology Publishing
James A. Doehrman....... 41 Vice President and Chief Financial Officer
Patrick J. McGovern..... 60 Director
James A. Casella........ 49 Director
</TABLE>

John J. Kilcullen. Mr. Kilcullen has served as Chief Executive Officer of
the Company since July 1991 and has been Chairman of the Board since March 1998.
Prior to that, Mr. Kilcullen served as Vice President, Sales and Marketing and
Publisher of the Company from April 1990 to July 1991. For the nine years prior
to joining the Company, Mr. Kilcullen worked in various sales and marketing
capacities for two publishing industry leaders, Bantam/Doubleday, Dell, Inc. and
Prentice-Hall, and computer book publisher Que Corporation.

Steven H. Berkowitz. Mr. Berkowitz has served as President and Publisher of
the Company since October 1996. Prior to that, Mr. Berkowitz served as Chief
Operating Officer and Publisher from October 1995 to September 1996, as
Executive Vice President, Worldwide Publishing Operations, from October 1994 to
September 1995, and as Chief Financial Officer and Vice President, Finance, from
June 1994 to October 1994. Prior to joining the Company, Mr. Berkowitz served as
Publisher of MIS:Press and M&T Books, a division of Henry Holt and Company, from
June 1991 to May 1994. Prior to 1991, Mr. Berkowitz worked for eight years at
Macmillan Publishing Company in numerous financial capacities including Vice
President of Finance and Administration during the period 1988 to 1991 and
before joining Macmillan Publishing Company he had three years of finance
experience with Paramount Pictures, Inc.

John P. Ball. Mr. Ball has served as Executive Vice President, Operations
and Administration, of the Company since joining the Company in April 1996 and
as Secretary of the Company since March 1998. Prior to joining the Company, Mr.
Ball acted as an independent publishing and graphic arts consultant from March
1995 to March 1996. From December 1986 to February 1994, Mr. Ball served as
Senior Vice President of Macmillan Publishing Company. Prior to joining
Macmillan Publishing Company, Mr. Ball worked in the publishing industry in a
senior production and manufacturing capacity for over 22 years, including the
last 17 years of the period as Vice President -- Production and Manufacturing
for William Morrow & Company, a leading publisher of trade and reference books.

Brenda L. McLaughlin. Ms. McLaughlin has served as Senior Vice President
and Publisher, IDG Books Technology Publishing, of the Company since joining the
Company in September 1994. Prior to joining the Company, Ms. McLaughlin served
as Associate Publisher of MIS:Press and M&T Books from August 1993 to September
1994. From August 1989 to July 1993, Ms. McLaughlin served as Acquisitions
Editor, Editor-in-Chief and Associate Publisher of M&T Books. Prior to joining
M&T Books, Ms. McLaughlin worked for five years in various editorial capacities
in the technology magazine businesses of Ziff-Davis, Inc. and McGraw-Hill, Inc.

James A. Doehrman. Mr. Doehrman has served as Vice President and Chief
Financial Officer of the Company since March 1998. Prior to that, Mr. Doehrman
served as Vice President and General Manager, International Division, from July
1997 to March 1998. Prior to joining the Company, Mr. Doehrman served as Vice
President and Business Manager of the Latin American Division of Simon &
Schuster from January

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<PAGE> 39

1996 to April 1997. From October 1993 to January 1996, Mr. Doehrman served as
Vice President and International Controller of Simon & Schuster. Mr. Doehrman
joined Simon & Schuster, Inc. as Vice President -- Accounting Services in April
1992. Prior to joining Simon & Schuster, Inc. Mr. Doehrman had four years of
financial experience with Federated Department Stores, Inc., serving as
Operating Vice President -- Capital Control from 1989 to 1992. Prior thereto,
Mr. Doehrman had nine years of financial experience which included seven years
of experience in public accounting with Arthur Andersen & Co.

Patrick J. McGovern. Mr. McGovern has been a director of the Company since
its inception in February 1990. Mr. McGovern is the founder and chairman of the
board of the directors of International Data Group, Inc., the parent company of
the Company. Mr. McGovern has served as the Chairman and Chief Executive Officer
of IDG and its predecessor since February 1964. Mr. McGovern also serves on the
boards of directors of the Massachusetts Institute of Technology, the Magazine
Publishers Association and a number of IDG subsidiaries.

James A. Casella. Mr. Casella has been a director of the Company since
April 1998. Mr. Casella has served as the Chief Operating Officer of IDG since
March 1995. From March 1992 to March 1995, Mr. Casella served as the President
of Infoworld Media Group, Inc., a subsidiary of IDG. Mr. Casella also serves on
the board of directors of BPA International, a privately-held company.

Executive officers of the Company are appointed by the Board of Directors
and serve at the discretion of the Board. There are no family relationships
among any of the directors or executive officers of the Company.

BOARD COMPOSITION

Directors of the Company are currently elected annually by its stockholders
to serve during the ensuing year and until their respective successors are duly
elected and qualified. The Company's Board of Directors is currently set at five
directors and has two vacancies, which the Company's Bylaws authorize the Board
of Directors to fill. The Company intends to appoint two people who are not
officers or employees of the Company or of IDG to the Board of Directors within
90 days after consummation of this offering and is required to do so to maintain
its listing on the Nasdaq National Market.

The Company's Bylaws provide that the authorized number of directors may be
changed by an amendment to the Bylaws adopted by the Board of Directors or by
the stockholders. Vacancies on the Board may be filled either by holders of a
majority of the Company's voting stock or a majority of directors in office,
although less than a quorum.

BOARD COMMITTEES

The Company's Board of Directors currently has no committees. After this
offering, the Board of Directors intends to create an Audit Committee and a
Compensation Committee.

The Audit Committee will be comprised of two independent directors. The
Audit Committee will review and, as it deems appropriate, recommend to the Board
of Directors the internal accounting and financial controls for the Company and
the accounting principles and auditing practices and procedures to be employed
in preparation and review of the financial statements of the Company. The Audit
Committee will also make recommendations to the Board concerning the engagement
of independent public auditors and the scope of the audit to be undertaken by
such auditors.

The Compensation Committee will be comprised of two independent directors.
The Compensation Committee will review and, as it deems appropriate, recommend
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 Committee will
also exercise all authority under the Company's employee equity incentive plans
and advise and consult with the officers of the Company as may be requested
regarding managerial personnel policies.

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<PAGE> 40

DIRECTOR COMPENSATION

Effective upon consummation of this offering, the Company's directors who
are not officers or employees of the Company will be paid an annual retainer of
$ and a fee of $ for each meeting attended of the Board of
Directors or of a committee of the Board. The Company has recently established
the 1998 Stock Plan which provides for automatic grants of options to
non-employee directors commencing upon consummation of this offering. See
"-- 1998 Stock Plan."

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Company's Board of Directors does not have, and has not in the past
had, a Compensation Committee. Decisions regarding compensation of officers and
employees of the Company have been made by the full Board of Directors. After
this offering, the Board of Directors intends to appoint a Compensation
Committee comprised of a majority of independent directors. Mr. McGovern, a
director of the Company, is Chairman of the Board of Directors of International
Data Group, Inc. In addition, Mr. Casella, a director of the Company, is an
executive officer of International Data Group, Inc.

LIMITATION ON LIABILITY AND INDEMNIFICATION MATTERS

Section 102 of the Delaware General Corporation Law ("DGCL") 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 generally 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 and their stockholders for monetary damages for
conduct constituting gross negligence in the exercise of their duty of care.
Although Section 102 of the DGCL does not change a director's duty of care, it
enables corporations to limit available relief to equitable remedies such as
injunction or rescission. The Company's Certificate of Incorporation and Bylaws
include provisions which limit or eliminate the personal liability of its
directors to the fullest extent permitted by Section 102 of the DGCL.
Consequently, a director or officer will not be personally liable to the Company
or its stockholders for monetary damages for breach of fiduciary duty as a
director, except for (i) any breach of the director's duty of loyalty to the
Company or its stockholders, (ii) acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) unlawful
payments of dividends or unlawful stock purchases, redemptions or other
distributions, and (iv) any transaction from which the director derived an
improper personal benefit.

The Company's Certificate of Incorporation and Bylaws provide that the
Company will 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 the Company or serves or served at the request of the Company as a
director, officer or employee. The Certificate of Incorporation and Bylaws
provide that expenses, including attorneys' fees, incurred by any such person in
defending any such action, suit or proceeding will be paid or reimbursed by the
Company promptly upon receipt by it of an undertaking of such person to repay
such expenses if it is ultimately determined that such person is not entitled to
be indemnified by the Company.

The Company has entered into agreements to indemnify its directors and
executive officers, in addition to indemnification provided for in the Company's
Certificate of Incorporation and Bylaws. These agreements, among other things,
indemnify the Company's directors and executive officers for certain expenses
(including attorneys' fees), judgments, fines and settlement amounts incurred by
any such person in any action or proceeding, including any action by or in the
right of the Company, arising out of such person's services as a director or
executive officer of the Company, any subsidiary of the Company or any other
company or enterprise to which the person provides services at the request of
the Company. In addition, the Company intends to obtain directors' and officers'
insurance providing indemnification for certain of the Company's

39
<PAGE> 41

directors, officers and employees for certain liabilities. The Company believes
that these indemnification provisions and agreements are necessary to attract
and retain qualified directors and officers.

The limited liability and indemnification provisions in the Company's
Certificate of Incorporation and Bylaws 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 benefit the
Company and its stockholders. Furthermore, a stockholder's investment in the
Company may be adversely affected to the extent the Company pays the costs of
settlement and damage awards against directors and officers of the Company
pursuant to the indemnification provisions in the Company's Certificate of
Incorporation and Bylaws.

At present, there is no pending litigation or proceeding involving any
director, officer or employee of the Company where indemnification is expected
to be required or permitted, and the Company is not aware of any threatened
litigation or proceeding that might result in a claim for such indemnification.

EXECUTIVE COMPENSATION

The following table sets forth information concerning the compensation paid
to the Company's Chief Executive Officer and the Company's four other most
highly compensated executive officers (collectively, the "Named Executive
Officers") during the Company's fiscal year ended September 30, 1997.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM
---------------------- COMPENSATION ALL OTHER
NAME AND PRINCIPAL POSITION SALARY($) BONUS($) AWARDS(1) COMPENSATION($)
--------------------------- --------- -------- ------------ ---------------
<S> <C> <C> <C> <C>
John J. Kilcullen............................ $260,000 $336,975 $21,000 $559,012(2)
Chief Executive Officer
Steven H. Berkowitz.......................... 200,000 281,358 21,000 88,783(3)
President and Publisher
John P. Ball................................. 175,000 114,775 21,000 --
Executive Vice President, Operations and
Administration, and Secretary
Brenda L. McLaughlin......................... 144,769 66,675 21,000 --
Senior Vice President and Publisher,
IDG Books Technology Publishing
James A. Doehrman............................ 28,558(4) -- 16,773 50,000(5)
Vice President and Chief Financial Officer
</TABLE>

- ---------------
(1) Represents contribution by the Company to its Employee Stock Ownership Plan.

(2) Consists of $468,378 of deferred compensation and $90,634 of relocation
expense reimbursement. The deferred compensation programs pursuant to which
Mr. Kilcullen received such amounts will be terminated upon consummation of
the offering.

(3) Consists of deferred compensation. The deferred compensation programs
pursuant to which Mr. Berkowitz received such amount will be terminated upon
consummation of the offering.

(4) Represents compensation from July to September 1997 based on an annual
salary of $165,000.

(5) Represents Mr. Doehrman's relocation expense allowance.

The Company did not grant stock options to any of the Named Executive
Officers or any other officer or employee during the calendar year ended
December 31, 1997 and no options were exercised during 1997 or outstanding as of
December 31, 1997. In May 1998, the Company granted options to purchase 250,000,
250,000, 100,000, 75,000 and 50,000 shares of Class A Common stock at an
exercise price of $11.88 per share to Mr. Kilcullen, Mr. Berkowitz, Mr. Ball,
Ms. McLaughlin and Mr. Doehrman, respectively, under the 1998 Stock Plan. See
"--1998 Stock Plan."

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<PAGE> 42

EMPLOYMENT AGREEMENTS

In May 1998, the Company entered into three-year employment agreements with
each of Messrs. Kilcullen and Berkowitz. Mr. Kilcullen's agreement entitles him
to a base salary of $260,000 per year, options to purchase 250,000 shares of
Class A common stock of the Company at an exercise price of not more than $11.88
per share and a bonus if the Company meets certain performance targets. Mr.
Kilcullen's agreement also requires IDG to use its best efforts to elect him as
a director of the Company and requires Mr. Kilcullen to continue to serve as a
director without compensation. Mr. Kilcullen is currently the Chairman of the
Company's Board of Directors. Mr. Berkowitz's agreement entitles him to a base
salary of $200,000 per year, options to purchase 250,000 shares of Class A
common stock of the Company at an exercise price of no more than $11.88 per
share and a bonus if the Company meets certain performance targets.

In addition, each agreement provides certain benefits upon the termination
of the employment of the respective executive. If the Company terminates the
executive without cause (as defined in the agreement), or if the executive
terminates voluntarily for good reason (as defined in the agreement and
including any change in position or responsibilities or any voluntary
termination following a change in control), the executive is entitled to any
accrued but unpaid salary and bonus, plus a year of salary (or, if terminated
within the first year, an amount equal to such executive's salary for the
remainder of the three year term), his maximum target bonus for the fiscal year
in which he leaves (or, if terminated within the first year, an amount equal to
such executive's maximum target bonus for the remainder of the three year term)
and credit for twenty-four additional months of vesting of his options. If
within 12 months after a change in control, the Company terminates the
employment of the executive without cause or the executive terminates
voluntarily for good reason, the executive is entitled to accrued but unpaid
salary and bonus plus an amount equal to two hundred percent of his yearly base
salary and of his maximum target bonus for the fiscal year in which he leaves.
In addition, all of the executive's unvested options shall vest. If the Company
terminates the employment of the executive for cause, or if the executive
terminates voluntarily without good reason, the Company will not be obligated to
pay any termination benefits or accelerate vesting of any of the executive's
options. The employment agreements also include provisions regarding the
protection of confidential information of the Company, non-solicitation of other
employees of the Company and indemnification of the executives by the Company.

Prior to the offering, the Company intends to enter into employee severance
agreements with each of Messrs. Ball and Doehrman and Ms. McLaughlin.

1998 STOCK PLAN

The Company's 1998 Stock Plan (the "1998 Stock Plan") was approved by the
Board of Directors and the stockholders of the Company in May 1998. The 1998
Stock Plan provides for the grant of incentive stock options within the meaning
of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), to
employees (including officers and employee directors) and for the grant of
nonstatutory stock options and stock purchase rights ("SPRs") to employees,
directors and consultants. A total of 2,850,000 shares of Class A common stock
are currently reserved for issuance pursuant to the 1998 Stock Plan. Unless
terminated sooner, the 1998 Stock Plan will terminate automatically in 2008. On
May 6, 1998, the Company granted options to purchase an aggregate of 1,500,000
shares of Class A common stock at an exercise price of $11.88 per share under
the 1998 Stock Plan.

The 1998 Stock Plan will be administered by the Board of Directors or a
committee of the Board of Directors (as applicable, the "Administrator"). The
Administrator has the power to determine the terms of the options or SPRs
granted, including the exercise price of the option or SPR, the number of shares
subject to each option or SPR, the exercisability thereof, and the form of
consideration payable upon such exercise. In addition, the Administrator has the
authority to amend, suspend or terminate the 1998 Stock Plan, provided that no
such action may affect any share of Class A common stock previously issued and
sold or any option or SPR previously granted under the 1998 Stock Plan.

The exercise price of all incentive stock options granted under the 1998
Stock Plan must be at least equal to the fair market value of the Class A common
stock on the date of grant. The exercise price of nonstatutory

41
<PAGE> 43

stock options and SPRs granted under the 1998 Stock Plan will be determined by
the Administrator, but with respect to nonstatutory stock options intended to
qualify as "performance-based compensation" within the meaning of Section 162(m)
of the Code, the exercise price must at least be equal to the fair market value
of the Class A common stock on the date of grant. With respect to any
participant who owns stock representing more than 10% of the voting power of all
classes of the Company's outstanding capital stock, the exercise price of any
incentive or nonstatutory stock option granted must equal at least 110% of the
fair market value on the grant date and the term of such incentive or
nonstatutory stock option must not exceed five years. The term of all other
options granted under the 1998 Stock Plan may not exceed ten years. Options and
SPRs granted under the 1998 Stock Plan are not generally transferable by the
optionee, and each option and SPR is exercisable during the lifetime of the
optionee only by such optionee. Options granted under the 1998 Stock Plan that
are vested must generally be exercised within 30 days after the end of the
optionee's status as an employee, director or consultant of the Company, or
within 30 days after such optionee's termination by death or disability, but in
no event later than the expiration of the option's term.

The 1998 Plan provides that in the event of a merger of the Company with or
into another corporation, or a sale of all or substantially all of the Company's
assets, each option and SPR shall be assumed or an equivalent option or SPR
substituted for by the successor corporation. If the outstanding options or SPRs
are not assumed or substituted for by the successor corporation, the
Administrator, in its discretion, may provide, unless otherwise provided in any
employment, compensation or other agreement with an optionee, for the optionee
to have the right to exercise the option or SPR as to all of the optioned stock,
including shares underlying options or SPRs that would not otherwise be vested
or exercisable.

The 1998 Stock Plan also provides that each director that is not also an
officer or employee of the Company or of IDG (a "non-employee director") shall
be automatically granted an option to purchase shares of Class A
common stock on the date on which such person first becomes a non-employee
director. Each non-employee director shall also be automatically granted an
option to purchase shares on of each year,
provided he or she is then a non-employee director and, as of such date, he or
she shall have served on the Board of Directors for at least the preceding six
months. Options granted to non-employee directors vest in three annual
installments commencing on the first anniversary of the date of grant and have a
term of ten years. The exercise price of options granted to non-employee
directors shall be 100% of the fair market value per share of the Class A common
stock on the date of grant.

Section 162(m) of the Code may limit the Company's ability to deduct for
United States federal income tax purposes compensation in excess of $1,000,000
paid to the Company's Chief Executive Officer and its four other most highly
compensated executive officers in any one fiscal year. Certain grants of option
or SPRs to employees under the 1998 Stock Plan will not be subject to the
deduction limitation if such grants are approved by stockholders or are provided
for in a plan that has been previously approved by stockholders. In order to
preserve the Company's ability to deduct the compensation associated with
options and SPRs granted to such persons, the 1998 Stock Plan, as approved by
the Company's stockholders, provides that no employee may be granted options and
SPRs to purchase more than 500,000 shares of Class A common stock in any one
fiscal year. Notwithstanding this limit, however, in connection with an
employee's initial employment, he or she may be granted options or SPRs to
purchase up to an additional 500,000 shares of Class A common stock.

EMPLOYEE STOCK PURCHASE PLAN

In May 1998, the Board of Directors adopted the Employee Stock Purchase
Plan (the "Purchase Plan") covering an aggregate of 350,000 shares of Class A
common stock which became effective upon its adoption. The Purchase Plan, which
is intended to qualify as an employee stock purchase plan within the meaning of
Section 423 of the Code, is administered by the Board of Directors or by a
committee appointed by the Board. Employees of the Company are eligible to
participate in the Purchase Plan if they are employed by the Company or a
subsidiary of the Company designated by the Board for at least 20 hours per week
and are customarily employed for more than five months in any calendar year. The
Purchase Plan permits eligible employees to purchase Class A common stock
through payroll deductions, which may not exceed 10% of an employee's
compensation, subject to certain limitations. The Purchase Plan will be
implemented in a series of

42
<PAGE> 44

consecutive offering periods, each of approximately 24 months duration. Offering
periods will begin on the first trading day on or after and
each year and terminate on the last trading day in the periods 24
months later. However, the first offering period shall be the period of
approximately months commencing on the date upon which the Company's
registration statement pursuant to this offering is declared effective by the
Commission and terminating on the last trading day in the period ending
, 2000. Each participant in the Purchase Plan will be granted an
option on the first day of the offering period and such option will be
automatically exercised on the last date of each offering period. The purchase
price of the Class A common stock under the Purchase Plan will be equal to 85%
of the lesser of the fair market value per share of Class A common stock on the
start date of the offering period or on the last day of the offering period.
Employees may end their participation in the offering at any time during the
offering period, and participation ends automatically on termination of an
employees employment with the Company. The Purchase Plan will terminate in 2008
unless earlier terminated by the Board of Directors.

