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FORM 10-K

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

For the fiscal year ended December 31, 2002

Commission File Number: 333-50119

AMERICAN LAWYER MEDIA HOLDINGS, INC.

Registrant’s telephone number, including area code: (212) 779-9200
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None

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

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

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

     Indicate the number of shares outstanding of each of the Registrant’s classes of common stock, as of the latest practicable date:

     As of March 28, 2003, 1,320,330 shares of Common Stock, par value $.01 per share, were outstanding, the majority of which were held by affiliates.

Documents Incorporated by Reference

See Exhibit Index

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EXPLANATORY NOTE

     American Lawyer Media Holdings, Inc. (the “Company”) is not currently required to file reports under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and is not currently an “issuer” within the meaning of the Sarbanes-Oxley Act of 2002. The Company is filing this annual report on Form 10-K pursuant to a covenant contained in the Indenture Discount dated December 22, 1997 between the Company and The Bank of New York, as Trustee, governing the Company’s 12 1/4 % Senior Discount Notes due 2008.

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PART I

Item 1. Business

     Unless the context otherwise requires: (i) “we,” “us,” “our” or “Holdings” refers to American Lawyer Media Holdings, Inc., which is the parent company of American Lawyer Media, Inc. and its subsidiaries; and (ii) “ALM” refers to American Lawyer Media, Inc. and its subsidiaries. References herein to estimated circulation include total paid and free circulation for all of our periodicals. References herein to readership include estimated circulation plus combined pass-along readership unadjusted for any overlap that exists among readers of our various publications.

     This report contains forward-looking statements. Such statements are based upon the beliefs and assumptions of, and on information available to, our management at the time such statements are made. The following are or may constitute forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995: (i) statements preceded by, followed by or that include the words “may,” “will,” “could,” “should,” “believe,” “expect,” “future,” “potential,” “anticipate,” “intend,” “plan,” “estimate” or “continue” or the negative or other variations thereof and (ii) statements regarding matters that are not historical facts. Such forward-looking statements are subject to various risks and uncertainties, including, without limitation, (i) general economic conditions and developments in the legal services industry or the publishing industry, (ii) product demand and pricing, (iii) the success of new initiatives, (iv) increased competition with respect to services we provide and for advertising and subscription revenue and (v) sufficiency of cash flow to fund our operations.

Company Overview

     We publish 23 periodicals, including several leading national periodicals and regional publications serving four of the five largest state legal markets. Our nationally-recognized periodicals include The American Lawyer, a monthly magazine containing articles and features targeted to attorneys practicing in large law firms, and The National Law Journal, the nation’s largest selling weekly legal newspaper, which covers the law, lawyers and litigation. Our regional publications are led by the New York Law Journal, a daily publication with one of the largest paid circulations of regional legal newspapers in the United States. In addition, we publish six other daily newspapers serving Atlanta, Philadelphia, Northern California, Miami, Fort Lauderdale and Palm Beach, as well as six weekly regional newspapers serving New Jersey, Delaware, Texas, Washington, D.C., Connecticut and Pennsylvania.

     In addition to the periodicals referred to above, we publish Corporate Counsel, a leading magazine for corporate in-house attorneys, Law Technology News and AmLaw Tech, two leading legal technology magazines, as well as IP Law & Business, a leading specialty magazine focusing on intellectual property.

     We also create and package information for attorneys and business professionals. This business includes a portfolio of publications covering a variety of specialized legal interests and practice areas, including 28 newsletters and over 150 treatises on topics of national and regional interest. We also publish various directories used by legal professionals.

     Under our LegalTech trademark, we are a leading producer of trade shows and conferences relating to law practice technology. In addition, we organize and sponsor numerous professional seminars, both live and on-line, that cover issues of current legal interest.

     Our litigation services division is dedicated to providing the legal community with high-quality, timely news and information about litigation. It includes The National Law Journal, a series of weekly and monthly verdict and settlement newsletters, and the NLJ Expert Witness and Consultants Network, a group of eight regional and one national expert witness directories. The division also operates three web sites, verdictsearch.com, nljexperts.com and nlj.com, which provide users with access to a vast database of verdict and settlement reports, the nation’s premier online expert witness directory and a variety of news and information resources. The network’s telephone research service fields more than 15,000 requests annually for verdict, settlement and expert witness research.

     In addition, we operate an on-line business through Law.com, Inc., a Delaware corporation (“Law.com”), which delivers legal news and information and includes an on-line training program which allows attorneys to receive continuing legal education (“CLE”) credit. We also recently began a research business which provides law firms, vendors and other customers with reports and surveys on specified legal topics.

     We derive our revenues principally from advertising and subscriptions, with additional revenues generated from ancillary

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products and services, which include our newsletters, books, trade shows and seminars division. For the twelve months ended December 31, 2002, approximately 58% of our revenues were from advertising, 18% were from subscriptions and 24% were from ancillary products and services.

Product Lines

     Periodicals. Our newspaper and magazine business publishes 23 national, regional and local periodicals that serve legal and business professionals. Our periodicals have a combined circulation of approximately 320,000. The subscription renewal rate of our periodicals averages approximately 75%.

     Newspapers. Our newspapers provide news, features, analysis and commentary about the world of law and advocacy. Feature articles and stories covering the local, state and federal courts and law firms are supplemented by reports and analyses of cutting-edge legal issues. We are committed to providing high quality and balanced coverage of our local markets. Most of our newspapers serve as the newspaper of record for their respective legal markets. Lawyers look to the newspapers for reports on local court rulings and opinions, as well as information regarding local court dockets.

     As of December 31, 2002, we published fourteen daily and weekly newspapers including The National Law Journal, the leading national weekly litigation newspaper in the United States, and the New York Law Journal, which has one of the largest paid circulations of any regional legal newspapers in the United States. In the aggregate, our newspapers serve nine state markets, including New York, New Jersey, Pennsylvania, Delaware, Georgia, Florida, Texas, California and Connecticut, and the District of Columbia, covering approximately 50% of all active attorneys in the United States. Each of our regional newspapers has a significant presence in its respective market. Our regional newspapers also publish a wide range of supplements on various practice specialties.

     The following table sets forth information regarding our newspapers:

Newspapers

     Magazines. The American Lawyer anchors our magazine portfolio. Founded in 1979, The American Lawyer is a glossy magazine that features stories on the strategies, successes, failures and personalities of the most important figures in the legal world. The target audience for the publication is attorneys practicing in large law firms and corporate legal departments across the United States. The American Lawyer has been the winner of National Magazine awards granted by the American Society of Magazine Editors four times, and has been nominated for 22 such awards since its founding.