EMPLOYEE STOCK OWNERSHIP PLAN

Prior to May 6, 1998, eligible employees of the Company participated in an
employee stock ownership plan of IDG. On that date, the Company adopted its own
employee stock ownership plan (the "IDG Books Plan") and the accounts of the
active employees of the Company as of that date were transferred from the IDG
plan to the IDG Books Plan, together with the shares of IDG common stock held in
the IDG Plan that were allocated to the accounts of such Company employees. In
May 1998 the IDG common stock held in the Plan was exchanged for 394,251 shares
of Class B common stock of the Company, pursuant to an appraisal of each class
of stock by the financial advisor to the trustee of the IDG Books Plan. On the
effective date of the offering the Plan's shares of Class B common stock will be
exchanged for an equal number of shares of Class A common stock.

The Company may make future contributions to the IDG Books Plan for the
accounts of Company employees who are then qualified for participation in the
Plan, in amounts determined by the Board of Directors from year to year
(subject, however, to certain limits contained in the IDG Books Plan and in the
Code). Contributions are at the discretion of the Board and depend, in part, on
the amount of Company profits during a Plan year. Any such contributions may be
made in Class A common stock, or may be made in cash with the intent that the
cash contribution be used to purchase Class A common stock. Benefits from the
IDG Books Plan, in the form of Class A common stock allocated to the account of
a participant, are generally distributable to the participant upon retirement,
disability, death or over a period beginning on termination of employment of the
participant by the Company. The IDG Books Plan provides that employees become
eligible to participate when hired and are vested in their employer-provided
account balances over seven years. The IDG Books Plan is intended to qualify as
an employee stock ownership plan under section 4975(e)(7) of the Code.

The Company's employees presently participate in a Section 401(k) plan of
IDG. After the offering, the Company expects to amend and restate the IDG Books
Plan to provide participants with the benefits of section 401(k) of the Code, by
permitting them to make elective contributions to the IDG Books Plan. On October
1, 1998, the Company intends to have the accounts of its employees transferred
from the IDG 401(k) plan to the IDG Books Plan, as so amended and restated.
Thereafter, an eligible participating employee may make elective cash
contributions to the IDG Books Plan in the amount of a maximum of 8% of his or
her compensation (as defined in the IDG Books Plan) for any Plan year (the
12-month period ending September 30 of each year), but not to exceed $10,000
(subject to adjustment each year based on cost of living adjustments determined
by the Internal Revenue Service) for any calendar year. The Company expects to
match employee contributions to the IDG Books Plan. The percentage of the match
will be set by the Company's Board of Directors each plan year, and the matching
contribution may, at the discretion of the Board, be made in cash or in Class A
common stock.

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<PAGE> 45

RELATIONSHIP WITH IDG AND CERTAIN TRANSACTIONS

PRINCIPAL STOCKHOLDER; CONTROL OF THE COMPANY

The Company is a wholly-owned subsidiary IDG Enterprises, Inc., a Delaware
corporation and wholly-owned subsidiary of IDG Holdings, Inc., a Delaware
corporation. IDG Holdings, Inc. is a wholly-owned subsidiary of International
Data Group, Inc., a Massachusetts corporation ("IDG"), the majority of the
capital stock of which is owned by Mr. Patrick J. McGovern, its founder and
chairman of the board of directors and a director of the Company. Upon
completion of this offering, IDG, through its subsidiaries, will own
shares of the Class A common stock and all of the outstanding
shares of Class B common stock, representing % of the voting power of the
Company, and approximately % of the outstanding shares of Class A common
stock and % of the voting power will be owned by the public.

As a result of its ownership of Class A common stock and Class B common
stock, IDG will be able to influence significantly matters affecting the Company
and will be in a position to direct the election of all members of the Board of
Directors and to control all actions that require the approval of a majority of
the voting share capital of the Company, including amendments to the Company's
Certificate of Incorporation and any business combinations.

INTERCOMPANY AGREEMENTS

In connection with the offering, the Company and IDG have entered into
certain agreements for the purpose of defining their ongoing relationship. These
agreements were developed in the context of a parent/subsidiary relationship and
therefore are not the result of arms-length negotiations between independent
parties. Although there can be no assurance that these agreements or the
transactions contemplated by these agreements have been effected on terms at
least as favorable to the Company as could have been obtained from unaffiliated
third parties, the Company believes that such agreements taken as a whole are
fair to both parties and that the amount of the expenses contemplated by the
agreements would not be materially different if the Company operated on a
stand-alone basis.

Corporate Services Agreement. The Company and IDG have entered into a
Corporate Services Agreement (the "Corporate Services Agreement") pursuant to
which IDG will provide certain administrative services to the Company following
the offering. Pursuant to the agreement, IDG will provide tax services,
insurance, employee benefits services and administration, corporate record
keeping services and information processing to the Company. The initial monthly
fee under the Corporate Services Agreement is $44,000. After an initial period
of service, the Company will be entitled to have these services provided on a
monthly basis at the same monthly fee. In addition, the Company may request
certain additional services, including legal, treasury and accounting services
to be provided from time-to-time in the future.

The Corporate Services Agreement may be terminated by either the Company on
90 days notice or may be terminated by IDG when it ceases to own a majority of
the outstanding voting stock of the Company. There can be no assurance that, if
required, the Company will be able to secure the provision of these services
from others on acceptable terms. If the Company is unsuccessful in obtaining
acceptable provision of services upon termination of the transitional service
agreements, its future financial performance could be adversely affected.

Registration Rights Agreement. The Company and IDG have entered into a
Registration Rights Agreement ("Registration Rights Agreement") in connection
with the offering. The Registration Rights Agreement entitles IDG to include its
shares of common stock of the Company in any future registration of common stock
made by the Company. The Company has agreed pursuant to the terms of the
Registration Rights Agreement to pay all costs and expenses, other than
underwriting discounts and commissions related to shares to be sold by IDG and
expenses of legal counsel for IDG, in connection with any such registration.

Trademark Licensing Agreement. In connection with the offering, IDG will
transfer to the Company certain trademarks owned by IDG that relate to
publications and products of the Company. The Company has agreed to pay all
costs, consisting primarily of required filing fees, in connection with such
transfer.

44
<PAGE> 46

In addition, the Company and IDG have entered into a Trademark Licensing
Agreement (the "Trademark License Agreement") pursuant to which IDG has granted
to the Company a royalty-free license to use certain publications and products
currently produced and held by the Company. The Trademark License Agreement
provides that if IDG's voting interest in the Company is reduced to less than
30%, the parties will negotiate a fee for the continued use of the tradenames,
including the IDG Books name. The license may be terminated by IDG upon a breach
of the licensing agreement by the Company or upon the insolvency of the Company.

Noncompetition Agreement. In connection with the offering, IDG has given
the Company an undertaking, subject to certain exceptions, that, until the
earlier of five years after the offering or such time as IDG ceases to own at
least a majority of the voting power of the Company, it will not, directly or
indirectly, as a partner, stockholder, investor or otherwise, own a majority
share or be responsible for the management of any corporation or other entity
the business objectives or activities of which are carried on anywhere in the
world and consist primarily of book publishing.

Tax Allocation Agreement. IDG and the Company have entered into a Tax
Allocation Agreement (the "Tax Allocation Agreement") that will provide for the
allocation between IDG and the Company of all responsibilities, liabilities and
benefits relating to taxes paid or payable by either IDG or the Company for all
taxable periods, whether beginning before, on, or after this offering. Prior to
the consummation of this offering, the Company has been included in the
consolidated tax returns of IDG. The Company intends to pay to IDG, in cash, its
share of IDG's consolidated income tax liability for the period from October 1,
1997 through the date on which IDG owns less than 80% of the Company (which will
occur upon the consummation of this offering). For the post-offering period, the
Company will file its own federal and most state income tax returns.

Share Exchange Agreement. Employees of the Company were historically
covered by the IDG Employee Stock Ownership Plan (the "IDG ESOP"), pursuant to
which their accounts were invested primarily in common stock of IDG. The IDG
Books Plan was adopted effective May 6, 1998 with respect to the eligible
employees of the Company as of October 1, 1997. Participants in the IDG ESOP who
were then employees of the Company then became participants in the IDG Plan.

As of May 21, 1998, the accounts of the employees of the Company and the
shares of common stock of IDG attributable to such accounts were transferred
from the IDG ESOP to the IDG Books Plan. As of May 21, 1998 all of the common
stock of IDG held by the IDG Books Plan was exchanged for an aggregate of
394,251 shares of Class B common stock of the Company on behalf of employees of
the Company pursuant to the terms of a Share Exchange Agreement among the
Company, IDG and a subsidiary of IDG. In connection with the exchange of the
shares of common stock of IDG for shares of Class B common stock of the Company,
the trustee of the IDG Books Plan received an opinion of an independent
valuation firm to the effect that the consideration to be received by the IDG
Books Plan in exchange for the IDG shares was no less than the fair market
value, within the meaning of ERISA, of such IDG shares, and that the exchange
was fair to the IDG Books Plan from a financial point of view. In connection
with the offering, the shares of the Company's Class B common stock held by the
IDG Books Plan will be transferred to IDG Enterprises Inc. in exchange for an
equal number of the Company's Class A common stock held by IDG Enterprises, Inc.

PRE-OFFERING DIVIDEND

In May 1998, the Company paid a $38.4 million dividend to IDG in the form
of a promissory note which will be paid out of the proceeds of the offering. See
"Use of Proceeds."

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<PAGE> 47

PRINCIPAL STOCKHOLDERS

The Company is a wholly-owned subsidiary of IDG Enterprises, Inc., a
Delaware corporation and wholly-owned subsidiary of IDG Holdings, Inc., a
Delaware corporation. IDG Holdings, Inc. is a wholly-owned subsidiary of
International Data Group, Inc., a Massachusetts corporation, a majority of the
capital stock of which is owned by Mr. Patrick J. McGovern, its founder and
chairman of the board of directors and a director of the Company. IDG's address
is One Exeter Plaza, Boston, Massachusetts 02116. The following table sets
forth, as of March 31, 1998, the beneficial ownership of the Company's common
stock by the Company's principal stockholder, each of the Named Executive
Officers, each of the Company's directors and by all executive officers and
directors of the Company as a group.

<TABLE>
<CAPTION>
CLASS B
COMMON
CLASS A COMMON STOCK STOCK COMMON STOCK
---------------------------------- ------------ -------------------
PERCENT OF PERCENT OF TOTAL
OWNERSHIP VOTING POWER
SHARES ------------------- SHARES -------------------
BENEFICIALLY BEFORE AFTER BENEFICIALLY BEFORE AFTER
NAME OWNED(1) OFFERING OFFERING OWNED(1) OFFERING OFFERING
---- ------------ -------- -------- ------------ -------- --------
<S> <C> <C> <C> <C> <C> <C>
IDG Enterprises, Inc.(2)...................
John J. Kilcullen(3).......................
Steven H. Berkowitz(4).....................
John P. Ball(5)............................
Brenda L. McLaughlin(6)....................
James A. Doehrman(7).......................
Patrick J. McGovern(8).....................
James A. Casella...........................
All executive officers and directors as a
group (7 persons)(9).....................
</TABLE>

- ---------------
* Less than one percent

(1) The number and percentage of shares beneficially owned are based on
11,100,000 shares of common stock outstanding as of March 31, 1998.
Beneficial ownership is determined in accordance with the rules and
regulations of the Securities and Exchange Commission. Shares of Class A
common stock subject to options that are currently exercisable or
exercisable within 60 days of March 31, 1998 are deemed to be outstanding
and beneficially owned by the person holding such options for the purpose of
computing the number of shares beneficially owned and the percentage
ownership of such person, but are not deemed to be outstanding for the
purpose of computing the percentage ownership of any other person. Except as
indicated in the footnotes to this table, and subject to applicable
community property laws, such persons have sole voting and investment power
with respect to all shares of the Company's common stock shown as
beneficially owned by them.

(2) Gives effect to the exchange at the time of the offering of 394,251 shares
of Class B common stock held by the IDG Books Plan for an equal number of
shares of Class A common stock held by IDG Enterprises, Inc.

(3) Includes shares of Class A common stock issuable pursuant to
options.

(4) Includes shares of Class A common stock issuable pursuant to
options.

(5) Includes shares of Class A common stock issuable pursuant to
options.

(6) Includes shares of Class A common stock issuable pursuant to
options.

(7) Includes shares of Class A common stock issuable pursuant to
options.

(8) Represents shares of Class A common stock and Class B common stock owned by
IDG Enterprises, Inc., an indirect, wholly-owned subsidiary of International
Data Group, Inc. of which Mr. McGovern is chairman of the board of directors
and of which Mr. McGovern owns a majority of the issued and outstanding
capital stock.

(9) Includes shares of Class A common stock issuable pursuant to
options.

As a result of its ownership of common stock, IDG will be able to influence
significantly matters affecting the Company and will be in a position to direct
the election of all members of the Board of Directors and to control all actions
that require the approval of a majority of the voting share capital of the
Company, including amendments to the Company's Certificate of Incorporation and
any business combinations. See "Risk Factors -- Control by Principal
Stockholder" and "Description of Capital Stock -- Certain Provisions of the
Certificate of Incorporation and Bylaws."

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<PAGE> 48

DESCRIPTION OF CAPITAL STOCK

The following summary of certain provisions of the Company's capital stock
describes all material provisions of the Company's Certificate of Incorporation
and Bylaws. This summary, however, does not purport to be complete and is
subject to, and qualified in its entirety by, the Certificate of Incorporation
and Bylaws, copies of which have been filed as exhibits to the Registration
Statement of which this prospectus is a part and by the provisions of applicable
law.

GENERAL

The authorized capital stock of the Company is 25,400,000 shares of common
stock, par value $0.001 per share, consisting of 25,000,000 shares of Class A
common stock and 400,000 shares of Class B common stock. Upon consummation of
this offering, shares of common stock will be issued and
outstanding, consisting of shares of Class A common stock and
394,251 shares of Class B common stock.

COMMON STOCK

The shares of Class A common stock and Class B common stock are identical
in all respects, except for voting rights and certain conversion rights, as
described below.

Voting Rights. Each share of Class A common stock outstanding is entitled
to one vote on all matters submitted to a vote of the Company's stockholders,
including the election of directors, and each share of Class B common stock
entitles the holder to ten votes on each such matter. Except as required by
applicable law, holders of the Class A common stock and Class B common stock
vote together as a single class on all matters submitted to a vote of the
stockholders of the Company. There is no cumulative voting in the election of
directors. See "Risk Factors -- Control of the Company; Anti-Takeover Effects of
Certificate of Incorporation, Bylaws and Delaware Law."

Any action that may be taken at a meeting of the stockholders may be taken
by written consent in lieu of a meeting if the Company receives consents signed
by stockholders having the minimum number of votes that would be necessary to
approve the action at a meeting at which all shares entitled to vote on the
matter were present and voted. This could permit IDG to take action regarding
certain matters without providing other stockholders the opportunity to voice
dissenting views or raise other matters.

Dividends, Distributions and Stock Splits. Holders of Class A common stock
and Class B common stock are entitled to receive dividends out of assets legally
available therefor at the same rate at such time and in such amounts as the
Board of Directors may from time to time determine. See "Dividend Policy."

In the case of dividends or distributions payable in Class A common stock
or Class B common stock, only shares of Class A common stock will be distributed
with respect to the Class A common stock and only shares of Class B common stock
will be distributed with respect to the Class B common stock. In the case of
dividends or other distributions consisting of other voting shares of the
Company, the Company will declare and pay such dividends in two separate classes
of such voting securities, identical in all respects, except that the voting
rights of each such security paid to the holders of the Class A common stock
shall be one-tenth of the voting rights of each such security paid to the
holders of Class B common stock, and such security paid to the holders of Class
B common stock shall convert into the security paid to the holders of the Class
A common stock upon the same terms and conditions applicable to the Class B
common stock. In the case of dividends or other distributions consisting of
nonvoting securities convertible into, or exchangeable for, voting securities of
the Company, the Company will provide that such convertible or exchangeable
securities and the underlying securities be identical in all respects, except
that the voting rights of each security underlying the convertible or
exchangeable security paid to the holders of the Class A common stock shall be
one-tenth of the voting rights of each security underlying the convertible or
exchangeable security paid to the holders of Class B common stock, and such
underlying securities paid to the holders of Class B common stock shall convert
into the security paid to the holders of the Class A common stock upon the same
terms and conditions applicable to the conversion of Class B common stock into
Class A common stock.

47
<PAGE> 49

Neither the Class A common stock nor the Class B common stock may be
subdivided or combined in any manner unless the other class is subdivided or
combined in the same proportion.

Conversion. The shares of Class A common stock are not convertible.

The Class B common stock is convertible into Class A common stock, in whole
or in part, at any time and from time to time at the option of the holder, on
the basis of one share of Class A common stock for each share of Class B common
stock converted. Each share of Class B common stock will also automatically
convert into one share of Class A common stock upon the sale or transfer of such
share of Class B common stock by the initial holder thereof, IDG, other than to
a person or entity controlling, controlled by or under common control with the
initial holder or a qualified employee stock ownership plan. The holders of
Class B common stock shall have, upon conversion of their shares of Class B
common stock into Class A common stock, one vote per share of Class A common
stock held on all matters submitted to a vote of the Company's stockholders.

Liquidation. In the event of any dissolution, liquidation, or winding up of
the affairs of the Company, whether voluntary or involuntary, after payment of
the debts and other liabilities of the Company, the remaining assets of the
Company will be distributed ratably among the holders of the Class A common
stock and the Class B common stock, treated as a single class.

Mergers and Other Business Combinations. Upon a merger, combination, or
other similar transaction of the Company in which shares of Common stock are
exchanged for or changed into other stock or securities, cash and/or any other
property, holders of the Class A common stock and Class B common stock will be
entitled to receive an equal per share amount of stock, securities, cash, and/or
any other property, as the case may be, into which or for which each share of
any other class of common stock is exchanged or changed; provided that in any
transaction in which shares of capital stock are distributed, such shares so
exchanged for or changed into may differ as to voting rights and certain
conversion rights to the extent and only to the extent that the voting rights
and certain conversion rights of Class A common stock and Class B common stock
differ at that time.

Other Provisions. The holders of the Class A common stock and Class B
common stock are not entitled to preemptive rights. There are no redemption
provisions or sinking fund provisions applicable to the Class A common stock or
the Class B common stock.

All shares of Class A common stock and Class B common stock outstanding are
fully paid and nonassessable, and all of the shares of Class A common stock and
Class B common stock to be outstanding upon completion of this offering will be
fully paid and nonassessable.

CERTAIN ANTI-TAKEOVER EFFECTS OF DELAWARE LAW

Following consummation of this offering, the Company will be subject to the
"business combination" provisions of Section 203 of the DGCL. 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 (i) the transaction is approved by the
board of directors prior to the date the interested stockholder obtained such
status; (ii) upon consummation of the transaction which resulted in the
stockholder becoming an interested stockholder, the 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 (a) persons who are directors and also
officers and (b) 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 (iii) 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

48
<PAGE> 50

corporation's voting stock. The statute could prohibit or delay mergers or other
takeover or change in control attempts with respect to the Company and,
accordingly, may discourage attempts to acquire the Company even though such a
transaction may offer the Company's stockholders the opportunity to sell their
stock at a price above the prevailing market price.

CERTAIN PROVISIONS OF THE COMPANY'S CERTIFICATE OF INCORPORATION AND BYLAWS

The Company's Certificate of Incorporation and Bylaws provide that any
action required or permitted to be taken by the stockholders of the Company may
be effected at a duly called annual or special meeting of the stockholders or
may be taken by a consent in writing by stockholders. The Company's Bylaws also
provide that special meetings of the stockholders of the Company may be called
by the Board of Directors, the Chairman of the Board, the Chief Executive
Officer of the Company or by any person or persons holding shares representing
at least 20% of the voting power of the outstanding capital stock. The Company's
Bylaws require advance written notice by a stockholder of a proposal or director
nomination which such stockholder desires to present at an annual or special
meeting of stockholders. No business other than that stated in the notice shall
be transacted at any special meeting. As a result of these provisions, IDG, as
holder of % of the Company's Class A common stock and all of the shares of
Class B common stock, together representing % of the voting power of the
Company after the offering, will be able to take any action to be taken by
stockholders without the necessity of holding a stockholder meeting and will be
able to call a special meeting of stockholders to consider certain corporate
actions.

The Company's Bylaws also provide that unanimous board approval, including
the approval of all non-employee directors and directors selected by IDG, will
be required to approve the incurrence of indebtedness by the Company in an
aggregate amount that exceeds five times the Company's EBITDA in its most
recently completed fiscal year.