     Our other magazines focus on specific practice areas or segments within the legal profession and certain topics applicable to the

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business of law. Our specialty legal magazines include Corporate Counsel, one of the nation’s most widely circulated magazines focused on issues of importance to in-house lawyers at large and mid-size corporations, and IP Law & Business, which covers developments in intellectual property law. We also publish two leading technology magazines targeted to the legal community, AmLaw Tech and Law Technology News, which focus on information technology and its applications to the practice of law. AmLaw Tech is targeted toward partners at law firms with purchase-making authority and is distributed for free to all readers of The American Lawyer, while Law Technology News is targeted toward attorneys and information services departments in law offices. We also publish L magazine, a law and lifestyle publication for law students and New York Law Journal Magazine, a law and lifestyle publication geared to lawyers in the New York metropolitan area that is primarily distributed with the New York Law Journal.

     We publish the following nine magazines:

Magazines

     Newsletters. Our newsletter division publishes 28 monthly newsletters that cover specialized legal practice areas. Circulation for our newsletters ranges from approximately 125 to 1,000, with an average circulation of over 550. The total number of paid subscribers for all newsletters was approximately 11,000 as of December 31, 2002. The following table sets forth a list of our newsletters as of December 31, 2002:

     Books. We currently publish over 150 books on a broad array of legal topics. These books generally focus on practical legal

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subjects that arise in the daily professional lives of lawyers. Most of our treatises are updated once or twice per year with inserts to keep the material current. We focus on publishing treatises that cover particularly dynamic areas of law that lend themselves to frequent supplementation.

     In 2001, we also began publishing soft cover and hardcover trade books. In May 2002 there were nine titles in this new line. As of May 2003, there will be thirteen titles in this new line. These books focus on general legal subjects and contain practical guidance for attorneys, business professionals and business students that does not need to be updated regularly. These books are distributed through us as well as through traditional bookstores.

     We usually develop the concept for a new book and then solicit an author to write the text. However, in certain cases, we have received unsolicited manuscripts which we have ultimately published. Authors who have written books for us include prominent attorneys and judges such as Martin Lipton, Judge Jed Rakoff, James Freund, Henry Miller and James Goodale. The following sets forth our current offering of books:

Books

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     Trade Shows and Seminars. Under the LegalTech tradename, we produce conferences and exhibitions relating to law practice technology in New York, Los Angeles, Chicago, San Francisco, Birmingham, England and London, England. The conferences are generally two-day events that include vendor exhibits, a CLE conference program, and a variety of workshops and focus sessions. Attendees typically include attorneys in private practice, corporate counsel, law firm administrators, managing partners, litigation support and information technology personnel, while exhibitors include a variety of software, hardware, publishing and other technology product related companies. We conduct a number of seminars for lawyers and other professionals in related fields. Our seminars complement our other products and services both by serving as powerful marketing vehicles for our existing books and newsletters, and by generating ideas for new seminars, books and newsletters. Seminars also introduce us to lawyers who may subsequently write articles or books for us. The following table sets forth our seminars and trade shows held in 2002:

Seminars

Trade Shows

     Litigation Services. The litigation services division is dedicated to providing the legal community with high-quality, timely news and information about litigation. The division includes The National Law Journal, the nation’s premier weekly legal newspaper, a series of weekly and monthly verdict and settlement newsletters, and the NLJ Expert Witness and Consultants Network, a group of eight regional and one national expert witness directories. The division also operates three web sites, verdictsearch.com, nljexperts.com and nlj.com, which provide users with access to a vast database of verdict and settlement reports, the nation’s premier online expert witness directory and a variety of news and information resources. The network’s telephone research service fields more than 15,000 requests annually for verdict, settlement and expert witness research. Among the division’s publications, with varying

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frequencies and circulations ranging from 200 to 30,000, are the following:

Research

     We recently launched our new research business, Legal Market Information Source (“LMIS”) (www.legalmarketinfo.com). Utilizing a newly-created database of current and past American Lawyer surveys, LMIS offers business reports on major U.S. and global law firms, industry trend reports, electronic versions of the American Lawyer surveys and other key surveys and custom research. Target markets include marketing directors, law librarians, managing partners and other members of law firm management, corporate counsel, recruiters, technology vendors, consultants and financial institutions.

Printing and Distribution

     Layouts for our publications are prepared in-house, while our printing and distribution activities are all outsourced.

Competition

     We compete for advertising and subscription revenues with publishers of special-interest legal newspapers and magazines with similar editorial content. However, in most of our markets, our newspaper is the only newspaper focused on serving the legal community. We also compete for advertising revenues with other national legal publications, as well as general-interest magazines and other forms of media, including broadcast and cable television, radio, direct marketing and electronic media. Factors that may affect competition for advertisers include effective costs of such advertising compared to other forms of media, and the size and characteristics of the readership of our publications. We also face significant competition from other legal publishers and legal service providers in all media.

Intellectual Property

     We own a number of registered and unregistered trademarks for use in connection with our business, including trademarks in the titles of our major periodicals such as The American Lawyer, Corporate Counsel, The National Law Journal and New York Law Journal. Provided that trademarks remain in continuous use in connection with similar goods or services, their term can be perpetual, subject, with respect to registered trademarks, to the timely renewal of such registrations with the United States Patent and Trademark Office.

     We approach copyright ownership with respect to our publications in the same manner as is generally customary within the publishing industry. Consequently, we own the copyright to all of our newspapers, magazines and newsletters, as compilations, and also own the copyright to almost all of our books. With respect to the specific articles in our publications, we generally obtain the assignment of all rights, title and interest in original materials created by our full-time journalists and editors as well as by paid and unpaid contributors. For articles authored by outside contributors, we obtain either all rights, title and interest in the article or the exclusive “first-time publication” and non-exclusive republication rights. Judicial opinions, court schedules and docketing information are provided to us directly by the courts, on a non-exclusive basis, and are public information.

     We license the content of certain of our publications to third parties, including West Company and Lexis/Nexis, on a non-exclusive basis, for republication and dissemination on electronic databases marketed by the licensees. The current West Company

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and Lexis/Nexis licenses expire in December 2004 and April 2003, respectively, and automatically renew, subject to either party’s right to terminate at the end of each subsequent term. In addition, until May 2002, we licensed our content to Law.com. In connection with our acquisition of Law.com in May 2002, the license agreement terminated.

     Some of our products, such as the Daily Decision Service and PICS, which offer subscribers faxed copies on request of both published and unpublished state and federal court opinions for New Jersey and Pennsylvania, respectively, utilize the extensive databases of court decisions compiled by us. We also have extensive subscriber and other customer databases which we believe would be extremely difficult to replicate. We attempt to protect these databases and lists as trade secrets by restricting access thereto and/or by the use of non-disclosure agreements. There can be no assurance, however, that the means taken to protect the confidentiality of these items will be sufficient, or that others will not independently develop similar databases and customer lists.

Employees and Labor Relations

     As of December 31, 2002, we employed approximately 786 full-time and part-time employees, 10 of whom are subject to a single collective bargaining agreement. Subject to the following, we believe that our relations with our employees are satisfactory.

     On May 21, 2001, based on the results of a secret-ballot election held on May 11, 2001, the National Labor Relations Board (the “NLRB”) certified the New York Typographical Union No. 6, CWA Local 14156, AFL-CIO (the “Union”), as the exclusive representative of a unit of certain of our editorial and advertising production department employees at the New York Law Journal. This certification was subsequently reaffirmed by the NLRB and later amended by agreement with the Union. Negotiations have started over the terms of a collective bargaining agreement and are continuing. It cannot be said at this time whether or when we and the Union will reach an agreement or what the terms of any agreement might be.

Significant Transactions

     Effective May 1, 2002, we acquired Law.com, a provider of web content and seminars for the legal industry. Prior to our acquisition of Law.com, Law.com’s RealLegal applications services business was spun off to Law.com’s shareholders as a new entity, RealLegal, LLC. We acquired Law.com through the acquisition of all of the 1,707,790 shares of outstanding common stock of Law.com from its shareholders in exchange for an aggregate of 120,030 shares of our common stock, par value $0.01 per share. We and Law.com shared substantially all of the same common stockholders, however, they were not deemed to be entities under common control. The amount of consideration was determined based on independent third party valuations undertaken in March 2002 of our equity and of the Web content and seminar business of Law.com. The acquired businesses include practice centers for specialty law practice areas, state web sites and information sites for attorneys, in-house counsel, law students and legal technology professionals. The acquisition was accounted for under the purchase method of accounting and the results of operations have been included in the financial statements since the date of acquisition. The total purchase price was $21.9 million which included $1.9 million of direct acquisition costs (see Note 2).

     After completion of the acquisition of Law.com, we contributed all of the outstanding shares of common stock of Law.com to ALM as a capital contribution. Law.com will operate as a subsidiary of ALM.

     At the time of the acquisition of Law.com, we recorded an investment in RealLegal, LLC of $4.7 million for 4,745,000 units of Series A Preferred Stock. This investment was in exchange for the extinguishment of an existing accounts receivable due from RealLegal, LLC and for future advertising commitments by RealLegal, LLC to us. This investment is carried at cost and included in Other Assets in the accompanying Consolidated Balance Sheet. We and RealLegal, LLC share substantially the same stockholders; however, are not deemed to be entities under common control.

     Effective May 1, 2002, RealLegal, LLC entered into an Operating Agreement with ALM (the “Operating Agreement”). The Operating Agreement provides, among other things, for ALM to provide RealLegal, LLC with certain content to be used in connection with its MA3000 product and certain advertising, in exchange for a periodic payment by RealLegal, LLC comprised of cash and equity in RealLegal, LLC.

Recent Developments

     On February 27, 2003, we entered into a waiver and consent with the holders of the 12 1/4% Senior Discount Notes due 2008 which provides for the waiver of cash payment by us of semi-annual interest that was to begin in June 2003. The Senior Discount Notes will now become “cash-pay” in December 2004, with the first interest payment due on June 15, 2005. The Senior Discount Notes will

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continue to accrete until December 2004, at which time the aggregate principal amount of the Senior Discount Notes will be $80,260,705. Beginning on December 15, 2004, cash interest on the Senior Discount Notes will accrue at the rate of 12 1/4% per annum. Bruce Wasserstein, chairman of the board of directors of us and ALM, and certain affiliates own all of the Senior Discount Notes. In addition, as of February 27, 2003, Bruce Wasserstein and certain affiliates own approximately 4% of the $175 million 9 3/4% Senior Notes due 2007 issued by ALM.

     On February 27, 2003, the credit agreement for our revolving credit facility with GE Corporate Finance (the “GECC Facility”) was amended to modify the covenants relating to the total leverage ratio, interest coverage ratio and fixed charge ratio until December 2004. These covenants now provide alternative compliance levels and associated incremental interest rates. In addition, the revolving credit agreement for the GECC Facility was amended to allow for the Senior Discount Note transaction described above.

Item 2. Properties

     We operate from various locations throughout the United States. Our corporate headquarters are based in New York. Information relating to our corporate headquarters and other regional offices which are owned or leased is set forth in the following table:

Item 3. Legal Proceedings

     We are a party to various litigation matters incidental to the conduct of our business. We do not believe that the outcome of any of the matters in which we are currently involved will have a material adverse effect on our financial condition or on the results of our operations.

Item 4. Submission of Matters to a Vote of Security Holders

     None.

PART II

Item 5. Market for Registrant’s Common Equity and Related Stockholders Markets

     The majority of our common stock is owned by U.S. Equity Partners, L.P. and its affiliates. There is no public trading market for our common stock.

     We have never paid any cash dividends on our common stock.

Item 6. Selected Financial Data

     The following tables present selected historical financial information for us, as of and for the years ended December 31, 1998,

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1999, 2000, 2001 and 2002. Our financial data for the years ended December 31, 1998, 1999, 2000 and 2001 were derived from financial statements audited by Arthur Andersen LLP. Our financial data for the year ended December 31, 2002 were derived from financial statements audited by Ernst & Young LLP. The selected financial information should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the historical financial statements and notes thereto included elsewhere in this Form 10-K. See “Index to Financial Statements.”

AMERICAN LAWYER MEDIA HOLDINGS, INC.
SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
(In thousands)

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Critical Accounting Policies

     Our Consolidated Financial Statements are prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements for the periods presented. We continually evaluate the policies and estimates we use to prepare our Consolidated Financial Statements. In general, our estimates are based on historical experience, information from third-party professionals and various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results may differ from those estimates made by us.

     We believe our critical accounting policies include our accounting for long-lived assets, income taxes and accounts receivable allowances. Additional information about these policies can be found below and in Note 3 of the Notes to the Consolidated Financial Statements.