Amendments to certain provisions of the Company's Bylaws, including those
provisions relating to stockholder action by written consent, the ability of
stockholders to call a special meeting and the requirement of unanimous board
approval for certain borrowings, require the approval of stockholders holding a
majority of the voting power of the outstanding common stock.

LIMITATIONS ON LIABILITY AND INDEMNIFICATION OF OFFICERS AND DIRECTORS

The Company's Certificate of Incorporation limits the liability of
directors to the fullest extent permitted by the DGCL. In addition, the
Certificate of Incorporation and Bylaws provide that the Company shall indemnify
directors and officers of the Company to the fullest extent permitted by
Delaware law. The Company has entered into separate indemnification agreements
with its directors and executive officers which provide such persons
indemnification protection in the event the Certificate of Incorporation is
subsequently amended. See "Management -- Limitation on Liability and
Indemnification Matters."

TRANSFER AGENT AND REGISTRAR

has been appointed as transfer agent and registrar for the
Company's Class A common stock.

LISTING

Application has been made to have the Class A common stock approved for
quotation on the Nasdaq National Market under the symbol "IDGB."

49
<PAGE> 51

SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there has been no public market for the common
stock of the Company. The Company cannot predict the effect, if any, that sales
of shares of the Class A common stock or the availability of shares for sale
will have on the market price of the Class A common stock prevailing from the
time. Nevertheless, sales of a significant number of shares of Class A common
stock in the public market, or the perception that such sales may occur, could
adversely affect the prevailing market price of the Class A common stock.

Upon consummation of this offering, the Company will have
shares of Class A common stock outstanding ( shares if the
underwriters' over-allotment is exercised in full) and shares of
Class B common stock outstanding. Of the shares outstanding after the offering,
the shares of Class A common stock sold in the offering will be
freely tradeable without restriction under the Securities Act, except for any
such shares which may be acquired by an "affiliate" of the Company (an
"affiliate"), which shares will be subject to the volume limitations of Rule 144
under the Securities Act. As defined in Rule 144, an "affiliate" of an issuer is
a person who, directly or indirectly, through one or more intermediaries,
controls or is controlled by, or is under common control with, such issuer. The
remaining shares of Class B common stock, all of which
immediately after this offering will be owned by an indirect, wholly-owned
subsidiary of IDG, will be "restricted securities" (as that phrase is defined in
Rule 144) and may not be resold in the absence of registration under the
Securities Act or pursuant to an exemption from such registration, including the
exemption provided by Rule 144 under the Securities Act.

Subject to the foregoing and to the lock-up agreements described below,
under Rule 144 as currently in effect, beginning 180 days after the date of this
prospectus, IDG will be entitled to sell a number of shares of common stock
within any three-month period equal to the greater of 1% of the then outstanding
shares of the common stock (approximately shares immediately
after the offering) or the average weekly reported volume of trading of the
common stock on the Nasdaq National Market during the four calendar weeks
preceding such sale, provided that certain manner of sale and notice
requirements and requirements as to the availability of current public
information concerning the Company are satisfied.

Immediately after the offering, there will be options to purchase
approximately 1,500,000 shares of Class A common stock outstanding. Subject to
the provisions of the lock-up agreements described below, holders of these
options may rely on the resale provisions of Rule 701 under the Securities Act,
which permits nonaffiliates to sell their shares without having to comply with
the current public information, holding period, volume limitation or notice
provisions of Rule 144 and permits affiliates to sell their shares without
having to comply with the holding period provision of Rule 144, in each case
beginning 90 days after the consummation of this offering. In addition,
immediately after this offering, the Company intends to file a registration
statement on Form S-8 covering all options granted under the 1998 Stock Plan.
Shares of Class A common stock registered under such registration statement
will, subject to Rule 144 volume limitations applicable to affiliates, be
available for sale in the open market, unless such shares are subject to vesting
restriction with the Company or the lock-up agreements described below. See
"Management -- 1998 Stock Plan."

The Company and IDG have entered into a Registration Rights Agreement in
connection with the offering which provides IDG with the right, subject to
certain exceptions, to include its common stock in any registration of common
stock made by the Company for its own account or for the account of other
stockholders of the Company. The Company does not currently have any other
registration rights outstanding. See "Relationship with IDG and Certain
Transactions."

Notwithstanding the foregoing, in connection with this offering, each of
the Company, IDG and the Company's directors and officers has agreed that,
without the prior written consent of Morgan Stanley & Co. Incorporated on behalf
of the underwriters, during the period ending 180 days after the date of this
prospectus, it will not, directly or indirectly (i) 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, directly or indirectly, any shares of common
stock or any securities convertible into or exercisable or exchangeable for
common stock (whether such shares or any such securities are then owned by such
person or are thereafter acquired directly from the Company), or (ii) enter into
any swap or other

50
<PAGE> 52

arrangement that transfers, in whole or in part, any of the economic
consequences of ownership of the common stock, whether any such transaction
described in clause (i) or (ii) above is to be settled by delivery of common
stock or such other securities, in cash or otherwise, other than (a) the sale to
the underwriters of the shares of common stock under the Underwriting Agreement
(as described below), (b) the issuance by the Company of shares of common stock
upon the exercise of an option or warrant or the conversion of any security
outstanding on the date of this prospectus of which the underwriters have been
advised in writing, or (c) transactions by any person other than the Company
relating to shares of common stock or other securities acquired in open market
transactions after completion of the offering of the shares of common stock. See
"Underwriters."

51
<PAGE> 53

UNDERWRITERS

Under the terms and subject to the conditions contained in the underwriting
agreement dated the date hereof (the "underwriting agreement"), the underwriters
named below, for whom Morgan Stanley & Co. Incorporated, Goldman, Sachs & Co.
and Merrill Lynch, Pierce, Fenner & Smith Incorporated are acting as
representatives, have severally agreed to purchase, and the Company has agreed
to sell to them, severally, the respective number of shares of Class A common
stock set forth opposite the names of such underwriters below:

<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES
---- ---------
<S> <C>
Morgan Stanley & Co. Incorporated...........................
Goldman, Sachs & Co.........................................
Merrill Lynch, Pierce, Fenner & Smith
Incorporated...................................
--------
Total.............................................
========
</TABLE>

The underwriters are offering the shares subject to their acceptance of the
shares from the Company and subject to prior sale. The underwriting agreement
provides that the obligations of the several underwriters to pay for and accept
delivery of the shares of Class A common stock offered hereby are subject to the
approval of certain legal matters by their counsel and to certain other
conditions. The underwriters are obligated to take and pay for all of the shares
of Class A common stock offered hereby (other than those covered by the over-
allotment option described below) if any such shares are taken.

The underwriters initially propose to offer part of the shares of Class A
common stock directly to the public at the public offering price set forth on
the cover page hereof and part to certain dealers at a price that represents a
concession not in excess of $ a share under the public offering price. Any
underwriter may allow, and such dealers may reallow, a concession not in excess
of $ a share to other underwriters or to certain other dealers. After the
initial offering of the shares of Class A common stock, the offering price and
other selling terms may from time to time be varied by the representatives of
the underwriters.

Pursuant to the underwriting agreement, the Company has granted to the
underwriters an option, exercisable for 30 days from the date of this
prospectus, to purchase up to an aggregate of additional
shares of Class A common stock at the public offering price set forth on the
cover page hereof, less underwriting discounts and commissions. The underwriters
may exercise such option solely for the purpose of covering over-allotments, if
any, made in connection with the offering of the shares of Class A common stock
offered hereby. To the extent such option is exercised, each underwriter will
become obligated, subject to certain conditions, to purchase approximately the
same percentage of such additional shares of Class A common stock as the number
set forth next to such underwriter's name in the preceding table bears to the
total number of shares of Class A common stock set forth next to the names of
all underwriters in the preceding table.

At the request of the Company, the underwriters have reserved up to
shares of Class A common stock to be issued by the Company and offered hereby
for sale, at the initial public offering price, to directors, officers,
employees, business associates and related persons of the Company. The number of
shares of Class A common stock available for sale to the general public will be
reduced to the extent such individuals purchase such reserved shares. Any
reserved shares which are not so purchased will be offered by the underwriters
to the general public on the same basis as the other shares offered hereby.

Each of the Company, IDG and the Company's directors and officers has
agreed that, without the prior written consent of Morgan Stanley & Co.
Incorporated on behalf of the underwriters, during the period ending 180 days
after the date of this prospectus, it will not, directly or indirectly (i)
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, directly or indirectly, any
shares of Class A common stock or any securities convertible into or exercisable
or exchangeable for Class A common stock (whether such shares or any such
securities are then owned by such person or are thereafter acquired directly

52
<PAGE> 54

from the Company), or (ii) enter into any swap or other arrangement that
transfers to another, in whole or in part, any of the economic consequences of
ownership of Class A common stock, whether any such transaction described in
clause (i) or (ii) above is to be settled by delivery of Class A common stock or
such other securities, in cash or otherwise. The restrictions described in this
paragraph do not apply to (a) the sale to the underwriters of the shares of
Class A common stock under the underwriting agreement, (b) the issuance by the
Company of shares of Class A common 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, or (c)
transactions by any person other than the Company relating to shares of Class A
common stock or other securities acquired in open market transactions after the
completion of the offering of the shares of Class A common stock.

The underwriters have informed the Company that they do not intend sales to
discretionary accounts to exceed five percent of the total number of shares of
Class A common stock offered by them.

In order to facilitate the offering of the Class A common stock, the
underwriters may engage in transactions that stabilize, maintain or otherwise
affect the price of the Class A common stock. Specifically, the underwriters may
over-allot in connection with the offering, creating a short position in the
Class A common stock for their own account. In addition, to cover
over-allotments or to stabilize the price of the Class A common stock, the
underwriters may bid for, and purchase, shares of Class A common stock in the
open market. Finally, the underwriting syndicate may reclaim selling concessions
allowed to an Underwriter or a dealer for distributing the Class A common stock
in the offering if the syndicate repurchases previously distributed shares of
Class A common stock in transactions to cover syndicate short positions, in
stabilization transactions or otherwise. Any of these activities may stabilize
or maintain the market price of the Class A common stock above independent
market levels. The underwriters are not required to engage in these activities
and may end any of these activities at any time.

The Company and the underwriters have agreed to indemnify each other
against certain liabilities, including liabilities under the Securities Act.

Certain of the underwriters have in the past performed various banking
services for IDG, for which such underwriters received customary compensation.

PRICING OF THE OFFERING

Prior to this offering, there has been no public market for the shares of
Class A common stock. Consequently, the initial public offering price for the
shares of Class A common stock will be determined by negotiations between the
Company and the representatives of the underwriters. Among the factors to be
considered in determining the initial public offering price will be the
Company's record of operations, the Company's current financial position and
future prospects, the experience of its management, the economics of the
publishing industry in general, the general condition of the equity securities
markets, sales, earnings and certain other financial and operating information
of the Company in recent periods, the price-earnings ratios, price-sales ratios,
market prices of securities and certain financial and operating information of
companies engaged in activities similar to those of the Company. The estimated
initial public offering price range set forth on the cover page of this
preliminary prospectus is subject to change as a result of market conditions and
other factors.

LEGAL MATTERS

The validity of the issuance of the shares of Class A common stock offered
hereby will be passed upon for the Company by Wilson Sonsini Goodrich & Rosati,
Professional Corporation, Palo Alto, California. Certain legal matters in
connection with this offering will be passed upon for the underwriters by Davis
Polk & Wardwell, New York, New York.

53
<PAGE> 55

EXPERTS

The financial statements of the Company as of September 30, 1997 and 1996,
and for each of the three years in the period ended September 30, 1997 included
in this prospectus and the related financial statement schedule included
elsewhere in the registration statement have been audited by Deloitte & Touche
LLP, independent auditors, as stated in their reports appearing herein and
elsewhere in the registration statement, and are included in reliance upon the
reports of such firm given upon their authority as experts in accounting and
auditing.

ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission"), a registration statement on Form S-1 under the Securities Act,
and the rules and regulations promulgated thereunder, with respect to the Class
A common stock offered hereby. This prospectus, which constitutes a part of the
registration statement, does not contain all of the information set forth in the
registration statement and the exhibits and schedules thereto. Statements
contained in this prospectus as to the contents of any contract or other
document that is filed as an exhibit to the registration statement are not
necessarily complete and each such statement is qualified in all respects by
reference to the full text of such contract or document. For further information
with respect to the Company and the Class A common stock, reference is hereby
made to the registration statement and the exhibits and schedules thereto, which
may be inspected and copied at the principal office of the Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the regional offices of the
Commission located at Seven World Trade Center, Suite 1300, New York, New York
10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661, and copies of all or any part thereof may be obtained at
prescribed rates from the Commission's Public Reference Section at such
addresses. Also, the Commission maintains a World Wide Web site on the Internet
at http://www.sec.gov that contains reports, proxy and information statements
and other information regarding registrants that file electronically with the
Commission. Upon approval of the Class A common stock for quotation on the
Nasdaq National Market, such reports, proxy and information statements and other
information also can be inspected at the office of Nasdaq Operations, 1735 K
Street, N.W., Washington, D.C. 20006.

Upon completion of this offering, the Company will become subject to the
information and periodic reporting requirements of the Exchange Act, and, in
accordance therewith, will file periodic reports, proxy statements and other
information with the Commission. Such periodic reports, proxy statements and
other information will be available for inspection and copying at the regional
offices, public reference facilities and Web site of the Commission referred to
above.

54
<PAGE> 56

IDG BOOKS WORLDWIDE, INC.
(AN INDIRECT SUBSIDIARY OF INTERNATIONAL DATA GROUP, INC.)

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditors' Report................................ F-2
Balance Sheets as of September 30, 1996 and 1997 and
(Unaudited) March 31, 1998............................. F-3
Statements of Income for the Years Ended September 30,
1995, 1996 and 1997 and (Unaudited) the Six Months
Ended March 31, 1997 and March 31, 1998................ F-4
Statements of Stockholder's Equity for the Years Ended
September 30, 1995, 1996 and 1997 and the Six Months
Ended March 31, 1998 (Unaudited)....................... F-5
Statements of Cash Flows for the Years Ended September 30,
1995, 1996 and 1997 and (Unaudited) the Six Months
Ended March 31, 1997 and March 31, 1998................ F-6
Notes to Financial Statements............................. F-7
</TABLE>

F-1
<PAGE> 57

The accompanying financial statements are required to disclose, pursuant to
rules of the Securities and Exchange Commission, unaudited pro forma basic and
diluted net income per share using common shares outstanding plus the number of
shares to be sold in a planned initial public offering whose proceeds are to be
used to pay a note issued to the Parent as payment for a dividend declared as of
May 6, 1998. The following opinion is in the form which will be signed by
Deloitte & Touche LLP upon inclusion of such disclosure in the accompanying
financial statements, and assuming that from March 31, 1998 to the date such
information has been included, no other events shall have occurred which affect
such financial statements and the notes thereto.

May 22, 1998 DELOITTE & TOUCHE LLP
San Jose, California

"INDEPENDENT AUDITORS' REPORT

IDG Books Worldwide, Inc.:

We have audited the accompanying balance sheets of IDG Books Worldwide,
Inc., an indirect subsidiary of International Data Group, Inc., as of September
30, 1996 and 1997, and the related statements of income, stockholder's equity,
and cash flows for the each of the three years in the period ended September 30,
1997. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

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

In our opinion, such financial statements present fairly, in all material
respects, the financial position of IDG Books Worldwide, Inc. at September 30,
1996 and 1997, and the results of its operations and its cash flows for each of
the three years in the period ended September 30, 1997 in conformity with
generally accepted accounting principles.

March 31, 1998
(May 6, 1998 as to the
twelfth paragraph of
Note 2 and May 22, 1998
as to Note 8)
San Jose, California"

F-2
<PAGE> 58

IDG BOOKS WORLDWIDE, INC.
(AN INDIRECT SUBSIDIARY OF INTERNATIONAL DATA GROUP, INC.)

BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

ASSETS

<TABLE>
<CAPTION>
PRO FORMA
SEPTEMBER 30, SEPTEMBER 30, MARCH 31, MARCH 31,
1996 1997 1998 1998
------------- ------------- ----------- -----------
(AUDITED)
(UNAUDITED) (NOTE 2)
<S> <C> <C> <C> <C>
Current Assets:
Cash................................... $ 83 $ 74 $ 46 $ 46
Accounts receivable -- net............. 20,915 26,561 33,553 33,553
Inventory -- net....................... 6,119 7,927 8,735 8,735
Other current assets................... 446 6 598 598
Deferred tax assets.................... 10,860 14,860 18,517 18,517
------- ------- ------- -------
Total current assets........... 38,423 49,428 61,449 61,449
Royalty Advances -- net.................. 2,139 3,078 3,736 3,736
Property and Equipment -- net............ 3,074 4,657 4,670 4,670
Publishing Rights (Note 11) -- net....... 3,833 3,833
------- ------- ------- -------
TOTAL.......................... $43,636 $57,163 $73,688 $73,688
======= ======= ======= =======
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
Current Liabilities:
Accounts payable....................... $ 2,960 $ 3,128 $ 4,697 $ 4,697
Accrued liabilities.................... 16,685 27,592 31,727 31,727
Note payable to Parent (Note 2)........ 38,400
------- ------- ------- -------
Total current liabilities...... 19,645 30,720 36,424 74,824
------- ------- ------- -------
Commitments and Contingencies (Note 10)
Stockholder's Equity (Deficit):
Preferred stock, $.001 par value;
authorized: 5,000,000
shares -- actual; issued and
outstanding: 0 shares -- actual and
pro forma...........................
Common stock, $.001 par value;
authorized: 25,000,000
shares -- actual, 25,000,000 Class A
shares and 400,000 Class B
shares -- pro forma; issued and
outstanding: 11,100,00
shares -- actual, 10,705,749 shares
Class A and 394,251 shares Class
B -- pro forma...................... 11 11 11 11
Retained earnings (deficit)............ 23,729 30,764 37,634 (766)
Advances due to (from) Parent.......... 251 (4,332) (381) (381)
------- ------- ------- -------
Total stockholder's equity
(deficit).................... 23,991 26,443 37,264 (1,136)
------- ------- ------- -------
Total.......................... $43,636 $57,163 $73,688 $73,688
======= ======= ======= =======
</TABLE>

See notes to financial statements.
F-3
<PAGE> 59

IDG BOOKS WORLDWIDE, INC.
(AN INDIRECT SUBSIDIARY OF INTERNATIONAL DATA GROUP, INC.)

STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED SEPTEMBER 30, MARCH 31,
---------------------------- -----------------
1995 1996 1997 1997 1998
------- ------- -------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenue:
Net sales................................. $69,712 $93,435 $116,488 $60,561 $69,583
Licensing revenues and other.............. 2,811 4,412 4,200 1,903 2,333
------- ------- -------- ------- -------
Net revenue............................ 72,523 97,847 120,688 62,464 71,916
------- ------- -------- ------- -------
Operating Costs and Expenses:
Cost of sales............................. 40,598 55,703 63,064 32,075 37,856
Selling, general and administrative....... 19,573 28,369 42,032 20,218 21,240
Parent corporate services fee............. 1,464 2,779 3,669 1,836 1,175
------- ------- -------- ------- -------
Total operating costs and
expenses........................ 61,635 86,851 108,765 54,129 60,271
------- ------- -------- ------- -------
Income Before Provision for Income Taxes.... 10,888 10,996 11,923 8,335 11,645
Provision for Income Taxes.................. 4,522 4,508 4,888 3,348 4,775
------- ------- -------- ------- -------
Net Income.................................. $ 6,366 $ 6,488 $ 7,035 $ 4,987 $ 6,870
======= ======= ======== ======= =======
Basic and Diluted Net Income per Share...... $ 0.57 $ 0.58 $ 0.63 $ 0.45 $ 0.62
======= ======= ======== ======= =======
Pro Forma Basic and Diluted Net Income per
Share (Note 2)............................ $ $
======== =======
Shares Used in per Share Calculations:
Basic and diluted net income.............. 11,100 11,100 11,100 11,100 11,100
======= ======= ======== ======= =======
Pro forma basic and diluted net income....
======== =======
</TABLE>

See notes to financial statements.
F-4
<PAGE> 60

IDG BOOKS WORLDWIDE, INC.
(AN INDIRECT SUBSIDIARY OF INTERNATIONAL DATA GROUP, INC.)