Long-Lived Assets

     Goodwill and certain other intangible assets are tested for impairment in accordance with Statement of Financial Accounting Standards Statement No. 142, “Goodwill and Other Intangible Assets” (“SFAS No. 142”), and all other long-lived assets are tested for impairment in accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”.

     Long-lived assets, including intangible assets, were $276.9 million, or 88% of total assets in our Consolidated Balance Sheet as of December 31, 2002. The annual impairment analysis is considered critical because of the significance of long-lived assets to our Consolidated Balance Sheet.

     We periodically review long-lived assets to evaluate whether the carrying value of a long-lived asset exceeds its fair value. In performing the evaluation, we estimate future cash flows expected to result from the use of the asset. The estimates of future cash flows, based on reasonable and supportable assumptions and projections, require our subjective judgment. Depending on the assumptions and estimates used, the estimated future cash flows projected in the evaluations of long-lived assets can vary within a range of outcomes. Any changes in key assumptions about our businesses and their prospects, or changes in market conditions, could result in an impairment charge and such a charge could have a material effect on our Consolidated Financial Statements. See Note 8 of the Notes to the Consolidated Financial Statements regarding the $19.5 million impairment charge recorded during 2002.

Income Taxes

     Income taxes are accounted for in accordance with SFAS No. 109, “Accounting for Income Taxes”, which requires that deferred tax assets and liabilities be recognized using enacted tax rates for the effect of temporary differences between the book and tax basis of recorded assets and liabilities. SFAS No.109 also requires that deferred tax assets be reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax assets will not be realized.

     Income tax benefit was approximately $13.8 million in our Consolidated Statement of Operations for the year ended December 31, 2002. Net deferred tax assets were approximately $5.1 million and deferred tax liabilities were approximately $4.0 million as of December 31, 2002 (see Note 6 of the Notes to the Consolidated Financial Statements). We consider accounting for income taxes critical because we are required to make significant subjective judgments in developing our provision for income taxes, including the determination of deferred tax assets and liabilities, and any valuation allowances that may be required against deferred tax assets. Failure to achieve a forecast of taxable income may affect the ultimate realization of the net deferred tax assets.

     In addition, we operate within multiple taxing jurisdictions and are subject to audit in these jurisdictions. These audits can involve complex issues, which could require an extended period of time to resolve.

Accounts Receivable Allowances

     Credit is extended to our advertisers and subscribers based upon an evaluation of our customer’s financial condition. We do not require collateral from our customers. We use an estimate of prior credit losses as a percentage of credit sales and the aging of accounts receivable to establish reserves for credit losses on accounts receivable. In addition, we establish reserves for estimated rebates, credit and rate adjustments and discounts based on historical experience.

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     Accounts receivable allowances were approximately $2.6 million, or 14%, of accounts receivable in our Consolidated Balance Sheet as of December 31, 2002. Accounts receivable, net of allowances, was approximately $15.8 million, or 63%, of total current assets in our Consolidated Balance Sheet as of December 31, 2002. We consider accounting for accounts receivable allowances critical because of the significance of accounts receivable to our current assets and operating cash flow. If the financial condition of our customers was to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required, which could have a material effect on our Consolidated Financial Statements.

     The following discussion should be read in conjunction with Selected Financial Data and our audited historical Consolidated Financial Statements, including the notes thereto, included elsewhere in this Form 10-K.

Overview

     On January 31, 2001, we consummated the acquisition of substantially all of the assets and certain of the liabilities of Haslam Publications (“Haslam”), the leading publisher of jury verdict and settlement research data in California.

     During the second quarter and fourth quarter of 2001, upon the decision to restructure certain of our operations, we accrued approximately $2.0 million of restructuring charges. These charges primarily relate to severance arrangements and have been included in operating income. As of December 31, 2001, approximately $0.7 million, representing the unpaid charges, is included in accrued expenses.

     During the second quarter of 2001, we wrote-off certain available for sale investments as the decline in value of these investments has been deemed to be other than temporary. This write-down of $4.7 million has been included in other expense.

     During the third quarter of 2001, we sold certain assets associated with our printing facility in Florida. We included in other expense a net loss of approximately $0.8 million from the sale of these assets and other costs directly associated with the transaction.

     Effective May 1, 2002, we acquired Law.com, a provider of web content and seminars for the legal industry. Prior to our acquisition of Law.com, Law.com’s RealLegal applications services business was spun off to Law.com shareholders as a new entity, RealLegal, LLC. We acquired Law.com through the acquisition of all of the 1,707,790 shares of outstanding common stock of Law.com from its shareholders in exchange for an aggregate of 120,030 shares of our common stock, par value $0.01 per share. We and Law.com share substantially all of the same common stockholders, however, they were not deemed to be entities under common control. The amount of consideration was determined based on independent third party valuations undertaken in March 2002 of our equity and of the Web content and seminar business of Law.com. The acquired businesses include practice centers for specialty law practice areas, state Web sites and information sites for in-house counsel, law students and legal technology professionals. The acquisition was accounted for under the purchase method of accounting and the results of operations have been included in the financial statements since the date of acquisition.

     After completion of the acquisition of Law.com, we contributed all of the outstanding shares of common stock of Law.com to ALM as a capital contribution. Law.com will operate as a subsidiary of ALM.

     During July 2002, ALM’s interest rate swap agreement which converted the fixed rate interest on ALM’s $175.0 million 9 3/4% Senior Notes to a variable rate interest was terminated. At June 30, 2002, the interest rate swap agreement outstanding with a notional amount of $175.0 million had a fair market value of $188,400. With the mutual release of this agreement, ALM received a settlement of $500,000. This transaction resulted in a net gain of $311,621 during the third quarter of 2002 and $421,000 for the full year 2002, reported in earnings as a component of interest expense because the swap did not qualify for hedge accounting.

     During the third quarter of 2002, we amended an advertising agreement that we had entered into as a result of a barter transaction for equity in 2000. This amendment limited our advertising obligation to advertisements already placed in our publications prior to the amendment. Consideration of equity interest received in the original agreement in exchange for future advertising in our publications was written off as other expense in the prior year. As a result, with the elimination of any future obligation to this advertiser, we recorded in other income $0.9 million, equal to the amount of the reduction in advertising obligation.

     During the fourth quarter of 2002, we completed our annual impairment review under the new accounting rules for goodwill and other intangible assets effective January 1, 2002. As a result of our review, we recorded an impairment for goodwill and our trademark intangible, all of which was generated from our acquisition of Law.com. The impairment totaled $19.5 million and is reflected as a component of operating expense in our Consolidated Statement of Operations for 2002.

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     In addition, during the fourth quarter of 2002, we recorded a loss of $0.3 million related to the sublease of our excess building space at our corporate headquarters at a rate lower than that specified in our lease term. This loss is reflected as a component of other expense in our Consolidated Statement of Operations for 2002.

     GAAP refers to accounting principles generally accepted in the United States of America. Throughout this Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), management discusses financial measures in accordance with GAAP and also on a non-GAAP basis. All references in this MD&A to earnings before interest, income taxes, depreciation and amortization, other income and expense and a one-time impairment charge (“EBITDA”) are to a non-GAAP financial measure. We believe that the use of non-GAAP financial measures enables us and investors to evaluate, and compare from period to period, the results from ongoing operations in a more meaningful and consistent manner. Reconciliations of GAAP to non-GAAP financial measures are included on page 21.

     The following table presents the results of operations (in thousands) for the years ended December 31, 2000, 2001 and 2002.

Results of Operations

Year Ended December 31, 2002 Compared to Year Ended December 31, 2001

     The financial results for the year ended December 31, 2002 include the acquisition of Law.com since May 1, 2002, the date of acquisition.

     Overview. Total revenues decreased $12.9 million, or 8.8%, from $145.8 million for the year ended December 31, 2001 to $132.9 million for the year ended December 31, 2002. Total operating expenses decreased $5.3 million, or 3.5%, from $151.7 million for the year ended December 31, 2001 to $146.4 million for the year ended December 31, 2002. As a result, the operating loss increased $7.6 million from a loss of $5.9 million for the year ended December 31, 2001 to a loss of $13.5 million for the year ended December 31, 2002. EBITDA decreased $1.5 million, or 6.2%, from $24.0 million for the year ended December 31, 2001 to $22.5 million for the year ended December 31, 2002.

     Revenues. Revenues decreased $12.9 million, or 8.8%, from $145.8 million for the year ended December 31, 2001 to $132.9 million for the year ended December 31, 2002. Advertising revenues decreased $8.5 million, or 10.0%, from $85.2 million for the year ended December 31, 2001 to $76.7 million for the year ended December 31, 2002. Revenue declines for the year ended December 31, 2002 compared to the year ended December 31, 2001 reflect the impact of the continued economic slowdown within the advertising industry which has resulted in reduced advertising revenues, book and newsletter revenues, and declines in sponsorship and attendance revenue from seminars and trade shows. In addition, due to the sale of our Florida printing operations during the third quarter of 2001, no commercial printing revenue was recorded in 2002 as compared to $1.4 million in 2001. Due to our acquisition of Law.com, the licensing agreement with it was terminated, resulting in lower royalty fees and the elimination of editorial content fees of $1.5 million. This decrease in content fees was partially offset by revenues recorded in our Law.com subsidiary.

     Advertising revenues decreased $8.5 million, or 10.0%, from $85.2 million for the year ended December 31, 2001 to $76.7 million for the year ended December 31, 2002. The decline in advertising revenues primarily resulted from a decrease in display, classified,

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and legal notice advertising resulting from the continuation of the depressed advertising environment experienced throughout 2001 and 2002. Display and classified advertising were the largest contributors to this decline with a decrease of $5.1 million, or 19.6%, and $3.8 million, or 16.7%, respectively. In both periods, display advertising revenue includes revenue related to certain barter transactions in which we exchanged advertising services for an equity interest in certain companies. Revenues associated with these transactions decreased from $5.4 million for the year ended December 31, 2001 to $2.0 million for the year ended December 31, 2002. In addition, declines in display and classified advertising revenues occurred across virtually all of our publications. The reduction in classified advertising revenue is directly attributable to the reduction of attorney help wanted advertising due to fewer jobs being available due to the poor economic climate. Legal notice advertising revenues also declined $0.8 million, or 3.7%, compared to the year ended December 31, 2001. Partially offsetting these declines were strong growth in our directory revenues, which grew $1.2 million, or 69.3%, from $1.8 million for the year ended December 31, 2001 to $3.0 million for the year ended December 31, 2002. This increase resulted primarily from growth in our expert witness and corporate counsel divisions and also from the acquisition of Law.com.

     Subscription revenues increased $0.6 million, or 2.3%, from $23.2 million for the year ended December 31, 2001 to $23.8 million for the year ended December 31, 2002. An increase of $0.7 million resulted from the acquisition of Law.com. This increase was partially offset by a decrease of $0.1 million in the remaining publications.

     Revenues from ancillary products and services decreased $5.0 million, or 13.2%, from $37.4 million for the year ended December 31, 2001 to $32.4 million for the year ended December 31, 2002. The decline in revenues from ancillary products and services resulted primarily from a decline of trade show and seminar revenues of $2.0 million, or 27.6%, due to lower attendance in 2002 shows and seminars, fewer show sponsorships and the reduction in the total number of shows in 2002, lower commercial printing revenues in 2002 of $1.4 million due to the sale of our Florida printing operations in the third quarter of 2001, a decline of $1.7 million in royalty fees and the elimination of editorial content fees due to the acquisition of Law.com and fewer book and newsletter sales. These decreases were partially offset by increases in other royalties from our licensing and research division and in phone and web search revenue.

     Operating expenses. Total operating expenses declined $5.3 million, or 3.5%, from $151.7 million for the year ended December 31, 2001 to $146.4 million for the year ended December 31, 2002. The majority of our expense categories experienced year-over-year reductions due to our continued cost containment efforts. However, marketing expense related to circulation increased due to the acquisition of Law.com and also due to our marketing efforts to maintain our subscription base. During the fourth quarter of 2002, we completed our annual impairment review under the new accounting rules for goodwill and other intangible assets effective January 1, 2002. As a result of our review, we recorded an impairment for goodwill and our trademark intangible, all of which was generated from our acquisition of Law.com. The impairment totaled $19.5 million and is reflected as a component of operating expenses in our Consolidated Statement of Operations for 2002. Lower operating expenses during the year ended December 31, 2002 as compared to the year ended December 31, 2001 were primarily realized in editorial, production and distribution, selling, and general and administrative expenses resulting from decreased revenues, continued cost containment efforts, lower year-over-year restructuring costs, cumulative savings from our restructuring efforts and the discontinuation of goodwill amortization. These decreases were partially offset by increases in operating expenses due to the acquisition of Law.com.