STATEMENTS OF STOCKHOLDER'S EQUITY
(IN THOUSANDS)

<TABLE>
<CAPTION>
ADVANCES
DUE
COMMON STOCK TO
---------------- RETAINED (FROM)
SHARES AMOUNT EARNINGS PARENT TOTAL
------ ------ --------- -------- -------
<S> <C> <C> <C> <C> <C>
Balance, October 1, 1994................... 11,100 $11 $10,875 $(3,429) $ 7,457
Net income............................... 6,366 6,366
Change in Advances due to (from)
Parent................................ 3,066 3,066
------ --- ------- ------- -------
Balance, September 30, 1995................ 11,100 11 17,241 (363) 16,889
Net income............................... 6,488 6,488
Change in Advances due to (from)
Parent................................ 614 614
------ --- ------- ------- -------
Balance, September 30, 1996................ 11,100 11 23,729 251 23,991
Net income............................... 7,035 7,035
Change in Advances due to (from)
Parent................................ (4,583) (4,583)
------ --- ------- ------- -------
Balance, September 30, 1997................ 11,100 11 30,764 (4,332) 26,443
Net income*.............................. 6,870 6,870
Change in Advances due to (from) Parent*... -- -- -- 3,951 3,951
------ --- ------- ------- -------
Balance, March 31, 1998*................... 11,100 $11 $37,634 $ (381) $37,264
====== === ======= ======= =======
</TABLE>

- ---------------
* unaudited

See notes to financial statements.
F-5
<PAGE> 61

IDG BOOKS WORLDWIDE, INC.
(AN INDIRECT SUBSIDIARY OF INTERNATIONAL DATA GROUP, INC.)

STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED SEPTEMBER 30, MARCH 31,
--------------------------- ------------------
1995 1996 1997 1997 1998
------- ------- ------- -------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash Flows from Operating Activities:
Net income................................ $ 6,366 $ 6,488 $ 7,035 $ 4,987 $ 6,870
------- ------- ------- -------- -------
Adjustments to reconcile net income to net
cash provided (used) by operating
activities:
Depreciation and amortization........ 382 1,355 1,663 712 1,668
Deferred income taxes................ (3,308) (2,017) (4,000) (2,784) (3,657)
Changes in operating assets and
liabilities:
Accounts receivable............... (7,615) (3,460) (5,646) (11,929) (7,942)
Inventory......................... (7,230) 3,378 (1,808) (2,332) (308)
Royalty advances.................. (279) (910) (939) (614) (258)
Other current assets.............. 355 (412) 440 207 (592)
Accounts payable.................. 1,786 (1,075) 168 2,553 1,569
Accrued liabilities............... 7,685 (1,492) 10,907 7,553 3,624
------- ------- ------- -------- -------
Net cash provided (used) by
operating activities............ (1,858) 1,855 7,820 (1,647) 974
------- ------- ------- -------- -------
Cash Flows from Investing Activities:
Capital expenditures...................... (1,250) (2,430) (3,246) (681) (1,514)
Acquisition of publishing rights and
related assets......................... -- -- -- -- (3,439)
------- ------- ------- -------- -------
Net cash used in investing
activities...................... (1,250) (2,430) (3,246) (681) (4,953)
------- ------- ------- -------- -------
Cash Flows from Financing Activities:
Advances due to (from) Parent -- net
change................................. 3,066 614 (4,583) 2,323 3,951
------- ------- ------- -------- -------
Net Increase (Decrease) in Cash............. (42) 39 (9) (5) (28)
Cash, Beginning of Period................... 86 44 83 83 74
------- ------- ------- -------- -------
Cash, End of Period......................... $ 44 $ 83 $ 74 $ 78 $ 46
======= ======= ======= ======== =======
Noncash Investing Activity:
Acquisition of publishing rights and
related assets (Note 11):
Current assets......................... $ 1,400
Publishing rights...................... 4,000
Less cash paid......................... (3,439)
-------
Liabilities assumed.................... $ 1,961
=======
</TABLE>

See notes to financial statements.
F-6
<PAGE> 62

IDG BOOKS WORLDWIDE, INC.
(AN INDIRECT SUBSIDIARY OF INTERNATIONAL DATA GROUP, INC.)

NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 1995, 1996 AND 1997 AND
SIX MONTHS ENDED MARCH 31, 1997 AND 1998
(INFORMATION AS OF MARCH 31, 1998 AND FOR THE SIX MONTHS ENDED MARCH 31, 1997
AND MARCH 31, 1998 IS UNAUDITED)

1. BASIS OF PRESENTATION

Organization and Description of Business -- IDG Books Worldwide, Inc., a
Massachusetts company ("Books-Massachusetts"), was founded in 1990 as a
wholly-owned subsidiary (through intermediate companies) of International Data
Group, Inc. ("Parent"). On March 24, 1998, the Parent formed a new intermediate
subsidiary, IDG Books Worldwide, Inc., a Delaware company ("Books-Delaware"), to
be the holding company of Books-Massachusetts. Subsequently Books-Massachusetts
was merged into Books-Delaware.

The formation of the Books-Delaware and subsequent merger with
Books-Massachusetts was a combination of companies under common control by the
Parent and is accounted for similar to a pooling of interests. Accordingly, the
accompanying financial statements report the operations of Books-Massachusetts
for periods prior to the formation of Books-Delaware. Books-Delaware and
Books-Massachusetts are collectively referred to in the accompanying financial
statements as "IDG Books Worldwide, Inc." or "the Company."

The Company is a publisher of computer, business, personal finance, study
aids, cooking, gardening, do-it-yourself, health and fitness and self-help
books. The Company publishes and markets its books under brand names, including
the ". . . For Dummies(R)" series.

Basis of Presentation and Transactions with Parent -- The Company has
conducted its business as an operating division of the Parent, with separate
management, personnel, facilities and accounting records. The Company has
historically depended on the Parent (or affiliates thereof) for corporate
administrative functions, as well as for strategic marketing and brand-building,
financing, cash management, tax and payroll administration, property/casualty
insurance, employee benefits administration, and certain other services. The
fees for these services have been charged to the Company, and reflected in the
accompanying financial statements, through a Parent corporate services fee based
on a percentage of budgeted net sales plus a fixed charge which is consistent
with the method that the Parent charges its other controlled subsidiaries.
Effective January 1, 1998, the Company assumed responsibility for certain
corporate administrative functions, as well as for the Company's strategic
marketing and brand-building, the costs for which had constituted a significant
portion of the parent corporate services fee. Accordingly, the parent corporate
services fee decreased to $150,000 per quarter. In the opinion of management,
the parent corporate services fees included in the accompanying financial
statements reflect a reasonable amount for the services received; however, such
amounts were not established on an arm's-length basis and may not be the same as
would have been incurred had the Company operated independent of its Parent (see
Note 9).

2. SIGNIFICANT ACCOUNTING POLICIES

Fiscal Year -- The Company's fiscal year ends on the Saturday closest to
September 30. Fiscal years 1995, 1996 and 1997 ended on September 30, 1995,
September 28, 1996, and September 27, 1997, respectively, and each consisted of
52 weeks. For convenience, fiscal year-ends are denoted in the accompanying
financial statements as September 30. Similarly, the twenty-six-week periods
ended March 29, 1997 and March 28, 1998 are referred to as the six-month periods
ended March 31, 1997 and 1998, respectively.

Revenue Recognition -- Sales are recorded upon shipment of products, net of
provisions for estimated returns and allowances, which are estimated based on
historical experience by type of book. Revenue from the licensing of titles,
editorial content and design are recognized when received.

F-7
<PAGE> 63
IDG BOOKS WORLDWIDE, INC.
(AN INDIRECT SUBSIDIARY OF INTERNATIONAL DATA GROUP, INC.)

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Concentrations of Credit Risk -- Financial instruments which potentially
expose the Company to concentrations of credit risk consist primarily of
accounts receivable. The Company's customers consist principally of retail chain
booksellers, wholesale distributors, office superstores, membership clubs and
computer/electronic superstores located primarily in the United States and
Canada. Certain customers account for over 10% of sales (Note 12). The Company
performs ongoing credit evaluations of its customers and maintains allowances
for estimated probable credit losses.

Use of Estimates -- The preparation of financial statements in accordance
with generally accepted accounting principles requires the use of estimates. The
primary estimates underlying the Company's financial statements include
allowances for sales returns, doubtful accounts, inventory obsolescence,
reserves for royalty advances and the recoverability of deferred tax assets.
Actual results could differ from those estimates.

Inventory -- Inventory is stated at lower of cost or market. Cost is
determined using the first-in, first-out method.

Royalty Advances -- Royalty advances are recorded as cash is advanced to
authors and are expensed as earned by authors or reserved when future recovery
appears doubtful. Royalty advances are reported net of reserves of $993,000,
$1,999,000 and $2,699,000 at September 30, 1996 and 1997, and March 31, 1998,
respectively.

Property and Equipment -- Property and equipment are stated at cost.
Depreciation is provided using the straight- line method over the estimated
useful lives of the assets ranging from three to five years. Leasehold
improvements are amortized over the shorter of the lease term or the remaining
useful life of the related assets. The Company capitalizes internal-use software
in accordance with AICPA statement of Position 98-1, Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use. As of March 31, 1998,
such software had not been placed into service and accordingly, no depreciation
has been provided.

Long-Lived Assets -- Long-lived assets held and used by the Company are
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. For purposes of
evaluating the recoverability of long-lived assets, the Company evaluates the
carrying value of its long-lived assets on an ongoing basis and recognizes an
impairment when the estimated future undiscounted cash flows from operations are
less than the carrying value of the related assets.

Advances due to (from) Parent are included as a component of stockholder's
equity, as no interest was charged for such balances and there was no scheduled
repayment. The Company intends to settle such balance in connection with a
planned initial public offering.

Income Taxes -- The Company's taxable income has been included in the
Parent's consolidated tax returns. The accompanying financial statements include
a charge in lieu of taxes paid which approximates the current income tax
provision, as if the Company were a separate taxpayer. Amounts which would
represent current income taxes payable are included in Advances due to (from)
Parent. The Company accounts for deferred income taxes in accordance with
Statement of Financial Accounting Standards (SFAS) No. 109, which requires that
deferred tax assets and liabilities are recognized for the expected future tax
consequences of temporary differences between the financial statement carrying
amount and the tax bases of assets and liabilities. Valuation allowances are
established when necessary to reduce deferred tax assets to the amounts, more
likely than not, to be realized.

Net Income Per Share -- Net income per share is computed using the basic
and diluted weighted average number of common shares outstanding during the year
in accordance with SFAS No. 128, Earnings Per Share. Basic net income per share
excludes dilution and is computed using the weighted average number of common
shares outstanding for the period. Diluted net income per share reflects the
potential dilution that could occur if securities or other contracts to issue
common stock (stock options) were exercised or converted

F-8
<PAGE> 64
IDG BOOKS WORLDWIDE, INC.
(AN INDIRECT SUBSIDIARY OF INTERNATIONAL DATA GROUP, INC.)

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

into common stock. Shares used in the basic and diluted calculations are
identical for the periods presented and, accordingly, no separate amounts for
diluted net income per share are reported. No stock options have been granted
through March 31, 1998.

Unaudited Pro Forma Balance Sheet and Earnings Per Share -- On May 6, 1998,
the Company declared a $38,400,000 dividend, which was paid on that date by
issuance of a note payable to the Parent. The Company intends to repay such note
using a portion of the proceeds from its planned initial public offering. The
unaudited pro forma balance sheet as of March 31, 1998 gives retroactive effect
to such dividend, as though it had been declared as of that date. Unaudited pro
forma basic and diluted net income per share amounts are calculated using common
shares outstanding plus the number of shares whose proceeds are to be used to
repay the note payable. The unaudited pro forma balance sheet also discloses the
amended share authorizations discussed in Note 8.

Stock-Based Compensation is accounted for using the intrinsic value method
in accordance with the provisions of APB Opinion No. 25, Accounting for Stock
Issued to Employees, as allowed by SFAS No. 123, Accounting for Stock-Based
Compensation.

New Accounting Pronouncements -- In June 1997, the Financial Accounting
Standards Board issued SFAS No. 130, Reporting Comprehensive Income, which
requires that an enterprise report, by major components and as a single total,
the change in its net assets during the period from nonowner sources; and No.
131, Disclosures about Segments of an Enterprise and Related Information, which
establishes annual and interim reporting standards for an enterprise's operating
segments and related disclosures about its products, services, geographic areas,
and major customers. Management has not yet determined its SFAS 131 reporting
segments. These Statements will not affect the Company's financial position,
results of operations or cash flows. Both statements are effective for the
Company in fiscal year 1999, with earlier application permitted.

3. ACCOUNTS RECEIVABLE

Accounts receivable consisted of the following (in thousands):

<TABLE>
<CAPTION>
SEPTEMBER 30,
------------------ MARCH 31,
1996 1997 1998
------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Accounts receivable......................................... $37,805 $47,859 $62,847
Allowance for doubtful accounts............................. (1,500) (3,465) (3,555)
Allowance for sales returns................................. (15,390) (17,833) (25,739)
------- ------- -------
Total............................................. $20,915 $26,561 $33,553
======= ======= =======
</TABLE>

4. INVENTORIES

Inventories consisted of the following (in thousands):

<TABLE>
<CAPTION>
SEPTEMBER 30,
------------------- MARCH 31,
1996 1997 1998
------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Books (finished goods)................................... $13,505 $ 17,038 $ 18,924
Paper.................................................... 822 2,823 3,374
------- -------- --------
Total inventory................................ 14,327 19,861 22,298
Reserve for obsolescence................................. (8,208) (11,934) (13,563)
------- -------- --------
Net inventory............................................ $ 6,119 $ 7,927 $ 8,735
======= ======== ========
</TABLE>

F-9
<PAGE> 65
IDG BOOKS WORLDWIDE, INC.
(AN INDIRECT SUBSIDIARY OF INTERNATIONAL DATA GROUP, INC.)

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

5. PROPERTY AND EQUIPMENT

Property and equipment consisted of the following (in thousands):

<TABLE>
<CAPTION>
SEPTEMBER 30,
------------------ MARCH 31,
1996 1997 1998
------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Computers and equipment................................... $ 3,469 $ 5,094 $ 5,470
Furniture and fixtures.................................... 1,330 1,334 1,337
Leasehold improvements.................................... 304 1,286 1,891
Internal-use software..................................... -- 635 1,164
------- ------- -------
Total........................................... 5,103 8,349 9,862
Less accumulated depreciation and amortization............ (2,029) (3,692) (5,192)
------- ------- -------
Property and equipment -- net............................. $ 3,074 $ 4,657 $ 4,670
======= ======= =======
</TABLE>

6. ACCRUED LIABILITIES

Accrued liabilities consisted of the following (in thousands):

<TABLE>
<CAPTION>
SEPTEMBER 30,
------------------ MARCH 31,
1996 1997 1998
------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Accrued royalties......................................... $ 6,559 $ 9,403 $11,075
Accrued compensation and benefits......................... 3,896 6,389 6,584
Accrued promotion......................................... 3,329 7,518 10,689
Other accrued liabilities................................. 2,901 4,282 3,379
------- ------- -------
Total........................................... $16,685 $27,592 $31,727
======= ======= =======
</TABLE>

7. INCOME TAXES

The provision for federal, state and foreign income taxes consisted of the
following for the years ended September 30 (in thousands):

<TABLE>
<CAPTION>
1995 1996 1997
------- ------- -------
<S> <C> <C> <C>
Current:
Federal................................................... $ 6,500 $ 5,325 $ 7,200
State..................................................... 1,209 1,048 1,539
Foreign................................................... 121 152 149
------- ------- -------
Total current............................................. 7,830 6,525 8,888
------- ------- -------
Deferred:
Federal................................................... (3,025) (1,662) (3,227)
State..................................................... (283) (355) (773)
------- ------- -------
Total deferred............................................ (3,308) (2,017) (4,000)
------- ------- -------
Total..................................................... $ 4,522 $ 4,508 $ 4,888
======= ======= =======
</TABLE>

Federal and state income tax expense is allocated to the Company by the
Parent through the Advances due to (from) Parent account.

F-10
<PAGE> 66
IDG BOOKS WORLDWIDE, INC.
(AN INDIRECT SUBSIDIARY OF INTERNATIONAL DATA GROUP, INC.)

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Deferred tax assets were comprised of the following at September 30 (in
thousands):

<TABLE>
<CAPTION>
1996 1997
------- -------
<S> <C> <C>
Reserve for returns......................................... $ 5,902 $ 6,842
Reserve for obsolescence.................................... 3,123 4,558
Loss accruals............................................... 1,014 2,221
Uniform capitalization...................................... 486 582
Other....................................................... 335 657
------- -------
Deferred tax assets......................................... $10,860 $14,860
======= =======
</TABLE>

The differences between the effective income tax rate and the statutory
federal income tax rate were as follows for the years ended September 30:

<TABLE>
<CAPTION>
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
Statutory federal tax rate.................................. 35.0% 35.0% 35.0%
State taxes net of federal tax.............................. 5.5 4.1 4.2
Other....................................................... 1.0 1.9 1.8
---- ---- ----
Effective tax rate.......................................... 41.5% 41.0% 41.0%
==== ==== ====
</TABLE>

8. STOCKHOLDER'S EQUITY AND BENEFIT PLANS

Capital Stock

As of March 31, 1998, the Company had authorized capital of 30,000,000
shares, par value $.001 per share, consisting of 5,000,000 shares of preferred
stock and 25,000,000 shares of common stock, of which 11,100,000 shares of
common stock were outstanding. On May 19, 1998, the Company amended its articles
of incorporation to change the total amount of authorized capital stock to
25,400,000, consisting of 25,000,000 shares of Class A common stock and 400,000
shares of Class B common stock. All outstanding shares were converted to Class A
common stock on a share-for-share basis except for 394,251 shares which were
converted to Class B common stock on a share-for-share basis.

No amounts have been paid in by the Parent for common stock since inception
of the Company in 1990. In connection with formation of the Delaware company
referred to in Note 1, $11,000 was allocated to common stock from retained
earnings.

Each outstanding share of Class A common stock is entitled to one vote and
each outstanding share of Class B common stock is entitled to ten votes. Holders
of Class A common stock and Class B common stock are entitled to receive
dividends at the same rate and in such amounts as the Board of Directors may
from time to time determine.

Class A common stock is not convertible. Class B common stock is
convertible at any time into Class A common stock on a share-for-share basis and
will automatically convert upon the transfer by the holder thereof.

In the event of any dissolution, liquidation, or winding up of the affairs
of the Company, whether voluntary or involuntary, after payment of the debts and
other liabilities of the Company, the remaining assets of the Company will be
distributed ratably among the holders of the Class A common stock and the Class
B common stock, treated as a single class.

F-11
<PAGE> 67
IDG BOOKS WORLDWIDE, INC.
(AN INDIRECT SUBSIDIARY OF INTERNATIONAL DATA GROUP, INC.)

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Stock Option Plan

Effective May 6, 1998, the Company's Board of Directors approved a stock
option plan under which 2,850,000 shares of Class A common stock are reserved
for issuance to employees, consultants and directors. Under the plan, both
incentive and nonstatutory stock options may be granted to purchase Class A
common stock at not less than the fair market value of the common stock at the
date of grant. Effective May 6, 1998, the Company granted options to purchase
1,500,000 shares of Class A common stock at $11.88 per share. Options generally
vest over 4 years and expire ten years after date of grant.

Employee Stock Purchase Plan

Effective May 22, 1998, the Company adopted an employee stock purchase plan
and reserved a total of 350,000 shares of Class A common stock for issuance
thereunder. The purchase plan permits eligible employees to purchase common
stock through payroll deductions, subject to certain limitations, at a purchase
price of 85% of the lower of the fair market value of the common stock on the
first day of the offering period or on the last day of the purchase period.

Employee Stock Ownership Plan

The Company's employees have historically participated in the Parent's
unleveraged ESOP ("ESOP-P") and, as discussed in Note 9, the Company has
recorded the applicable plan contribution expense in its financial statements.
As of May 6, 1998, the Company adopted a new ESOP ("Books ESOP"). In connection
therewith, the accounts of the Company employees, and the shares of common stock
of the Parent attributable to such accounts, were transferred from ESOP-P to
Books ESOP. Such Parent common shares received by Books ESOP were tendered on
May 21, 1998 to the Parent in exchange for 394,251 shares of Company Class B
common stock, based on an exchange ratio determined by an independent valuation
firm of the relative fair value of one Company Class B common share to one
Parent common share. The shares of Class B common stock owned by Books ESOP are
to be transferred to an affiliate of the Parent in exchange for 394,251 shares
of Class A common stock in connection with the Company's planned initial public
offering. Effective as of May 6, 1998, employees of the Company no longer
participate in ESOP-P.

The Company also participates in the Parent's defined 401(k) contribution
plan that covers substantially all U.S. employees of the Company who have been
employed for one year and have attained the age of 21. The plan provides that
eligible employees electing to become participants can contribute to the plan
through payroll deferrals up to 8% of their base compensation. The Company and
Parent make no contribution to the plan on the participant's behalf.