     Editorial expenses decreased $1.6 million, or 6.9%, from $23.0 million for the year ended December 31, 2001 to $21.4 million for the year ended December 31, 2002. The decrease in editorial expenses resulted primarily from restructuring in 2001 and 2002, continued cost containment efforts and expense reductions directly related to the decreased revenue from our licensing and research division. These decreases were partially offset by editorial expenses in 2002 at Law.com of $0.6 million with no like costs incurred in 2001. In addition, our expert witness and litigation services division’s editorial expenses experienced increases that were directly related to increases in related revenues.

     Production and distribution expenses decreased $3.5 million, or 11.4%, from $30.8 million for the year ended December 31, 2001 to $27.3 million for the year ended December 31, 2002. Lower production and distribution expenses resulted primarily from the sale of the Florida commercial printing operations during the third quarter of 2001. Other reductions included lower printing and paper expenses due to favorable pricing from renegotiated contracts, reduced volume directly related to the decline in revenues and other cost containment efforts. In addition, there were decreases in trade show and seminar production costs that were due to our cancellation of some trade shows and seminars in the fourth quarter of 2002. These decreases were partially offset by $0.8 million of production and distribution expenses at Law.com and also by an increase in our book inventory reserve for planned destruction of obsolete book inventory as we move toward a print on demand system.

     Selling expenses decreased $1.9 million, or 6.7%, from $28.4 million for the year ended December 31, 2001 to $26.5 million for the year ended December 31, 2002. The decrease in selling expenses is primarily attributable to lower expenses directly related to the

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decline in display and classified revenues and cost containment efforts for the year ended December 31, 2002. These declines primarily consisted of salaries and related benefits costs, the discontinuance of costs to place classified advertising on Law.com and other general marketing cost reductions. These declines were partially offset by increases in our international operations selling efforts, an increase in direct mail efforts and $1.7 million in Law.com selling expenses.

     General and administrative expenses decreased $4.4 million, or 11.1%, from $39.6 million for the year ended December 31, 2001 to $35.2 million for the year ended December 31, 2002. The decrease resulted primarily from a year-over-year decrease in restructuring charges, salaries and related payroll tax expenses due to a reduction in headcount along with a reduction in incentive compensation and other employee benefits. In addition, lower legal fees were incurred from less litigation and higher insurance refunds for legal fees previously incurred. These decreases were partially offset by increased provisions for uncollectible receivables, increased management consulting and other professional fees and increased banking and cash management fees. Also, during 2002, general and administrative costs for Law.com totaled $1.8 million with no like costs in 2001.

     Depreciation and amortization expenses decreased $13.4 million, or 44.8%, from $29.9 million for the year ended December 31, 2001 to $16.5 million for the year ended December 31, 2002. This decline primarily resulted from the elimination of amortization of goodwill in 2002 resulting from the implementation of SFAS No. 142, “Goodwill and Other Intangible Assets.” Depreciation expenses increased $0.8 million for 2002 compared to 2001. Higher depreciation expenses for 2002 resulted primarily from capital assets acquired due to the acquisition of Law.com in the second quarter of 2002.

     Operating loss. As a result of the above factors, our operating loss increased $7.6 million, from a $5.9 million loss for the year ended December 31, 2001 to a $13.5 million loss for the year ended December 31, 2002. In addition, EBITDA decreased $1.5 million, or 6.2%, from $24.0 million for the year ended December 31, 2001 to $22.5 million for the year ended December 31, 2002.

     The decline in EBITDA resulted primarily from lower advertising revenues, content licensing and royalty fees, lower printing revenues resulting from the sale of our Florida printing operations and revenue declines in our book, trade show and licensing and research divisions. These declines were partially offset by increases in sales of directories, phone and we research services and subscription revenues. Also offsetting the decline in EBITDA are lower expenses in virtually all categories in 2002 over 2001 due primarily to lower direct costs related to reductions in year-over-year revenue, continued cost containment efforts and the cumulative effect of the restructuring efforts in 2002 and 2001.

Year Ended December 31, 2001 Compared to Year Ended December 31, 2000

     For the year ended December 31, 2001, the financial results include the acquisitions of Nationwide in late December 2000 and Haslam Publications (“Haslam”) in January 2001, both since the date of acquisition.

     Overview. Total revenues decreased $8.7 million, or 5.6%, from $154.5 million for the year ended December 31, 2000 to $145.8 million for the year ended December 31, 2001. Total operating expenses decreased $6.5 million, or 4.1%, from $158.2 million for the year ended December 31, 2000 to $151.7 million for the year ended December 31, 2001. As a result, the operating loss widened $2.2 million from a loss of $3.7 million for the year ended December 31, 2000 to a loss of $5.9 million for the year ended December 31, 2001. EBITDA decreased $0.7 million, or 2.9%, from $24.7 million for the year ended December 31, 2000 to $24.0 million for the year ended December 31, 2001.

     Revenues. Total revenues decreased $8.7 million, or 5.6%, from $154.5 million for the year ended December 31, 2000 to $145.8 million for the year ended December 31, 2001. Advertising revenues decreased $3.0 million, or 3.4%, from $88.2 million for the year ended December 31, 2000 to $85.2 million for the year ended December 31, 2001. The decline in advertising revenues primarily resulted from a decrease in classified, legal notice and directory advertising. Classified advertising was the largest contributor to this decline with a decrease of $5.0 million, or 18.1%, which occurred across virtually all of our publications. This decline primarily resulted from the economic downturn experienced during 2001 as compared to the higher revenues realized during 2000. Legal notice and directory advertising also declined $0.5 million, or 2.3%, and $0.3 million, or 12.7%, respectively, for 2001 as compared to 2000. Partially offsetting these declines was strong growth in law firm advertising revenues, which grew $2.6 million, or 25.2%, from $10.2 million for the year ended December 31, 2000 to $12.8 million for the year ended December 31, 2001. Increased advertising pages and increased frequency in three publications contributed $1.5 million of the growth, with the balance of the growth coming from new publications started in 2001.

     Subscription revenues decreased $0.2 million, or 0.09%, from $23.4 million for the year ended December 31, 2000 to $23.2

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million for the year ended December 31, 2001. The decline in subscription revenues in 2001 resulted primarily from a slight decline in subscriptions for The National Law Journal prior to its refocus as a litigation-focused publication.

     Revenues from ancillary products and services decreased $5.4 million, or 12.8%, from $42.9 million for the year ended December 31, 2000 to $37.4 million for the year ended December 31, 2001. A decline in revenues from ancillary products and services resulted primarily from lower licensing and research revenues of $4.5 million recorded in 2001 as compared to 2000. This decrease was the result of the amendment to our agreement with Law.com to exclusively develop and supply legal content material. In addition, printing revenues declined $1.5 million due to the sale of our Florida printing operations in July 2001, custom publishing revenues declined $1.0 million resulting from the closing of that division and seminar revenue declined by $0.8 million due to a decline in attendance. These declines were partially offset by revenue growth of $1.3 million, or 95.5%, in phone and web research revenues, book revenues of $0.9 million, or 8.3%, and trade show revenues of $1.2 million, or 26.7%, for 2001 as compared to 2000.