9. RELATED PARTY TRANSACTIONS

Net revenue from affiliated customers amounted to approximately $66,000,
$188,000 and $700,000 in 1995, 1996 and 1997, respectively.

Operating expenses allocated from the Parent consist of (1) Parent
Corporate Services Fee (Note 1), (2) Employee Stock Ownership Plan expenses,
which are based on the applicable ESOP contribution rate applied to Company
salaries, and (3) income tax provisions, which are calculated as though the
Company were a separate taxpayer. Neither party pays interest on intercompany
balances, and, accordingly, no such interest income or expense has been recorded
in the accompanying financial statements.

F-12
<PAGE> 68
IDG BOOKS WORLDWIDE, INC.
(AN INDIRECT SUBSIDIARY OF INTERNATIONAL DATA GROUP, INC.)

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

A summary of such amounts follows (in thousands):

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED SEPTEMBER 30, MARCH 31,
-------------------------- ----------------
1995 1996 1997 1997 1998
------ ------ ------ ------ ------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Parent corporate services fee................. $1,464 $2,779 $3,669 $1,836 $1,175
ESOP.......................................... 822 1,307 1,811 798 --
Income tax provision.......................... 4,522 4,508 4,888 3,348 4,775
</TABLE>

Effective October 1, 1997, no further contributions were made to the
Parent's ESOP with respect to Company employees. During the six-month period
ended March 31, 1998, the Company accrued $850,000 of contributions to be made
to the newly established Books ESOP as described in Note 8.

10. COMMITMENTS AND CONTINGENCIES

Leases -- The Company leases equipment and facilities under operating
leases which expire at various dates through January 2000. Total rental expense
for operating leases amounted to approximately $1,045,000, $1,861,000 and
$2,212,000 in 1995, 1996 and 1997, respectively.

At September 30, 1997, the aggregate minimum rental commitments under
noncancelable operating leases in excess of one year were as follows (in
thousands):

<TABLE>
<S> <C>
Years ending September 30,
1998...................................................... $2,990
1999...................................................... 2,440
2000...................................................... 483
------
Total............................................. $5,913
======
</TABLE>

The Company is subject to various legal actions and claims which have
arisen in the ordinary course of business. In the opinion of management and
counsel, the ultimate resolution of such legal proceedings and claims will not
have a material effect on the financial position or results of operations of the
Company.

11. PUBLISHING RIGHTS

On December 1, 1997, the Company acquired from Henry Holt and Company the
publishing rights for the books published under the names "MIS:Press" and "M&T
Books," and the related inventory and other assets, for $5,400,000 in cash and
assumed liabilities. The cost of this acquisition was allocated to the assets
acquired, including $4,000,000 allocated to publishing rights which is being
amortized over eight years.

F-13
<PAGE> 69
IDG BOOKS WORLDWIDE, INC.
(AN INDIRECT SUBSIDIARY OF INTERNATIONAL DATA GROUP, INC.)

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

12. MAJOR CUSTOMERS AND INTERNATIONAL SALES AND OPERATIONS

Net sales to individual customers representing greater than 10% of the
Company's net sales were as follows for the years ended September 30 (in
thousands):

<TABLE>
<CAPTION>
1995 1996 1997
------- ------- -------
<S> <C> <C> <C>
Company A............................. $ 7,667 $10,876 $17,805
Company B............................. 11,104 11,854 14,942
Company C............................. 10,712 * *
Company D............................. * 10,303 12,204
</TABLE>

- ---------------
* Less than 10% of sales.

The Company operates in one business segment, namely publishing, and
develops, publishes and markets products including professional and reference
works, consumer books, for the educational, technical, professional and trade
markets around the world.

Net sales to unaffiliated international customers were as follows (in
thousands):

<TABLE>
<CAPTION>
1995 1996 1997
------- ------- -------
<S> <C> <C> <C>
Canada................................ $ 4,542 $ 5,481 $ 5,813
Europe................................ 2,984 3,965 5,191
Other................................. 2,476 3,734 4,418
------- ------- -------
Total................................. $10,002 $13,180 $15,422
======= ======= =======
</TABLE>

13. UNAUDITED INTERIM FINANCIAL STATEMENTS

Unaudited interim financial statements as of March 31, 1998 and for the
six-month periods ended March 31, 1997 and 1998 are unaudited but have been
prepared in accordance with generally accepted accounting principles for interim
financial statements. In the opinion of management, all adjustments (consisting
only of normal recurring adjustments) considered necessary for a fair
presentation have been included. The results of operations of any interim period
are not necessarily indicative of the results of operations for the full year.

F-14
<PAGE> 70

Back Artwork Page:

[Set forth on the outside panel of the back gatefold under the heading "The
Brand People Know" are photographs of various ". . . For Dummies(R)" products
and the ". . . For Dummies(R)" logos.]

[Set forth on one inside panel of the back gatefold under the heading "The
Quality Consumers Know" are certain awards the Company has received, a list of
best seller books published by the Company and press coverage related to the
Company.]

[Set forth on the second inside panel of the back gatefold under the heading
"The Company You Must Know" is additional press coverage related to the
Company.]
<PAGE> 71

idg logo
<PAGE> 72

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by the Registrant in connection
with the sale of common stock being registered. All amounts are estimates except
the Securities and Exchange Commission registration fee and the NASD filing fee.

<TABLE>
<CAPTION>
AMOUNT
TO BE PAID
----------
<S> <C>
Securities and Exchange Commission registration fee......... $14,750
NASD filing fee............................................. 5,500
Nasdaq National Market listing fee.......................... *
Printing and engraving expenses............................. *
Legal fees and expenses..................................... *
Accounting fees and expenses................................ *
Blue Sky fees and expenses.................................. *
Transfer agent fees......................................... *
Miscellaneous............................................... *
-------
Total............................................. $ *
=======
</TABLE>

- ---------------
* To be provided by amendment.

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 to the Registrant. The
Delaware General Corporation Law provides that Section 145 is not exclusive of
other rights to which those seeking indemnification may be entitled under any
bylaw, agreement, vote of stockholders or disinterested directors or otherwise.
Section 6.1 of the Registrant's Bylaws provides for indemnification by the
Registrant of its directors, officers and employees to the fullest extent
permitted by the Delaware General Corporation Law.

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 (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) for
unlawful payments of dividends or unlawful stock repurchases, redemptions or
other distributions, or (iv) for any transaction from which the director derived
an improper personal benefit. The Registrant's Certificate of Incorporation
provides for such limitation of liability.

The Registrant intends to obtain directors, and officers, insurance
providing indemnification for certain of the Registrant's directors, officers
and employees for certain liabilities.

Reference is also made to Section 7 of the Underwriting Agreement to be
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> 73

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

In March 1998, the Registrant issued 11,100,000 shares of its common stock
to IDG Enterprises, Inc., an indirect, wholly-owned subsidiary of International
Data Group, Inc., in return for all of the issued and outstanding capital stock
of IDG Books Worldwide, Inc., a Massachusetts company and the predecessor to the
Registrant. The shares were issued in a private placement in reliance on Section
4(2) of the Securities Act.

In May 1998, the Registrant issued options to purchase 1,500,000 shares of
common stock to approximately 440 current employees of the Company at an
exercise price of $11.88 per share. The options were issued in a private
placement in reliance on Section 4(2) of the Securities Act.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits

<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
------- -----------
<S> <C>
1.1* Form of Underwriting Agreement.
3.1 Amended and Restated Certificate of Incorporation of the
Registrant.
3.2 Bylaws of the Registrant.
4.1* Form of Registrant's Class A common stock certificate.
5.1* Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation, regarding the legality of the securities being
issued.
10.1* Form of Indemnification Agreement entered into by the
Registrant with each of its directors and executive
officers.
10.2* 1998 Stock Plan and related agreements.
10.3* 1998 Employee Stock Purchase Plan.
10.4* Employment Agreement between the Registrant and
.
10.5* Employment Agreement between the Registrant and
.
10.6* Corporate Services Agreement between the Registrant and IDG
dated , 1998.
10.7* Registration Rights Agreement between the Registrant and IDG
dated , 1998.
10.8* Trademark Licensing Agreement between the Registrant and IDG
dated , 1998.
10.9* Non-competition Agreement between the Registrant and IDG
dated , 1998.
10.10* Tax Allocation Agreement between the Registrant and IDG
dated , 1998.
10.11* Share Exchange Agreement between the Registrant and IDG
dated , 1998.
23.1* Consent of Wilson Sonsini Goodrich & Rosati, Professional
Corporation (included in Exhibit 5.1).
23.2* Consent and Report on Schedule of Deloitte & Touche LLP,
independent auditors
(see page II-5).
24.1 Power of Attorney (see page II-4).
27.1 Financial Data Schedule.
27.2 Financial Data Schedule.
</TABLE>

- ---------------
* To be supplied by amendment.

(b)Financial Statement Schedule
Schedule II--Valuation and Qualifying Accounts.

Schedules not listed above have been omitted because the information
required to be set forth therein is not applicable or is shown in the financial
statements or notes thereto.

II-2
<PAGE> 74

ITEM 17. UNDERTAKINGS

(a) The undersigned hereby undertakes to provide to the underwriters at the
closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.

(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the provisions referenced in Item 14 of this
Registration Statement 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 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 hereunder, 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 by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.

(1) For purposes of determining any liability under the 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 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 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-3
<PAGE> 75

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-1 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Foster City, State of California, on this 22nd day of May, 1998.

IDG Books Worldwide, Inc.

By: /s/ JOHN J. KILCULLEN

------------------------------------
John J. Kilcullen
Chairman of the Board and
Chief Executive Officer

POWER OF ATTORNEY

Each person whose signature appears below constitutes and appoints John J.
Kilcullen and Steven H. Berkowitz, and each of them, as attorneys-in-fact, each
with the power of substitution, for him or her in any and all capacities, to
sign any amendment to this Registration Statement (including post-effective
amendments and registration statements filed pursuant to Rule 462 and
otherwise), and to file the same, with exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, granting to
said attorneys-in-fact, and each of them, full power and authority to do and
perform each and every act and thing requisite and necessary to be done in
connection therewith, as fully to all intents and purposes as he or she might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact or either of them, or their or his substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.

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

/s/ JOHN J. KILCULLEN Chairman of the Board and May 22, 1998
- -------------------------------------------------------- Chief Executive Officer
John J. Kilcullen (Principal Executive Officer)

/s/ STEVEN H. BERKOWITZ President and Publisher May 22, 1998
- -------------------------------------------------------- (Principal Financial Officer)
Steven H. Berkowitz

/s/ JAMES A. DOEHRMAN Vice President and Chief May 22, 1998
- -------------------------------------------------------- Financial Officer (Principal
James A. Doehrman Accounting Officer)

/s/ PATRICK J. MCGOVERN Director May 22, 1998
- --------------------------------------------------------
Patrick J. McGovern

/s/ JAMES A. CASELLA Director May 22, 1998
- --------------------------------------------------------
James A. Casella
</TABLE>

II-4
<PAGE> 76

SCHEDULE II

IDG BOOKS WORLDWIDE, INC.

VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED SEPTEMBER 30, 1995, 1996 AND 1997
(IN THOUSANDS)

<TABLE>
<CAPTION>
BALANCE AT ADDITIONS-CHARGED NET DEDUCTIONS BALANCE AT END
DESCRIPTION BEGINNING OF PERIOD TO EXPENSE (RECOVERIES) OF PERIOD
----------- ------------------- ----------------- -------------- --------------
<S> <C> <C> <C> <C>
Allowance for sales returns
1995...................... $ 9,900 $17,347 $12,087 $15,160
1996...................... 15,160 26,866 26,636 15,390
1997...................... 15,390 31,026 28,583 17,833

Allowance for doubtful accounts
1995...................... 1,001 1,459 1,439 1,021
1996...................... 1,021 557 78 1,500
1997...................... 1,500 1,811 (154) 3,465

Reserve for inventory obsolescence
1995...................... 2,564 4,764 3,158 4,170
1996...................... 4,170 6,779 2,741 8,208
1997...................... 8,208 5,194 1,468 11,934

Reserve for royalty advances
1995...................... 100 495 -- 595
1996...................... 595 398 -- 993
1997...................... 993 1,006 -- 1,999
</TABLE>

S-1
<PAGE> 77

EXHIBIT INDEX

<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
- ------- ----------- ----------
<S> <C> <C>
1.1* Form of Underwriting Agreement..............................
3.1 Certificate of Incorporation of the Registrant..............
3.2 Bylaws of the Registrant....................................
4.1* Form of Registrant's Class A common stock certificate.......
5.1* Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation, regarding the legality of the securities being
issued......................................................
10.1* Form of Indemnification Agreement entered into by the
Registrant with each of its directors and executive
officers....................................................
10.2* 1998 Stock Plan and related agreements......................
10.3* 1998 Employee Stock Purchase Plan...........................
10.4* Employment Agreement between the Registrant and ...
10.5* Employment Agreement between the Registrant
and ..........................................
10.6* Corporate Services Agreement between the Registrant and IDG
dated , 1998....................................
10.7* Registration Rights Agreement between the Registrant and IDG
dated , 1998....................................
10.8* Trademark Licensing Agreement between the Registrant and IDG
dated , 1998....................................
10.9* Non-competition Agreement between the Registrant and IDG
dated , 1998.........................................
10.10* Tax Allocation Agreement between the Registrant and IDG
dated , 1998.........................................
10.11* Share Exchange Agreement between the Registrant and IDG
dated , 1998.........................................
23.1* Consent of Wilson Sonsini Goodrich & Rosati, Professional
Corporation (included in Exhibit 5.1).......................
23.2* Consent and Report on Schedule of Deloitte & Touche LLP,
independent auditors (see page II-5)........................
24.1 Power of Attorney (see page II-4)...........................
27.1 Financial Data Schedule.....................................
27.2 Financial Data Schedule.....................................
</TABLE>

- ---------------
* To be supplied by amendment.

<PAGE> 1
EXHIBIT 3.1

AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

IDG BOOKS WORLDWIDE, INC.

IDG Books Worldwide, Inc., a corporation organized and existing under
the General Corporation Law of the State of Delaware and originally incorporated
in Delaware on March 24, 1998 (the "Corporation"), does hereby certify that:

FIRST: The Amended and Restated Certificate of Incorporation of the
Corporation, in the form attached hereto as Exhibit 1, has been duly adopted in
accordance with the provisions of Sections 242 and 245 of the General
Corporation Law of the State of Delaware by the written consent of the sole
director of the Corporation as of May 18, 1998.

SECOND: The Amended and Restated Certificate of Incorporation of the
Corporation, in the form attached hereto as Exhibit 1, has been duly approved in
accordance with the provisions of Sections 228, 242 and 245 of the General
Corporation Law of the State of Delaware by the written consent of the sole
stockholder of the Corporation as of May 18, 1998.

THIRD: The Amended and Restated Certificate of Incorporation so adopted
reads in full as set forth in Exhibit 1 attached hereto and incorporated herein
by reference.

IN WITNESS WHEREOF, the Corporation has caused this to be signed and
attested by its duly authorized officer this 19th day of May, 1998.

IDG BOOKS WORLDWIDE, INC.

By: /s/ John J. Kilcullen
--------------------------------
John J. Kilcullen
Chief Executive Officer

<PAGE> 2
Exhibit 1

AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

IDG BOOKS WORLDWIDE, INC.

FIRST. The name of the corporation is IDG Books Worldwide, Inc. (the
"Corporation").

SECOND. The address of the Corporation's registered office in the State
of Delaware is 1209 Orange Street, Wilmington, County of New Castle, Delaware
19801. The name of its registered agent at such address is The Corporation Trust
Company.

THIRD. The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.

FOURTH. The total number of shares the Corporation shall have authority
to issue is twenty-five million four hundred thousand (25,400,000) shares, all
of which shall be designated common stock, $0.001 par value (the "Common
Stock"), of which twenty-five million (25,000,000) shares shall be designated
Common Stock, Class A (the "Class A Common") and four hundred thousand (400,000)
shares shall be designated Common Stock, Class B (the "Class B Common").

Each share of Class B Common issued by the Corporation, if
reacquired by the Corporation (whether by repurchase, conversion into Class A
Common or other means) shall upon such reacquisition be retired and may not be
reissued thereafter.

FIFTH: The shares of Class A Common and Class B Common shall be
identical in all respects and shall have equal rights and privileges, except as
expressly set forth in this Article FIFTH.

1. Dividends. Any dividends or distributions upon the Class A
Common and Class B Common may be declared by the Board of Directors and paid by
the Board of Directors of the Corporation from time to time in such amounts as
the Board shall determine, out of any source at the time lawfully available
therefor, provided that identical dividends or distributions per share are
declared and paid concurrently upon the shares of each such class. In the case
of dividends or other distributions payable in Class A Common or Class B Common,
only shares of Class A Common shall be distributed with respect to Class A
Common and only shares of Class B Common shall be distributed with respect to
Class B Common. In the case of dividends or other distributions consisting of
other voting securities of the Corporation, the Corporation shall declare and
pay such dividends in two separate classes of such voting securities, identical
in all respects, except that the

<PAGE> 3
voting rights of each such security paid to the holders of Class A shall be
one-tenth of the voting rights of each such security paid to the holders of
Class B Common, and such security paid to the holders of Class B Common shall
convert into the security paid to the holders of Class A Common upon the same
terms and conditions applicable to the Class B Common. In the case of dividends
or other distributions consisting of non-voting securities convertible into, or
exchangeable for, voting securities of the Corporation, the Corporation shall
provide that such convertible or exchangeable securities and the underlying
securities be identical in all respects (including, without limitation, the
conversion or exchange rate), except that the voting rights of each security
underlying the convertible or exchangeable security paid to the holders of Class
A Common shall be one-tenth of the voting rights of each security underlying the
convertible or exchangeable security paid to the holders of Class B Common, and
such underlying securities paid to the holders of Class B Common shall convert
into the underlying securities paid to the holders of Class A Common upon the
same terms and conditions applicable to the conversion of Class B Common into
Class A Common.

2. Stock Splits, Combinations and the Like. Neither the Class A
Common nor the Class B Common shall be split, combined or subdivided unless at
the same time there shall be a proportionate split, combination or subdivision
of such other class of Common Stock.

3. Rights Upon Liquidation or Dissolution. The holders of the
Class A Common and the holders of the Class B Common shall be entitled to share
ratably in the assets of the Corporation available for distribution to the
holders of Common Stock upon any dissolution, liquidation or winding up of the
affairs of the Corporation, whether voluntary or involuntary, after payment or
provision for the payment of the debts and other liabilities of the Corporation.

4. Voting. Except as otherwise required by law, on all matters on
which the holders of Common Stock shall be entitled to vote, each holder of
Class A Common shall be entitled to one (1) vote for each share of Class A
Common held by such holder, and each holder of Class B Common shall be entitled
to ten (10) votes for each share of Class B Common held by such holder. Except
as otherwise required by applicable law, the holders of shares of Class A Common
and Class B Common shall vote together as one class on all matters submitted to
a vote of stockholders of the Corporation.

5. Conversion.

(a) Optional Conversion. Subject to the provisions of
this section 5, each holder of record of Class B Common may, at the sole
discretion and option of such holder, convert any whole number or all of such
holder's shares of Class B Common into fully paid and nonassessable shares of
Class A Common at the rate of one (1) share of Class A Common for each share of
Class B Common surrendered for conversion; provided, however, that such
conversion shall not be effective unless and until any consents or approvals
required under applicable securities laws shall have been obtained.

(b) Automatic Conversion. The outstanding shares of
Class B Common shall automatically be converted into Class A Common at the
conversion rate specified in

-2-
<PAGE> 4

paragraph (a) above, without further action by the respective holder or holders
of such shares, at the times and in the manner specified as follows: each share
of Class B Common shall automatically convert into Class A Common immediately
upon any sale, conveyance, assignment or other transfer of such share, whether
or not for value, or attempt thereof, by the initial registered holder thereof
or by any subsequent registered holder, other than any such transfer (1) to a
person or entity controlling, controlled by or under common control with the
initial registered holder or (2) to or from an employee stock ownership plan
qualified under Section 4975(e)(7) of the Internal Revenue Code of 1986, as
amended (a "Qualified Plan"); provided that in the event that any sale,
conveyance, assignment or other transfer shall not give rise to automatic
conversion hereunder, then any subsequent transfer or attempt thereof by the
holder (other than any transfer (1) to any person or entity controlling,
controlled by or under common control with the initial registered holder or (2)
to or from a Qualified Plan) shall be subject to automatic conversion upon the
terms and conditions set forth herein.