     Operating expenses. Total operating expenses declined $6.5 million, or 4.1%, from $158.2 million for the year ended December 31, 2000 to $151.7 million for the year ended December 31, 2001. Lower operating expenses in 2001 were primarily realized in editorial, production and distribution, and selling expense categories. These decreases were partially offset by increased depreciation and amortization expenses along with higher general and administrative expenses. Included in general and administrative expenses for 2001 are pre-tax restructuring costs of $2.0 million, which relate to severance arrangements from a workforce reduction and the realignment of various divisions to capitalize on inherent synergies within our acquired businesses in 2000 and 2001. The decrease in operating expenses was partially offset by increased costs related to new publications and acquisitions made during 2000 and 2001. In addition, increased depreciation and amortization expenses resulted from additional goodwill, intangibles and capital assets recorded during 2000 and 2001. The acquisitions commenced in 2000 and 2001 are fully reflected in the results for the year ended December 31, 2001, while the results for the year ended December 31, 2000 only reflect a small portion of those expenses.

     Editorial expenses decreased $3.2 million, or 12.2%, from $26.2 million for the year ended December 31, 2000 to $23.0 million for the year ended December 31, 2001. The decrease in editorial expenses primarily resulted from reduced expenses of $2.6 million due to the sale of The Daily Deal and Corporate Control Alert (the “Business”), along with the discontinuation of the weekly newsletter division in 2000. In addition, lower editorial expenses were recorded as a result of the reduction in licensing revenues and our restructuring efforts during 2001. These declines were partially offset by increased expenses from new publications started in 2000 and 2001.

     Production and distribution expenses decreased $1.6 million, or 5.2%, from $32.4 million for the year ended December 31, 2000 to $30.8 million for the year ended December 31, 2000. Lower production and distribution expenses primarily resulted from a decline in commercial printing expenses of $1.0 million due to the sale of our Florida printing operations and from $0.6 million related to the discontinuation of the weekly newsletter division. Also contributing to this decline were lower costs resulting from the discontinuation of the custom publishing division and other cost containment efforts. These expenses were partially offset by higher costs from new publications started and acquisitions made during 2000 and 2001.

     Selling expenses decreased $3.9 million, or 12.0%, from $32.3 million for the year ended December 31, 2000 to $28.4 million for the year ended December 31, 2001. The decrease was primarily attributable to lower selling expenses of $1.4 million due to the sale of the Business along with the discontinuation of the weekly newsletter division in 2000, which primarily reduced display advertising, circulation and telemarketing expenses. In addition, lower selling expenses of $0.9 million were incurred which related to the decline in advertising revenues during 2001. Also contributing to this decline were lower expenses related to circulation, general marketing and telemarketing throughout our publications.

     General and administrative expenses increased $0.8 million, or 2.0%, from $38.8 million for the year ended December 31, 2000 to $39.6 million for the year ended December 31, 2001. The increase in general and administrative expenses for 2001 resulted primarily from a $2.0 million pre-tax restructuring charge, higher benefits costs and legal and other professional fees. Partially offsetting these increases were savings of $1.9 million due to the sale of the Business and the discontinuation of the weekly newsletter division in 2000 and from other savings which resulted from our cost containment efforts during 2001.

     Depreciation and amortization expenses increased $1.5 million, or 5.2%, from $28.4 million for the year ended December 31, 2000 to $29.9 million for the year ended December 31, 2001. Depreciation expenses increased $0.7 million for 2001 compared to 2000. In addition, amortization expenses on goodwill and intangible assets increased $0.8 million during this same period. Higher depreciation expenses for 2001 resulted from additional capital improvements on our leased properties and capital expenditures incurred in database development for our jury verdict and expert witness businesses, as well as enhancements to existing systems and equipment modernization. The increase in amortization expenses of goodwill and intangibles resulted from goodwill and intangible assets

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recognized as a result of the acquisitions of Nationwide in late 2000, Haslam in January 2001 and the full-year impact of the Moran Publishing Company, Inc. (“Moran”) acquisition in 2000.

     Operating loss. As a result of the above factors, the operating loss widened $2.2 million, from a $3.7 million loss for the year ended December 31, 2000 to a $5.9 million loss for the year ended December 31, 2001. In addition, EBITDA decreased $0.7 million, or 2.9%, from $24.7 million for the year ended December 31, 2000 to $24.0 million for the year ended December 31, 2001.

     The decline in EBITDA primarily resulted from lower advertising revenues, content licensing and royalty fees, lower printing revenues resulting from the sale of our Florida printing operations and revenue declines from the discontinuance of our custom publication division, partially offset by increased book, trade show and phone and web research revenue. Also offsetting the decline in EBITDA are lower editorial, production and selling expenses incurred 2001 over 2000, partially offset by a $2.0 million pre-tax restructuring charge recorded in 2001.

Operating Segments

     Operating segments represent components of our business that are evaluated regularly by key management in assessing performance and resource allocation. We have determined that our reportable segments consist of our regional newspapers (the “Regional Newspapers”), national businesses (the “National Businesses”) and our online business, Law.com (“Online”). We have also reflected unallocated costs related to our corporate and administrative functions as a separate unit (“Corporate”) so as to not distort our other segments.

     For the years presented herein, the Regional Newspapers are comprised of the following operating segments: New York Law Journal; The National Law Journal; and twelve other daily and weekly newspapers.

     The National Businesses are comprised of the following operating segments: our magazine group which includes The American Lawyer and eight other magazines; our newsletters, our hard and soft cover books; our trade shows and seminars; our licensing and research business; our litigation services division and our international operations.

     Online is administered by Law.com and consists primarily of web content, seminars and practice areas.

     Corporate is comprised of unallocated costs relating to our administrative offices, which include executive management, legal, human resources, accounting, information systems, business development, office services, government affairs and public relations. In addition, Corporate includes ALM and ALM Properties, Inc., one of our subsidiaries.