(c) Mechanics of Conversion. To exercise the optional
conversion privilege set forth herein, the holder of shares of Class B Common
shall surrender the shares to be converted, accompanied by instruments of
transfer satisfactory to the Corporation and the payment in cash of any amount
required pursuant to subparagraph 5(e) below and sufficient to transfer the
Class B Common being converted to the Corporation free of any adverse interest,
at the principal offices of the Corporation or any of the offices or agencies
maintained for such purpose by the Corporation ("Conversion Agent") and shall
give written notice (by registered or certified mail, overnight courier or hand
delivery) to the Corporation at such Conversion Agent that the holder elects to
convert such shares. Such notice shall also state the name or names, together
with the address or addresses, in which the certificate or certificate for Class
A Common which shall be issuable upon such conversion shall be issued. As
promptly as practicable after the surrender of such shares of Class B Common as
aforesaid, the Corporation shall issue and deliver at such Conversion Agent to
such holder, or on the holder's written order, a certificate or certificates for
the number of full shares of Class A Common issuable upon the conversion of such
shares in accordance with the provisions hereof. Certificates will be issued for
the balance of the shares of Class B Common in any case in which fewer than all
of the shares of Class B Common represented by a certificate are converted.

Each conversion pursuant to subparagraph 5(b) shall be deemed to
have been effected when the share is transferred or proposed to be transferred.
In each such case the person or persons in whose name or names any certificate
of certificates for Class A Common shall be issuable upon such conversion shall
be deemed to have become the holder or holders of record of the Class A Common
represented thereby at the effective date of such conversion, unless the stock
transfer books of the Corporation shall be closed on such date, in which event
such conversion shall be deemed to have been effected immediately following the
opening of business on the next day on which the stock transfer books of the
Corporation shall be open. Following any such automatic conversion, the share or
shares of Class B Common so converted shall cease to be outstanding,
notwithstanding the fact that the holder or holders may not have surrendered the
certificate or certificates representing such Class B Common for conversion, and
such certificate or certificates shall thereafter represent solely the right to
receive a certificate or certificates for Class A Common issuable upon
conversion

-3-
<PAGE> 5

of the Class B Common so converted, upon surrender of such certificate or
certificates to the Corporation or its Conversion Agent, of the certificate or
certificates for Class B Common so converted.

(d) Reservation of Shares. The Corporation shall at all
times reserve and keep available out of the authorized and unissued shares of
Class A Common, solely for the purposes of effecting the conversion of the
outstanding Class B Common, such number of shares of Class A Common as shall
from time to time be sufficient to effect conversion of all outstanding Class B
Common.

(e) Payment of Transfer Taxes. The Corporation will
pay any and all documentary stamp or similar issue or transfer taxes payable in
respect of the issue or delivery of shares of Class A Common on conversion of
the Class B Common pursuant hereto; provided however, that the Corporation shall
not be required to pay any tax which may be payable in respect of any transfer
involved in the issue or delivery of shares of Class A Common in a name other
that of the original holder of the Class B Common to be converted and no such
issue or delivery shall be made unless and until the person requesting such
issue or delivery has paid to the Corporation the amount of any such tax or has
established, to the satisfaction of the Corporation, that such tax has been
paid.

(f) Additional Rights of Class B Common. In the event
that the Corporation shall enter into any consolidation, merger, combination or
other transaction in which shares of any class of Common Stock are exchanged for
or changed into other stock or securities, then, and in such event, the shares
of each class of Common Stock (assuming conversion of the Class B Common into
Class A Common at the rate specified in subparagraph 5(a) above) shall be
exchanged for or changed into an amount per share equal to the amount of stock,
securities, cash and/or any other property, as the case may be, into which or
for which each share of the other class of Common Stock is exchanged or changed;
provided, however, that if shares of Class A Common and Class B Common are
exchanged for or changed into shares of capital stock, such shares so exchanged
for or changed into may differ to the extent and only to the extent that the
Class A Common and Class B Common differ as provided herein.

In the event of a reclassification, change of outstanding shares
(other than a change in par value or as a result of any subdivision or
combination) or other similar transaction as a result of which the shares of
Class A Common are converted into another security, then a holder of Class B
Common shall be entitled to receive upon conversion the amount of such security
that such holder would have received if such conversion had occurred immediately
prior to the record date of such reclassification or other similar transaction.

If a share of Class B Common shall be converted subsequent to the
record date for the payment of a dividend or other distribution on shares of
Class B Common but prior to such payment, then the registered holder of such
share at the close of business on such record date shall be entitled to receive
the dividend or other distribution payable on such share on such date
notwithstanding the conversion thereof.

-4-
<PAGE> 6

SIXTH. The management of the business and the conduct of the affairs of
the Corporation shall be vested in its Board of Directors. The number of
directors which shall constitute the whole Board of Directors shall be fixed
exclusively by one or more resolutions adopted from time to time by the Board of
Directors.

SEVENTH. The directors of the Corporation need not be elected by written
ballot unless a stockholder or stockholders holding a majority of the voting
power of the outstanding capital stock entitled to vote demands election by
written ballot at the meeting and before voting or unless the Bylaws of the
Corporation so provide.

EIGHTH. Advance notice of stockholder nomination for the election of
directors and of business to be brought by stockholders before any meeting of
the stockholders of the Corporation shall be given in the manner provided in the
Bylaws of the Corporation.

NINTH. Meetings of stockholders may be held within or without the State
of Delaware, as the Bylaws may provide. The books of the Corporation may be kept
(subject to any provision contained in the statutes) outside of the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the Bylaws of the Corporation.

TENTH. In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to make, alter, amend or
repeal the Bylaws of the Corporation.

ELEVENTH. To the fullest extent permitted by the General Corporation Law
of Delaware as the same exists or as may hereafter be amended, a director of the
Corporation shall not be personally liable to the Corporation or its
stockholders for monetary damages for a breach of fiduciary duty as a director.

The Corporation may indemnify to the fullest extent permitted by law any
person made or threatened to be made a party to an action or proceeding, whether
criminal, civil, administrative or investigative, by reason of the fact that he,
his testator or intestate is or was a director, officer or employee of the
Corporation or any predecessor of the Corporation or serves or served at any
other enterprise as a director, officer or employee at the request of the
Corporation or any predecessor to the Corporation.

Neither any amendment nor repeal of this Article ELEVENTH, nor the
adoption of any provision of the Corporation's Certificate of Incorporation
inconsistent with this Article ELEVENTH, shall eliminate or reduce the effect of
this Article ELEVENTH, in respect of any matter occurring, or any action or
proceeding accruing or arising or that, but for this Article ELEVENTH, would
accrue or arise, prior to such amendment, repeal or adoption of an inconsistent
provision.

TWELFTH. The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon the
stockholders herein are granted subject to this right.

-5-

<PAGE> 1

EXHIBIT 3.2

BYLAWS

IDG BOOKS WORLDWIDE, INC.

A DELAWARE CORPORATION

<PAGE> 2

TABLE OF CONTENTS

PAGE

<S> <C> <C>
ARTICLE I CORPORATE OFFICES.....................................................................1

1.1 REGISTERED OFFICE.................................................................1
1.2 OTHER OFFICES.....................................................................1

ARTICLE II MEETINGS OF STOCKHOLDERS.............................................................1

2.1 PLACE OF MEETINGS.................................................................1
2.2 ANNUAL MEETING....................................................................1
2.3 SPECIAL MEETING...................................................................3
2.4 ORGANIZATION......................................................................3
2.5 NOTICE OF STOCKHOLDERS' MEETINGS..................................................4
2.6 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE......................................4
2.7 QUORUM............................................................................4
2.8 ADJOURNED MEETING; NOTICE.........................................................5
2.9 VOTING............................................................................5
2.10 VALIDATION OF MEETINGS; WAIVER OF NOTICE; CONSENT.................................6
2.11 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A
MEETING ..........................................................................6
2.12 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING
CONSENTS .........................................................................7
2.13 PROXIES...........................................................................7
2.14 INSPECTORS OF ELECTION............................................................8

ARTICLE III DIRECTORS...........................................................................8

3.1 POWERS............................................................................8
3.2 NUMBER AND TERM OF OFFICE.........................................................9
3.3 RESIGNATION AND VACANCIES.........................................................9
3.4 REMOVAL..........................................................................10
3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE.........................................10
3.6 FIRST MEETINGS...................................................................11
3.7 REGULAR MEETINGS.................................................................11
3.8 SPECIAL MEETINGS; NOTICE.........................................................11
3.9 QUORUM...........................................................................11
3.10 WAIVER OF NOTICE.................................................................12
3.11 ADJOURNMENT......................................................................12
3.12 NOTICE OF ADJOURNMENT............................................................12
3.13 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING................................12
</TABLE>

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TABLE OF CONTENTS
(CONTINUED)
PAGE

<S> <C> <C>
3.14 ORGANIZATION.....................................................................12
3.15 FEES AND COMPENSATION OF DIRECTORS...............................................12
3.16 APPROVAL OF LOANS TO OFFICERS....................................................13
3.17 APPROVAL OF BORROWING AUTHORITY..................................................13

ARTICLE IV COMMITTEES..........................................................................13

4.1 COMMITTEES OF DIRECTORS..........................................................13
4.2 MEETINGS AND ACTION OF COMMITTEES................................................14

ARTICLE V OFFICERS.............................................................................14

5.1 OFFICERS.........................................................................14
5.2 ELECTION OF OFFICERS.............................................................14
5.3 SUBORDINATE OFFICERS.............................................................14
5.4 REMOVAL AND RESIGNATION OF OFFICERS..............................................15
5.5 VACANCIES IN OFFICES.............................................................15
5.6 CHAIRMAN OF THE BOARD............................................................15
5.7 CHIEF EXECUTIVE OFFICER..........................................................15
5.8 PRESIDENT........................................................................16
5.9 VICE PRESIDENTS..................................................................16
5.10 SECRETARY........................................................................16
5.11 CHIEF FINANCIAL OFFICER..........................................................17

ARTICLE VI INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND
OTHER AGENTS............................................................................17

6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS........................................17
6.2 INDEMNIFICATION OF OTHERS........................................................18
6.3 INSURANCE........................................................................18
6.4 EXPENSES.........................................................................18
6.5 NON-EXCLUSIVITY OF RIGHTS........................................................19
6.6 SURVIVAL OF RIGHTS...............................................................19
6.7 AMENDMENTS.......................................................................19

ARTICLE VII RECORDS AND REPORTS................................................................19

7.1 MAINTENANCE AND INSPECTION OF RECORDS............................................19
7.2 INSPECTION BY DIRECTORS..........................................................20
7.3 ANNUAL STATEMENT TO STOCKHOLDERS.................................................20
</TABLE>

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<TABLE>
<CAPTION>
TABLE OF CONTENTS
(CONTINUED)
PAGE
<S> <C> <C>
7.4 REPRESENTATION OF SHARES OF OTHER CORPORATIONS...................................20

ARTICLE VIII GENERAL MATTERS...................................................................21

8.1 RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING............................21
8.2 CHECKS; DRAFTS; EVIDENCES OF INDEBTEDNESS........................................21
8.3 CORPORATE CONTRACTS AND INSTRUMENTS: HOW EXECUTED...............................21
8.4 STOCK CERTIFICATES; PARTLY PAID SHARES...........................................21
8.5 SPECIAL DESIGNATION ON CERTIFICATES..............................................22
8.6 LOST CERTIFICATES................................................................22
8.7 CONSTRUCTION; DEFINITIONS........................................................23

ARTICLE IX AMENDMENTS..........................................................................23

ARTICLE X DISSOLUTION..........................................................................23

ARTICLE XI CUSTODIAN...........................................................................24

11.1 APPOINTMENT OF A CUSTODIAN IN CERTAIN CASES......................................24
11.2 DUTIES OF CUSTODIAN..............................................................24
</TABLE>

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<PAGE> 5

BYLAWS

IDG BOOKS WORLDWIDE, INC.

A DELAWARE CORPORATION

ARTICLE I

CORPORATE OFFICES

1.1 REGISTERED OFFICE

The registered office of the corporation shall be fixed in the
Certificate of Incorporation of the corporation.

1.2 OTHER OFFICES

The board of directors may at any time establish branch or subordinate
offices at any place or places where the corporation is qualified to do
business.

ARTICLE II

MEETINGS OF STOCKHOLDERS

2.1 PLACE OF MEETINGS

Meetings of stockholders shall be held at any place within or outside
the State of Delaware designated by the board of directors. In the absence of
any such designation, stockholders' meetings shall be held at the registered
office of the corporation.

2.2 ANNUAL MEETING

(a) The annual meeting of stockholders shall be held each year on
a date and at a time designated by the board of directors. In the absence of
such designation, the annual meeting of stockholders shall be held on the third
Thursday in May of each year at 10:00 a.m. However, if such day falls on a legal
holiday, then the meeting shall be held at the same time and place on the next
succeeding full business day. At the meeting, directors shall be elected, and
any other proper business may be transacted.

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(b) At an annual meeting of the stockholders, only such business
shall be conducted as shall have been properly brought before the meeting. To be
properly brought before an annual meeting, business must be: (A) specified in
the notice of meeting (or any supplement thereto) given by or at the direction
of the board of directors, (B) otherwise properly brought before the meeting by
or at the direction of the board of directors, or (C) otherwise properly brought
before the meeting by a stockholder. For business to be properly brought before
an annual meeting by a stockholder, the stockholder must have given timely
notice thereof in writing to the secretary of the corporation. To be timely, a
stockholder's notice must be delivered to or mailed and received at the
principal executive offices of the corporation not less than one hundred twenty
(120) calendar days prior to the first anniversary of the date of the
corporation's proxy statement for the previous year's annual meeting of
stockholders; provided, however, that in the event that no annual meeting was
held in the previous year or the date of the annual meeting has been changed by
more than thirty (30) days from the date contemplated at the time of the
previous year's proxy statement, notice by the stockholder to be timely must be
so received a reasonable time before the solicitation is made. A stockholder's
notice to the secretary shall set forth as to each matter the stockholder
proposes to bring before the annual meeting: (i) a brief description of the
business desired to be brought before the annual meeting and the reasons for
conducting such business at the annual meeting, (ii) the name and address, as
they appear on the corporation's books, of the stockholder proposing such
business, (iii) the class and number of shares of the corporation which are
beneficially owned by the stockholder, (iv) any material interest of the
stockholder in such business and (v) any other information that is required to
be provided by the stockholder pursuant to Regulation 14A under the Securities
Exchange Act of 1934, as amended (the "1934 Act"), in his capacity as a
proponent to a stockholder proposal. Notwithstanding the foregoing, in order to
include information with respect to a stockholder proposal in the proxy
statement and form of proxy for a stockholder's meeting, stockholders must
provide notice as required by the regulations promulgated under the 1934 Act and
the proposal must otherwise be eligible for inclusion pursuant to such
regulations. Notwithstanding anything in these Bylaws to the contrary, no
business shall be conducted at any annual meeting except in accordance with the
procedures set forth in this paragraph (b). The chairman of the annual meeting
shall, if the facts warrant, determine and declare at the meeting that business
was not properly brought before the meeting and in accordance with the
provisions of this paragraph (b), and, if he should so determine, he shall so
declare at the meeting that any such business not properly brought before the
meeting shall not be transacted.

(c) Only persons who are nominated in accordance with the
procedures set forth in this paragraph (c) shall be eligible for election as
directors. Nominations of persons for election to the board of directors of the
corporation may be made at a meeting of stockholders by or at the direction of
the board of directors or by any stockholder of the corporation entitled to vote
in the election of directors at the meeting who complies with the notice
procedures set forth in this paragraph (c). Such nominations, other than those
made by or at the direction of the board of directors, shall be made pursuant to
timely notice in writing to the secretary of the corporation in accordance with
the provisions of paragraph (b) of this Section 2.2. Such stockholder's notice
shall set forth (i) as to each person, if any, whom the stockholder proposes to
nominate for election or re-election as a director: (A) the name, age, business
address and residence address of such person,

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(B) the principal occupation or employment of such person, (C) the class and
number of shares of the corporation which are beneficially owned by such person,
(D) a description of all arrangements or understandings between the stockholder
and each nominee and any other person or persons (naming such person or persons)
pursuant to which the nominations are to be made by the stockholder, and (E) any
other information relating to such person that is required to be disclosed in
solicitations of proxies for elections of directors, or is otherwise required,
in each case pursuant to Regulation 14A under the 1934 Act (including without
limitation such person's written consent to being named in the proxy statement,
if any, as a nominee and to serving as a director if elected); and (ii) as to
such stockholder giving notice, the information required to be provided pursuant
to paragraph (b) of this Section 2.2. At the request of the board of directors,
any person nominated by a stockholder for election as a director shall furnish
to the secretary of the corporation that information required to be set forth in
the stockholder's notice of nomination which pertains to the nominee. No person
shall be eligible for election as a director of the corporation unless nominated
in accordance with the procedures set forth in this paragraph (c). The chairman
of the meeting shall, if the facts warrants, determine and declare at the
meeting that a nomination was not made in accordance with the procedures
prescribed by these Bylaws, and if he should so determine, he shall so declare
at the meeting, and the defective nomination shall be disregarded.

2.3 SPECIAL MEETING

A special meeting of the stockholders may be called at any time by the
board of directors, by the chairman of the board, the chief executive officer or
by the secretary of the corporation at the request in writing of stockholders
owning capital stock of the corporation having not less than 20% of the voting
power, but such special meetings may not be called by any other person or
persons. Notwithstanding the provisions of Article IX, under no circumstances
shall the provisions of this Section 2.3 be amended unless pursuant to the
affirmative vote or written consent of stockholders holding at least a majority
of the voting power of stock entitled to vote.

If a special meeting is called by any person or persons other than the
board of directors, the request shall be in writing, specifying the time of such
meeting and the general nature of the business proposed to be transacted, and
shall be delivered personally or sent by registered mail or by telegraphic or
other facsimile transmission to the chairman of the board, chief executive
officer, president, or the secretary of the corporation. No business may be
transacted at such special meeting otherwise than specified in such notice. The
officer receiving the request shall cause notice to be promptly given to the
stockholders entitled to vote, in accordance with the provisions of Sections 2.5
and 2.6, that a meeting will be held at the time requested by the person or
persons who called the meeting, not less than ten (10) nor more than sixty (60)
days after the receipt of the request. If the notice is not given within twenty
(20) days after the receipt of the request, the person or persons requesting the
meeting may give the notice. Nothing contained in this paragraph of this Section
2.3 shall be construed as limiting, fixing, or affecting the time when a meeting
of stockholders called by action of the board of directors may be held.

2.4 ORGANIZATION

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Meetings of stockholders shall be presided over by the chairman of the
board, if any, or in his absence by the vice chairman of the board, if any, or
in his absence by the chief executive officer, if any, or in his absence by the
president, if any, or in his absence a vice president, or in the absence of the
foregoing persons by a chairman designated by the board of directors, or in the
absence of such designation by a chairman chosen at the meeting. The secretary
shall act as secretary of the meeting, but in his absence the chairman of the
meeting may appoint any person to act as secretary of the meeting.

2.5 NOTICE OF STOCKHOLDERS' MEETINGS

Except as set forth in Section 2.3, all notices of meetings of
stockholders shall be sent or otherwise given in accordance with Section 2.6 of
these Bylaws not less than ten (10) nor more than sixty (60) days before the
date of the meeting. The notice shall specify the place, date, and hour of the
meeting and (i) in the case of a special meeting, the general nature of the
business to be trans acted (no business other than that specified in the notice
may be transacted) or (ii) in the case of the annual meeting, those matters
which the board of directors, at the time of giving the notice, intends to
present for action by the stockholders (but any proper matter may be presented
at the meeting for such action). The notice of any meeting at which directors
are to be elected shall include the name of any nominee or nominees who, at the
time of the notice, the board intends to present for election.

2.6 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE

Written notice of any meeting of stockholders shall be given either
personally or by first-class mail or by telegraphic or other written
communication. Notices not personally delivered shall be sent charges prepaid
and shall be addressed to the stockholder at the address of that stockholder
appearing on the books of the corporation or given by the stockholder to the
corporation for the purpose of notice. If no such address appears on the
corporation's books or is given, notice shall be deemed to have been given if
sent to that stockholder by mail or telegraphic or other written communication
to the corporation's principal executive office, or if published at least once
in a newspaper of general circulation in the county where that office is
located. Notice shall be deemed to have been given at the time when delivered
personally or deposited in the mail or sent by telegram or other means of
written communication.

An affidavit of the mailing or other means of giving any notice of any
stockholders' meeting, executed by the secretary, assistant secretary or any
transfer agent of the corporation giving the notice, shall be prima facie
evidence of the giving of such notice.

2.7 QUORUM

The presence in person or by proxy of the holders of a majority of the
voting power of the shares entitled to vote thereat constitutes a quorum for the
transaction of business at all meetings of stockholders; provided, however, that
in the case of any vote to be taken by classes, the holders of a majority of the
votes entitled to be cast by the stockholders of a particular class shall
constitute a

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quorum for the transaction of business by such class. The stockholders present
at a duly called or held meeting at which a quorum is present may continue to do
business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum, if any action taken (other than
adjournment) is approved by at least a majority of the voting power of the
shares required to constitute a quorum.

2.8 ADJOURNED MEETING; NOTICE

Any stockholders' meeting, annual or special, whether or not a quorum is
present, may be adjourned from time to time by the vote of the majority of the
voting power of the shares represented at that meeting, either in person or by
proxy. In the absence of a quorum, no other business may be transacted at that
meeting except as provided in Section 2.7 of these Bylaws.

When any meeting of stockholders, either annual or special, is adjourned
to another time or place, notice need not be given of the adjourned meeting if
the time and place are announced at the meeting at which the adjournment is
taken. However, if a new record date for the adjourned meeting is fixed or if
the adjournment is for more than thirty (30) days from the date set for the
original meeting, then notice of the adjourned meeting shall be given. Notice of
any such adjourned meeting shall be given to each stockholder of record entitled
to vote at the adjourned meeting in accordance with the provisions of Sections
2.5 and 2.6 of these Bylaws. At any adjourned meeting the corporation may
transact any business which might have been transacted at the original meeting.

2.9 VOTING

Except as may be otherwise provided in the Certificate of Incorporation,
voting at any meeting of stockholders need not be by ballot.

The stockholders entitled to vote at any meeting of stockholders shall
be determined in accordance with the provisions of Section 2.12 of these Bylaws,
subject to the provisions of Sections 217 and 218 of the General Corporation Law
of Delaware (relating to voting rights of fiduciaries, pledgors and joint
owners, and to voting trusts and other voting agreements).

Except as may be otherwise provided in the Certificate of Incorporation,
each stockholder shall be entitled to one vote for each share of capital stock
held by such stockholder.

Any stockholder entitled to vote on any matter may vote part of the
shares in favor of the proposal and refrain from voting the remaining shares or,
except when the matter is the election of directors, may vote them against the
proposal; but if the stockholder fails to specify the number of shares which the
stockholder is voting affirmatively, it will be conclusively presumed that the
stock holder's approving vote is with respect to all shares which the
stockholder is entitled to vote.

If a quorum is present, the affirmative vote of the voting power of the
shares represented, in person or by proxy, and voting at a duly held meeting
(which shares voting affirmatively also

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constitute at least a majority of the voting power of the required quorum) shall
be the act of the stockholders, unless the vote of a greater number or a vote by
classes is required by law or by the Certificate of Incorporation.

2.10 VALIDATION OF MEETINGS; WAIVER OF NOTICE; CONSENT

The transactions of any meeting of stockholders, either annual or
special, however called and noticed, and wherever held, shall be as valid as
though they had been taken at a meeting duly held after regular call and notice,
if a quorum be present either in person or by proxy, and if, either before or
after the meeting, each person entitled to vote, who was not present in person
or by proxy, signs a written waiver of notice or a consent to the holding of the
meeting or an approval of the minutes thereof. The waiver of notice or consent
or approval need not specify either the business to be transacted or the purpose
of any annual or special meeting of stockholders. All such waivers, consents,
and approvals shall be filed with the corporate records or made a part of the
minutes of the meeting.

Attendance by a person at a meeting shall also constitute a waiver of
notice of and presence at that meeting, except when the person objects at the
beginning of the meeting to the transaction of any business because the meeting
is not lawfully called or convened. Attendance at a meeting is not a waiver of
any right to object to the consideration of matters required by law to be
included in the notice of the meeting but not so included, if that objection is
expressly made at the meeting.

2.11 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A
MEETING

Unless otherwise provided in the Certificate of Incorporation, any
action which may be taken at any annual or special meeting of stockholders may
be taken without a meeting and without prior notice, if a consent or consents in
writing, setting forth the action so taken, is signed by the holders of
outstanding shares having not less than the minimum number of votes that would
be necessary to authorize or take that action at a meeting at which all shares
entitled to vote on that action were present and voted.

Prompt notice of the taking of the corporate action without a meeting by
less than unanimous written consent shall be given to those stockholders who
have not consented in writing and who, if the action had been taken at a
meeting, would have been entitled to notice of the meeting if the record date
for such meeting had been the date that written consents signed by a sufficient
number of stockholders to take the action were delivered to the corporation as
required by Section 228 of the General Corporation Law of Delaware. If the
action which is consented to is such as would have required the filing of a
certificate under any section of the General Corporation Law of Delaware if such
action had been voted on by stockholders at a meeting thereof, then the
certificate filed under such section shall state, in lieu of any statement
required by such section concerning any vote of stockholders, that written
consent has been given as provided in Section 228 of the General Corporation Law
of Delaware.

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Notwithstanding the provisions of Article IX, under no circumstances
shall the provisions of this Section 2.11 be amended unless pursuant to the
affirmative vote or written consent of stockholders holding at least a majority
of the voting power of stock entitled to vote.

2.12 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING
CONSENTS

For purposes of determining the stockholders entitled to notice of any
meeting or to vote thereat or entitled to give consent to corporate action
without a meeting, the board of directors may fix, in advance, a record date,
which shall not be more than sixty (60) days nor less than ten (10) days before
the date of any such meeting nor more than sixty (60) days before any such
action without a meeting, and in such event only stockholders of record on the
date so fixed are entitled to notice and to vote or to give consents, as the
case may be, notwithstanding any transfer of any shares on the books of the
corporation after the record date.

If the board of directors does not so fix a record date:

(a) the record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be at the close of
business on the business day next preceding the day on which notice is given,
or, if notice is waived, at the close of business on the business day next
preceding the day on which the meeting is held; and

(b) the record date for determining stockholders entitled to give
consent to corporate action in writing without a meeting, (i) when no prior
action by the board of directors has been taken, shall be the day on which the
first written consent is given, or (ii) when prior action by the board of
directors has been taken, shall be at the close of business on the day on which
the board of directors adopts the resolution relating to that action.

The record date for any other purpose shall be as provided in Article
VIII of these Bylaws.

2.13 PROXIES

Every person entitled to vote for directors, or on any other matter,
shall have the right to do so either in person or by one or more agents
authorized by a written proxy signed by the person and filed with the Secretary
of the corporation, but no such proxy shall be voted or acted upon after three
(3) years from its date, unless the proxy provides for a longer period. A proxy
shall be deemed signed if the stockholder's name is placed on the proxy (whether
by manual signature, typewriting, telegraphic transmission or otherwise) by the
stockholder or the stockholder's attorney-in-fact. A duly executed proxy shall
be irrevocable if it states that it is irrevocable and if, and only as long as,
it is coupled with an interest sufficient in law to support an irrevocable
power. A stockholder may revoke any proxy which is not irrevocable by attending
the meeting and voting in person or by filing an instrument in writing revoking
the proxy or another duly executed proxy bearing a later date with the secretary
of the corporation.

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2.14 INSPECTORS OF ELECTION

Before any meeting of stockholders, the board of directors may appoint
an inspector or inspectors of election to act at the meeting or its adjournment.
If no inspector of election is so appointed, then the chairman of the meeting
may, and on the request of any stockholder or a stockholder's proxy shall,
appoint an inspector or inspectors of election to act at the meeting. The number
of inspectors shall be either one (1) or three (3). If inspectors are appointed
at a meeting pursuant to the request of one (1) or more stockholders or proxies,
then the holders of a majority of the voting power of shares or their proxies
present at the meeting shall determine whether one (1) or three (3) inspectors
are to be appointed. If any person appointed as inspector fails to appear or
fails or refuses to act, then the chairman of the meeting may, and upon the
request of any stockholder or a stockholder's proxy shall, appoint a person to
fill that vacancy.

Such inspectors shall:

(a) determine the number of shares outstanding and the voting
power of each, the number of shares represented at the meeting, the existence of
a quorum, and the authenticity, validity, and effect of proxies;

(b) receive votes, ballots or consents;

(d) count and tabulate all votes or consents;

(e) determine when the polls shall close;

(f) determine the result; and

(g) do any other acts that may be proper to conduct the election
or vote with fairness to all stockholders.

ARTICLE III

DIRECTORS

3.1 POWERS

Subject to the provisions of the General Corporation Law of Delaware and
to any limitations in the Certificate of Incorporation or these Bylaws relating
to action required to be approved by the stockholders or by the outstanding
shares, the business and affairs of the corporation shall be

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managed and all corporate powers shall be exercised by or under the direction of
the board of directors.

3.2 NUMBER AND TERM OF OFFICE

The authorized number of directors shall be five (5). An indefinite
number of directors may be fixed, or the definite number of directors may be
changed, by a duly adopted amendment to the Certificate of Incorporation or by
an amendment to this bylaw adopted by the vote or written consent of holders of
a majority of the voting power of the outstanding shares entitled to vote or by
resolution of a majority of the board of directors.

No reduction of the authorized number of directors shall have the effect
of removing any director before that director's term of office expires. If for
any cause, the directors shall not have been elected at an annual meeting, they
may be elected as soon thereafter as convenient at a special meeting of the
stockholders called for that purpose in the manner provided in these Bylaws.

3.3 RESIGNATION AND VACANCIES

Any director may resign effective on giving written notice to the
chairman of the board, the chief executive officer, the secretary or the board
of directors, unless the notice specifies a later time for that resignation to
become effective. If the resignation of a director is effective at a future
time, the board of directors may elect a successor to take office when the
resignation becomes effective.

Unless otherwise provided in the Certificate of Incorporation or these
Bylaws, vacancies in the board of directors may be filled by a majority of the
remaining directors, even if less than a quorum, or by a sole remaining
director; however, a vacancy created by the removal of a director by the vote or
written consent of the stockholders or by court order may be filled only by the
affirmative vote of a majority of the voting power of shares represented and
voting at a duly held meeting at which a quorum is present (which shares voting
affirmatively also constitute a majority of the required quorum), or by the
written consent of a majority of the voting power of shares entitled to vote
thereon. Each director so elected shall hold office until the next annual
meeting of the stockholders and until a successor has been elected and
qualified.

Unless otherwise provided in the Certificate of Incorporation or these
Bylaws:

(i) Vacancies and newly created directorships resulting from
any increase in the authorized number of directors elected by all of the
stockholders having the right to vote as a single class may be filled by a
majority of the directors then in office, although less than a quorum, or by a
sole remaining director.

(ii) Whenever the holders of any class or classes of stock or
series thereof are entitled to elect one or more directors by the provisions of
the Certificate of Incorporation, vacancies and newly created directorships of
such class or classes or series may be filled by a majority of the

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directors elected by such class or classes or series thereof then in office, or
by a sole remaining director so elected.

If at any time, by reason of death or resignation or other cause, the
corporation should have no directors in office, then any officer or any
stockholder or an executor, administrator, trustee or guardian of a stockholder,
or other fiduciary entrusted with like responsibility for the person or estate
of a stockholder, may call a special meeting of stockholders in accordance with
the provisions of the Certificate of Incorporation or these Bylaws, or may apply
to the Court of Chancery for a decree summarily ordering an election as provided
in Section 211 of the General Corporation Law of Delaware.

If, at the time of filling any vacancy or any newly created
directorship, the directors then in office constitute less than a majority of
the whole board (as constituted immediately prior to any such increase), then
the Court of Chancery may, upon application of any stockholder or stockholders
holding at least ten percent (10%) of the total number of the then outstanding
shares having the right to vote for such directors, summarily order an election
to be held to fill any such vacancies or newly created directorships, or to
replace the directors chosen by the directors then in office as aforesaid, which
election shall be governed by the provisions of Section 211 of the General
Corporation Law of Delaware as far as applicable.

3.4 REMOVAL

Unless otherwise provided in the Certificate of Incorporation, the board
of directors, or any individual director, may be removed from office at any time
by the affirmative vote of the holders of at least a majority of the voting
power of the then outstanding shares of the capital stock of the corporation
entitled to vote at an election of directors.

3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE

Regular meetings of the board of directors may be held at any place
within or outside the State of Delaware that has been designated from time to
time by resolution of the board of directors. In the absence of such a
designation, regular meetings shall be held at the principal executive office of
the corporation. Special meetings of the board of directors may be held at any
place within or outside the State of Delaware that has been designated in the
notice of the meeting or, if not stated in the notice or if there is no notice,
at the principal executive office of the corporation.

Any meeting, regular or special, may be held by conference telephone or
similar communication equipment, so long as all directors participating in the
meeting can hear one another; and all such directors shall be deemed to be
present in person at the meeting.

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3.6 FIRST MEETINGS

The first meeting of each newly elected board of directors shall be held
at such time and place as shall be fixed by the board of directors, or in the
event of the failure of the board of directors to fix the time or place of such
first meeting of the newly elected board of directors, or in the event such
meeting is not held at the time and place so fixed by the board of directors,
the meeting may be held at such time and place as shall be specified in a notice
given as hereinafter provided for special meetings of the board of directors, or
as shall be specified in a written waiver signed by all of the directors.

3.7 REGULAR MEETINGS

Regular meetings of the board of directors may be held without notice if
the times of such meetings are fixed by the board of directors.

3.8 SPECIAL MEETINGS; NOTICE

Special meetings of the board of directors for any purpose or purposes
may be called at any time by the chairman of the board, or in the absence of the
chairman of the board by the chief executive officer or any two (2) directors.

Notice of the time and place of special meetings shall be delivered
personally or by telephone to each director or sent by facsimile or first-class
mail, charges prepaid, addressed to each director at that director's address as
it is shown on the records of the corporation. If the notice is mailed, it shall
be deposited in the United States mail at least seven (7) days before the time
of the holding of the meeting. If the notice is delivered personally, by
facsimile or by telephone, it shall be delivered personally, by facsimile or by
telephone at least forty-eight (48) hours before the time of the holding of the
meeting. Any oral notice given personally or by telephone may be communicated
either to the director or to a person at the office of the director who the
person giving the notice has reason to believe will promptly communicate it to
the director. The notice need not specify the purpose or the place of the
meeting, if the meeting is to be held at the principal executive office of the
corporation.

3.9 QUORUM

A majority of the authorized number of directors shall constitute a
quorum for the transaction of business, except to adjourn as provided in Section
3.12 of these Bylaws. Every act or decision done or made by a majority of the
directors present at a duly held meeting at which a quorum is present shall be
regarded as the act of the board of directors, subject to the provisions of the
Certificate of Incorporation and applicable law.

A meeting at which a quorum is initially present may continue to
transact business notwithstanding the withdrawal of directors, if any action
taken is approved by at least a majority of the required quorum for that
meeting.

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3.10 WAIVER OF NOTICE

Notice of a meeting need not be given to any director (i) who signs a
waiver of notice or a consent to holding the meeting or an approval of the
minutes thereof, whether before or after the meeting, or (ii) who attends the
meeting without protesting, prior thereto or at its commencement, the lack of
notice to such directors. All such waivers, consents, and approvals shall be
filed with the corporate records or made part of the minutes of the meeting. A
waiver of notice need not specify the purpose of any regular or special meeting
of the board of directors.

3.11 ADJOURNMENT

A majority of the directors present, whether or not constituting a
quorum, may adjourn any meeting to another time and place.

3.12 NOTICE OF ADJOURNMENT

Notice of the time and place of holding an adjourned meeting need not be
given if announced unless the meeting is adjourned for more than twenty-four
(24) hours. If the meeting is adjourned for more than twenty-four (24) hours,
then notice of the time and place of the adjourned meeting shall be given before
the adjourned meeting takes place, in the manner specified in Section 3.8 of
these Bylaws, to the directors who were not present at the time of the
adjournment.

3.13 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING

Any action required or permitted to be taken by the board of directors
may be taken without a meeting, provided that all members of the board of
directors individually or collectively consent in writing to that action. Such
action by written consent shall have the same force and effect as a unanimous
vote of the board of directors. Such written consent and any counterparts
thereof shall be filed with the minutes of the proceedings of the board.

3.14 ORGANIZATION

Meetings of the board of directors shall be presided over by the
chairman of the board, if any, or in his absence by the vice chairman of the
board, if any, or in his absence by the chief executive officer, or in their
absence by a chairman chosen at the meeting. The secretary shall act as
secretary of the meeting, but in his absence the chairman of the meeting may
appoint any person to act as secretary of the meeting.

3.15 FEES AND COMPENSATION OF DIRECTORS

Directors and members of committees may receive such compensation, if
any, for their services and such reimbursement of expenses as may be fixed or
determined by the board of directors. This Section 3.15 shall not be construed
to preclude any director from serving the

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corporation in any other capacity as an officer, agent, employee or otherwise
and receiving compensation for those services.

3.16 APPROVAL OF LOANS TO OFFICERS

The corporation may lend money to, or guarantee any obligation of, or
otherwise assist any officer or other employee of the corporation or of its
subsidiary, including any officer or employee who is a director of the
corporation or its subsidiary, whenever, in the judgment of the directors, such
loan, guaranty or assistance may reasonably be expected to benefit the
corporation. The loan, guaranty or other assistance may be with or without
interest and may be unsecured, or secured in such manner as the board of
directors shall approve, including, without limitation, a pledge of shares of
stock of the corporation. Nothing contained in this Section 3.16 shall be deemed
to deny, limit or restrict the powers of guaranty or warranty of the corporation
at common law or under any statute.

3.17 APPROVAL OF BORROWING AUTHORITY

Unless unanimously approved by the corporation's board of directors, the
corporation shall not incur indebtedness for borrowed money in an aggregate
amount exceeding five (5) times the corporation's earnings before interest,
taxes, depreciation and amortization for the corporation's most recently
completed fiscal year. Notwithstanding the provisions of Article IX, under no
circumstances shall the provisions of this Section 3.17 be amended unless
pursuant to the affirmative vote or written consent of stockholders holding at
least a majority of the voting power of stock entitled to vote.

ARTICLE IV

COMMITTEES

4.1 COMMITTEES OF DIRECTORS

The board of directors may, designate one (1) or more committees, each
committee to consist of one (1) or more of the directors of the corporation. The
board of directors may designate one (1) or more directors as alternate members
of any committee, who may replace any absent or disqualified member at any
meeting of the committee. In the absence or disqualification of a member of a
committee, the member or members present at any meeting and not disqualified
from voting, whether or not such member or members constitute a quorum, may
unanimously appoint another member of the board of directors to act at the
meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the board of directors,
shall have and may exercise all the powers and authority of the board of
directors in the management of the business and affairs of the corporation, and
may authorize the seal of the corporation to be affixed to all papers which may
require it; but no such committee shall have the power or authority in reference
to the following matter: (i) approving or adopting, or recommending

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to the stockholders, any action or matter expressly required by the General
Corporation Law of Delaware to be submitted to stockholders for approval or (ii)
adopting, amending or repealing the Bylaws of the corporation.

4.2 MEETINGS AND ACTION OF COMMITTEES

Meetings and actions of committees shall be governed by, and held and
taken in accordance with, the provisions of Article III of these Bylaws, with
such changes in the context of those Bylaws as are necessary to substitute the
committee and its members for the board of directors and its members; provided,
however, that the time of regular meetings of committees may be determined
either by resolution of the board of directors or by resolution of the
committee, that special meetings of committees may also be called by resolution
of the board of directors, and that notice of special meetings of committees
shall also be given to all alternate members, who shall have the right to attend
all meetings of the committee. The board of directors may adopt rules for the
government of any committee not inconsistent with the provisions of these
Bylaws.

ARTICLE V

OFFICERS

5.1 OFFICERS

The officers of the corporation shall be a chairman of the board, a
chief executive officer, a president, a secretary and a chief financial officer.
The corporation may also have, at the discretion of the board of directors, one
or more vice presidents, a treasurer, one or more assistant secretaries, one or
more assistant treasurers, and such other officers as may be appointed in
accordance with the provisions of Section 5.3 of these Bylaws. Any number of
offices may be held by the same person.

5.2 ELECTION OF OFFICERS

The officers of the corporation, except such officers as may be
appointed in accordance with the provisions of Section 5.3 or Section 5.5 of
these Bylaws, shall be chosen by the board of directors, subject to the rights,
if any, of an officer under any contract of employment.

5.3 SUBORDINATE OFFICERS

The board of directors may appoint, or may empower the chief executive
officer to appoint, such other officers as the business of the corporation may
require, each of whom shall hold office for such period, have such authority,
and perform such duties as are provided in these Bylaws or as the board of
directors may from time to time determine.

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5.4 REMOVAL AND RESIGNATION OF OFFICERS

Subject to the rights, if any, of an officer under any contract of
employment, any officer may be removed, either with or without cause, by the
board of directors at any regular or special meeting of the board or, except in
case of an officer chosen by the board of directors, by any officer upon whom
such power of removal may be conferred by the board of directors.

Any officer may resign at any time by giving written notice to the
corporation. Any resignation shall take effect at the date of the receipt of
that notice or at any later time specified in that notice; and, unless otherwise
specified in that notice, the acceptance of the resignation shall not be
necessary to make it effective. Any resignation is without prejudice to the
rights, if any, of the corporation under any contract to which the officer is a
party.

5.5 VACANCIES IN OFFICES

A vacancy in any office because of death, resignation, removal,
disqualification or any other cause shall be filled in the manner prescribed in
these Bylaws for regular appointments to that office.

5.6 CHAIRMAN OF THE BOARD

The chairman of the board, if such an officer be elected, shall serve as
the corporation's general manager, and shall have general supervision, direction
and control of the corporation's business and its officers, and, if present,
preside at meetings of the stockholders and the board of directors and exercise
and perform such other powers and duties as may from time to time be assigned to
him by the board of directors or as may be prescribed by these Bylaws. If there
is no chief executive officer, then the chairman of the board shall also be the
chief executive officer of the corporation and shall have the powers and duties
prescribed in Section 5.7 of these Bylaws. The chairman of the board shall
report to the board of directors.

5.7 CHIEF EXECUTIVE OFFICER

Subject to such supervisory powers, if any, as may be given by the board
of directors to the chairman of the board, if there be such an officer, the
chief executive officer of the corporation shall, subject to the control of the
board of directors, have general supervision, direction, and control of the
business and the officers of the corporation. He shall preside at all meetings
of the stockholders and, in the absence or nonexistence of a chairman of the
board, at all meetings of the board of directors. He shall have the general
powers and duties of management usually vested in the chief executive officer of
a corporation, and shall have such other powers and duties as may be prescribed
by the board of directors or these Bylaws.

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5.8 PRESIDENT

The president may assume and perform the duties of the chief executive
officer in the absence or disability of the chief executive officer or whenever
the office of the chief executive officer is vacant. The president of the
corporation shall exercise and perform such powers and duties as may from time
to time be assigned to him by the board of directors or as may be prescribed by
these Bylaws. The president shall have authority to execute in the name of the
corporation bonds, contracts, deeds, leases and other written instruments to be
executed by the corporation. In the absence or nonexistence of the chairman of
the board and chief executive officer, he shall preside at all meetings of the
stockholders and, in the absence or nonexistence of a chairman of the board and
the chief executive officer, at all meetings of the board of directors and shall
perform such other duties as the board of directors may from time to time
determine.

5.9 VICE PRESIDENTS

In the absence or disability of the president, the vice presidents, if
any, in order of their rank as fixed by the board of directors or, if not
ranked, a vice president designated by the board of directors, shall perform all
the duties of the president and when so acting shall have all the powers of, and
be subject to all the restrictions upon, the president. The vice presidents
shall have such other powers and perform such other duties as from time to time
may be prescribed for them respectively by the board of directors, these Bylaws,
the chairman of the board or the chief executive officer.

5.10 SECRETARY

The secretary shall keep or cause to be kept, at the principal executive
office of the corporation or such other place as the board of directors may
direct, a book of minutes of all meetings and actions of directors, committees
of directors and stockholders. The minutes shall show the time and place of each
meeting, whether regular or special, the names of those present at directors'
meetings or committee meetings, the number of shares present or represented at
stockholders' meetings, and the proceedings thereof.

The secretary shall keep, or cause to be kept, at the principal
executive office of the corporation or at the office of the corporation's
transfer agent or registrar a share register, or a duplicate share register,
showing the names of all stockholders and their addresses, the number and
classes of shares held by each, the number and date of certificates evidencing
such shares, and the number and date of cancellation of every certificate
surrendered for cancellation.

The secretary shall give, or cause to be given, notice of all meetings
of the stockholders and of the board of directors required to be given by law or
by these Bylaws. He or she shall keep the seal of the corporation, if one be
adopted, in safe custody and shall have such other powers and perform such other
duties as may be prescribed by the board of directors or by these Bylaws.

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5.11 CHIEF FINANCIAL OFFICER

The chief financial officer shall keep and maintain, or cause to be kept
and maintained, adequate and correct books and records of accounts of the
properties and business transactions of the corporation, including accounts of
its assets, liabilities, receipts, disbursements, gains, losses, capital,
retained earnings and shares. The books of account shall at all reasonable times
be open to inspection by any director.

The chief financial officer shall deposit all money and other valuables
in the name and to the credit of the corporation with such depositaries as may
be designated by the board of directors. He or she shall disburse the funds of
the corporation as may be ordered by the board of directors, shall render to the
chief executive officer and directors, whenever they request it, an account of
all of his or her transactions as chief financial officer and of the financial
condition of the corporation, and shall have such other powers and perform such
other duties as may be prescribed by the board of directors or these Bylaws.

ARTICLE VI

INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND OTHER AGENTS

6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS

The corporation shall, to the maximum extent and in the manner permitted
by the General Corporation Law of Delaware, indemnify each of its directors and
officers against expenses (including attorneys' fees), judgments, fines,
settlements and other amounts actually and reasonably incurred in connection
with any proceeding, arising by reason of the fact that such person is or was an
agent of the corporation; provided, however, that the corporation may modify the
extent of such indemnification by individual contracts with its directors and
executive officers and, provided, further, that the corporation shall not be
required to indemnify any director or officer in connection with any proceeding
(or part thereof) initiated by such person unless (i) such indemnification is
expressly required to be made by law, (ii) the proceeding was authorized by the
board of directors of the corporation, (iii) such indemnification is provided by
the corporation, in its sole discretion, pursuant to the powers vested in the
corporation under the General Corporation Law of Delaware or (iv) such
indemnification is required to be made pursuant to an individual contract. For
purposes of this Section 6.1, a "director" or "officer" of the corporation
includes any person (i) who is or was a director or officer of the corporation,
(ii) who is or was serving at the request of the corporation as a director or
officer of another corporation, partnership, joint venture, trust or other
enterprise, or (iii) who was a director or officer of a corporation which was a
predecessor corporation of the corporation or of another enterprise at the
request of such predecessor corporation.

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6.2 INDEMNIFICATION OF OTHERS

The corporation shall have the power, to the maximum extent and in the
manner permitted by the General Corporation Law of Delaware, to indemnify each
of its employees and agents (other than directors and officers) against expenses
(including attorneys' fees), judgments, fines, settlements and other amounts
actually and reasonably incurred in connection with any proceeding, arising by
reason of the fact that such person is or was an agent of the corporation. For
purposes of this Section 6.2, an "employee" or "agent" of the corporation (other
than a director or officer) includes any person (i) who is or was an employee or
agent of the corporation, (ii) who is or was serving at the request of the
corporation as an employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, or (iii) who was an employee or agent of a
corporation which was a predecessor corporation of the corporation or of another
enterprise at the request of such predecessor corporation.

6.3 INSURANCE

The corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the corporation,
or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against such person and incurred
by such person in any such capacity, or arising out of such person's status as
such, whether or not the corporation would have the power to indemnify such
person against such liability under the provisions of the General Corporation
Law of Delaware.

6.4 EXPENSES

The corporation shall advance to any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that he or she is or was a director or officer, of the
corporation, or is or was serving at the request of the corporation as a
director or officer of another corporation, partnership, joint venture, trust or
other enterprise, prior to the final disposition of the proceeding, promptly
following request therefor, all expenses incurred by any director or officer in
connection with such proceeding upon receipt of an undertaking by or on behalf
of such person to repay said amounts if it should be determined ultimately that
such person is not entitled to be indemnified under this Bylaw or otherwise.

Notwithstanding the foregoing, unless otherwise determined pursuant to
Section 6.5, no advance shall be made by the corporation to an officer of the
corporation (except by reason of the fact that such officer is or was a director
of the corporation in which event this paragraph shall not apply) in any action,
suit or proceeding, whether civil, criminal, administrative or investigative, if
a determination is reasonably and promptly made (i) by the board of directors by
a majority vote of a quorum consisting of directors who were not parties to the
proceeding, or (ii) if such quorum is not obtainable, or, even if obtainable, a
quorum of disinterested directors so directs, by independent legal counsel in a
written opinion, that the facts known to the decision-making party at the time
such

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determination is made demonstrate clearly and convincingly that such person
acted in bad faith or in a manner that such person did not believe to be in or
not opposed to the best interests of the corporation

6.5 NON-EXCLUSIVITY OF RIGHTS

The rights conferred on any person by this Bylaw shall not be exclusive
of any other right which such person may have or hereafter acquire under any
statute, provision of the Certificate of Incorporation, Bylaws, agreement, vote
of stockholders or disinterested directors or otherwise, both as to action in
such person's official capacity and as to action in another capacity while
holding office. The corporation is specifically authorized to enter into
individual contracts with any or all of its directors, officers, employees or
agents respecting indemnification and advances, to the fullest extent not
prohibited by the General Corporation Law of Delaware.

6.6 SURVIVAL OF RIGHTS

The rights conferred on any person by this Bylaw shall continue as to a
person who has ceased to be a director, officer, employee or other agent and
shall inure to the benefit of the heirs, executors and administrators of such a
person.

6.7 AMENDMENTS

Any repeal or modification of this Bylaw shall only be prospective and
shall not affect the rights under this Bylaw in effect at the time of the
alleged occurrence of any action or omission to act that is the cause of any
proceeding against any agent of the corporation.

ARTICLE VII

RECORDS AND REPORTS

7.1 MAINTENANCE AND INSPECTION OF RECORDS

The corporation shall, either at its principal executive office or at
such place or places as designated by the board of directors, keep a record of
its stockholders listing their names and addresses and the number and class of
shares held by each stockholder, a copy of these Bylaws as amended to date,
accounting books and other records.

Any stockholder of record, in person or by attorney or other agent,
shall, upon written demand under oath stating the purpose thereof, have the
right during the usual hours for business to inspect for any proper purpose the
corporation's stock ledger, a list of its stockholders, and its other books and
records and to make copies or extracts therefrom. A proper purpose shall mean a
purpose reasonably related to such person's interest as a stockholder. In every
instance where an attorney or

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other agent is the person who seeks the right to inspection, the demand under
oath shall be accompanied by a power of attorney or such other writing that
authorizes the attorney or other agent to so act on behalf of the stockholder.
The demand under oath shall be directed to the corporation at its registered
office in Delaware or at its principal place of business.

The officer who has charge of the stock ledger of a corporation shall
prepare and make, at least ten (10) days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior to
the meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.

7.2 INSPECTION BY DIRECTORS

Any director shall have the right to examine the corporation's stock
ledger, a list of its stockholders and its other books and records for a purpose
reasonably related to his or her position as a director. The Court of Chancery
is hereby vested with the exclusive jurisdiction to determine whether a director
is entitled to the inspection sought. The Court may summarily order the corpora
tion to permit the director to inspect any and all books and records, the stock
ledger, and the stock list and to make copies or extracts therefrom. The Court
may, in its discretion, prescribe any limitations or conditions with reference
to the inspection, or award such other and further relief as the Court may deem
just and proper.

7.3 ANNUAL STATEMENT TO STOCKHOLDERS

The board of directors shall present at each annual meeting, and at any
special meeting of the stockholders when called for by vote of the stockholders,
a full and clear statement of the business and condition of the corporation.

7.4 REPRESENTATION OF SHARES OF OTHER CORPORATIONS

The chairman of the board, the chief executive officer, the president,
any vice president, the chief financial officer, the secretary or assistant
secretary of this corporation, or any other person authorized by the board of
directors or the chief executive officer or the president or a vice president,
is authorized to vote, represent, and exercise on behalf of this corporation all
rights incident to any and all shares of any other corporation or corporations
standing in the name of this corporation. The authority herein granted may be
exercised either by such person directly or by any other person authorized to do
so by proxy or power of attorney duly executed by such person having the
authority.

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ARTICLE VIII

GENERAL MATTERS

8.1 RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING

For purposes of determining the stockholders entitled to receive payment
of any dividend or other distribution or allotment of any rights or the
stockholders entitled to exercise any rights in respect of any other lawful
action (other than action by stockholders by written consent without a meeting),
the board of directors may fix, in advance, a record date, which shall not be
more than sixty (60) days before any such action. In that case, only
stockholders of record at the close of business on the date so fixed are
entitled to receive the dividend, distribution or allotment of rights, or to
exercise such rights, as the case may be, notwithstanding any transfer of any
shares on the books of the corporation after the record date so fixed, except as
otherwise provided by law.

If the board of directors does not so fix a record date, then the record
date for determining stockholders for any such purpose shall be at the close of
business on the day on which the board adopts the applicable resolution or the
sixtieth (60th) day before the date of that action, whichever is later.

8.2 CHECKS; DRAFTS; EVIDENCES OF INDEBTEDNESS

From time to time, the board of directors shall determine by resolution
which person or persons may sign or endorse all checks, drafts, other orders for
payment of money, notes or other evidences of indebtedness that are issued in
the name of or payable to the corporation, and only the persons so authorized
shall sign or endorse those instruments.

8.3 CORPORATE CONTRACTS AND INSTRUMENTS: HOW EXECUTED

The board of directors, except as otherwise provided in these Bylaws,
may authorize any officer or officers, or agent or agents, to enter into any
contract or execute any instrument in the name of and on behalf of the
corporation; such authority may be general or confined to specific instances.
Unless so authorized or ratified by the board of directors or within the agency
power of an officer, no officer, agent or employee shall have any power or
authority to bind the corporation by any contract or engagement or to pledge its
credit or to render it liable for any purpose or for any amount.

8.4 STOCK CERTIFICATES; PARTLY PAID SHARES

The shares of a corporation shall be represented by certificates,
provided that the board of directors of the corporation may provide by
resolution or resolutions that some or all of any or all classes or series of
its stock shall be uncertificated shares. Any such resolution shall not apply to
shares represented by a certificate until such certificate is surrendered to the
corporation.

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Notwithstanding the adoption of such a resolution by the board of directors,
every holder of stock represented by certificates and upon request every holder
of uncertificated shares shall be entitled to have a certificate signed by, or
in the name of the corporation by, the chairman or vice-chairman of the board of
directors, or the chief executive officer or the president or vice-president,
and by the chief financial officer, the secretary or an assistant secretary of
such corporation representing the number of shares registered in certificate
form. Any or all of the signatures on the certificate may be a facsimile. In
case any officer, transfer agent or registrar who has signed or whose facsimile
signature has been placed upon a certificate has ceased to be such officer,
transfer agent or registrar before such certificate is issued, it may be issued
by the corporation with the same effect as if he or she were such officer,
transfer agent or registrar at the date of issue.

The corporation may issue the whole or any part of its shares as partly
paid and subject to call for the remainder of the consideration to be paid
therefor. Upon the face or back of each stock certificate issued to represent
any such partly paid shares, upon the books and records of the corporation in
the case of uncertificated partly paid shares, the total amount of the
consideration to be paid therefor and the amount paid thereon shall be stated.
Upon the declaration of any dividend on fully paid shares, the corporation shall
declare a dividend upon partly paid shares of the same class, but only upon the
basis of the percentage of the consideration actually paid thereon.

8.5 SPECIAL DESIGNATION ON CERTIFICATES

If the corporation is authorized to issue more than one class of stock
or more than one series of any class, then the powers, the designations, the
preferences, and the relative, participating, optional or other special rights
of each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate that the corporation shall
issue to represent such class or series of stock; provided, however, that,
except as otherwise provided in Section 202 of the General Corporation Law of
Delaware, in lieu of the foregoing requirements there may be set forth on the
face or back of the certificate that the corporation shall issue to represent
such class or series of stock a statement that the corporation will furnish
without charge to each stockholder who so requests the powers, the designations,
the preferences, and the relative, participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights.

8.6 LOST CERTIFICATES

Except as provided in this Section 8.6, no new certificates for shares
shall be issued to replace a previously issued certificate unless the latter is
surrendered to the corporation and canceled at the same time. The board of
directors may, in case any share certificate or certificate for any other
security is lost, stolen or destroyed, authorize the issuance of replacement
certificates on such terms and conditions as the board of directors may require;
the board of directors may require indemnification of the corporation secured by
a bond or other adequate security sufficient to protect the corporation against
any claim that may be made against it, including any expense or liability, on

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account of the alleged loss, theft or destruction of the certificate or the
issuance of the replacement certificate.

8.7 CONSTRUCTION; DEFINITIONS

Unless the context requires otherwise, the general provisions, rules of
construction, and definitions in the General Corporation Law of Delaware shall
govern the construction of these Bylaws. Without limiting the generality of this
provision, the singular number includes the plural, the plural number includes
the singular, and the term "person" includes both a corporation and a natural
person.

ARTICLE IX

AMENDMENTS

Subject to Section 6.7 hereof, the Bylaws of the corporation may be
adopted, amended or repealed and new Bylaws adopted by the affirmative vote of
stockholders holding a majority of the voting power of stock entitled to vote
or, unless otherwise specifically provided in any Bylaw, by the board of
directors.

ARTICLE X

DISSOLUTION

If it should be deemed advisable in the judgment of the board of
directors of the corporation that the corporation should be dissolved, the
board, after the adoption of a resolution to that effect by a majority of the
whole board at any meeting called for that purpose, shall cause notice to be
mailed to each stockholder entitled to vote thereon of the adoption of the
resolution and of a meeting of stockholders to take action upon the resolution.

At the meeting a vote shall be taken for and against the proposed
dissolution. If a majority of the voting power of the outstanding stock of the
corporation entitled to vote thereon votes for the proposed dissolution, then a
certificate stating that the dissolution has been authorized in accordance with
the provisions of Section 275 of the General Corporation Law of Delaware and
setting forth the names and residences of the directors and officers shall be
executed, acknowledged, and filed and shall become effective in accordance with
Section 103 of the General Corporation Law of Delaware. Upon such certificate's
becoming effective in accordance with Section 103 of the General Corporation Law
of Delaware, the corporation shall be dissolved.

Whenever stockholders holding a majority of the voting power of stock
entitled to vote on a dissolution consent in writing, either in person or by
duly authorized attorney, to a dissolution, no meeting of directors or
stockholders shall be necessary. The consent shall be filed and shall become

-23-

<PAGE> 28

effective in accordance with Section 103 of the General Corporation Law of
Delaware. Upon such consent's becoming effective in accordance with Section 103
of the General Corporation Law of Delaware, the corporation shall be dissolved.
If the consent is signed by an attorney, then the original power of attorney or
a photocopy thereof shall be attached to and filed with the consent. The consent
filed with the Secretary of State shall have attached to it the affidavit of the
secretary or some other officer of the corporation stating that the consent has
been signed by or on behalf of all the stockholders entitled to vote on a
dissolution; in addition, there shall be attached to the consent a certification
by the secretary or some other officer of the corporation setting forth the
names and residences of the directors and officers of the corporation.

ARTICLE XI

CUSTODIAN

11.1 APPOINTMENT OF A CUSTODIAN IN CERTAIN CASES

The Court of Chancery, upon application of any stockholder, may appoint
one or more persons to be custodians and, if the corporation is insolvent, to be
receivers, of and for the corporation when:

(i) at any meeting held for the election of directors the
stockholders are so divided that they have failed to elect successors to
directors whose terms have expired or would have expired upon qualification of
their successors; or

(ii) the business of the corporation is suffering or is
threatened with irreparable injury because the directors are so divided
respecting the management of the affairs of the corporation that the required
vote for action by the board of directors cannot be obtained and the
stockholders are unable to terminate this division; or

(iii) the corporation has abandoned its business and has failed
within a reasonable time to take steps to dissolve, liquidate or distribute its
assets.

11.2 DUTIES OF CUSTODIAN

The custodian shall have all the powers and title of a receiver
appointed under Section 291 of the General Corporation Law of Delaware, but the
authority of the custodian shall be to continue the business of the corporation
and not to liquidate its affairs and distribute its assets, except when the
Court of Chancery otherwise orders and except in cases arising under Sections
226(a)(3) or 352(a)(2) of the General Corporation Law of Delaware.

-24-

<PAGE> 29

CERTIFICATE OF ADOPTION OF BYLAWS

IDG BOOKS WORLDWIDE, INC.

The undersigned Secretary of IDG Books Worldwide, Inc. hereby certifies
the foregoing Bylaws, comprising 24 pages, as the Bylaws of the corporation.

Effective as of March 30, 1998.

/s/ John Ball
----------------------------
John Ball

-25-

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