Regional Newspapers

     For the Year Ended December 31, 2002 Compared to the Year Ended December 31, 2001

     Revenues. Revenues for our Regional Newspapers decreased $8.2 million, or 8.6%, from $95.2 million for the year ended December 31, 2001 to $87.0 million for the year ended December 31, 2002. Advertising revenues in our Regional Newspapers decreased $7.0 million, or 10.8%, from $65.1 million for the year ended December 31, 2001 to $58.1 million for the year ended December 31, 2002. Revenue declines for the year ended December 31, 2002 compared to the year ended December 31, 2001 reflect the impact of the continued economic slowdown within the advertising industry, which has resulted in reduced advertising revenues primarily within the classified and display advertising categories. In addition, due to the sale of our Florida printing operations during the third quarter of 2001, no commercial printing revenue was recorded in 2002 as compared to $1.4 million in 2001. These decreases were partially offset by an increase in our Pennsylvania newspapers’ royalty revenue due to a more favorable contract which began in late 2001.

     Operating expenses. Total operating expenses for our Regional Newspapers declined $7.4 million, or 10.8%, from $68.7 million for the year ended December 31, 2001 to $61.3 million for the year ended December 31, 2002. The majority of our expense categories experienced year-over-year reductions due to reductions in cost of goods sold directly related to revenue declines, our continued cost containment efforts and our restructuring efforts in 2001 and 2002. Partially offsetting these declines were an increase in circulation costs as we continue to focus on maintaining and growing our subscription base.

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     Operating profit. The operating profit for our Regional Newspapers decreased $0.8 million from $26.5 million for the year ended December 31, 2001 to $25.7 million for the year ended December 31, 2002. EBITDA decreased $1.0 million, or 3.6%, from $27.5 million for the year ended December 31, 2001 to $26.5 million for the year ended December 31, 2002.

For the Year Ended December 31, 2001 Compared to the Year Ended December 31, 2000

     Revenues. Revenues for our Regional Newspapers decreased $9.0 million, or 8.6%, from $104.2 million for the year ended December 31, 2000 to $95.2 million for the year ended December 31, 2001. Advertising revenues for our Regional Newspapers decreased $7.1 million, or 9.9%, from $72.2 million for the year ended December 31, 2000 to $65.1 million for the year ended December 31, 2001. These declines for the year ended December 31, 2001 compared to the year ended December 31, 2000 resulted from economic downturn experienced during 2001 as compared to record revenues realized during 2000 within the classified and display advertising revenue categories. In addition, due to the sale of our Florida printing operations in July of 2001, no subsequent commercial printing revenue was recorded.

     Operating expenses. Total operating expenses for our Regional Newspapers declined $4.4 million, or 6.0%, from $73.1 million for the year ended December 31, 2000 to $68.7 million for the year ended December 31, 2001. The majority of our expense categories experienced year-over-year reductions due to reductions in cost of goods sold and selling expenses directly related to the revenue declines, cost containment efforts and restructuring efforts in 2001. Partially offsetting these declines was an increase in circulation costs as we continue to focus on maintaining and growing our subscription base.

     Operating profit. The operating profit for our Regional Newspapers decreased $4.6 million from $31.1 million for the year ended December 31, 2000 to $26.5 million for the year ended December 31, 2001. EBITDA decreased $4.7 million, or 14.6%, from $32.2 million for the year ended December 31, 2000 to $27.5 million for the year ended December 31, 2001.

National Businesses

For the Year Ended December 31, 2002 Compared to the Year Ended December 31, 2001

     Revenues. Revenues for our National Businesses decreased $7.6 million, or 15.1%, from $50.6 million for the year ended December 31, 2001 to $43.0 million for the year ended December 31, 2002. Advertising revenues for our National Businesses decreased $3.4 million, or 16.7%, from $20.2 million for the year ended December 31, 2001 to $16.8 million for the year ended December 31, 2002. Revenue declines for the year ended December 31, 2002 compared to the year ended December 31, 2001 reflect the impact of the continued economic slowdown within the advertising industry that has resulted in reduced advertising revenues primarily within the display advertising category. In addition, seminar and trade show revenue decreased $2.5 million primarily due to declines in sponsorship and attendance revenues from seminars and trade shows. Other revenue declined due to a reduction of $1.7 million in royalty fees and the elimination of editorial content fees due to the acquisition of Law.com.

     Operating expenses. Total operating expenses for our National Businesses declined $6.3 million, or 14.5%, from $43.6 million for the year ended December 31, 2001 to $37.3 million for the year ended December 31, 2002. The majority of our expense categories experienced year-over-year reductions due to reductions in cost of goods sold directly related to the revenue declines, our continued cost containment efforts and our restructuring efforts in 2001 and 2002. Partially offsetting these declines was an increase in circulation costs as we continue to focus on maintaining and growing our subscription base.

     Operating profit. The operating profit for our National Businesses decreased $1.4 million from $7.0 million for the year ended December 31, 2001 to $5.6 million for the year ended December 31, 2002. EBITDA decreased $1.5 million, or 21.0%, from $7.2 million for the year ended December 1, 2001 to $5.7 million for the year ended December 31, 2002.

For the Year Ended December 31, 2001 Compared to the Year Ended December 31, 2000

     Revenues. Revenues for our National Businesses increased $0.3 million from $50.3 million for the year ended December 31, 2000 to $50.6 million for the year ended December 31, 2001. Advertising revenues for our National Businesses increased $4.1 million, or 25.6%, from $16.0 million for the year ended December 31, 2000 to $20.2 million for the year ended December 31, 2001. This increase is due primarily to growth in the law firm and display advertising categories. Phone and web research revenue also increased due to our acquisition of two jury verdict and settlement businesses in May 2000 and January 2001, respectively. These increases were partially offset by lower licensing and research revenues of $4.0 million due to an amendment to our agreement with Law.com to exclusively develop and supply legal content.

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     Operating expenses. Total operating expenses for our National Businesses declined $2.6 million, or 5.6%, from $46.2 million for the year ended December 31, 2000 to $43.6 million for the year ended December 31, 2001. This decrease was due primarily to a reduction of $4.2 million in operating expenses due to the sale of the Business in March 2000, a decrease of $1.5 million due to our agreement with Law.com to exclusively develop and supply legal content, the discontinuation of our custom publications business and a reduction of seminar production costs due to a decrease in the number of seminars produced. These decreases were partially offset by an increase in operating expenses due to our acquisition of two jury verdict and settlement businesses and the expansion of our international operations.

     Operating profit. The operating profit for our National Businesses increased $2.9 million from $4.1 million for the year ended December 31, 2000 to $7.0 million for the year ended December 31, 2001. EBITDA increased $2.9 million, or 64.9%, from $4.3 million for the year ended December 31, 2000 to $7.2 million for the year ended December 31, 2001.

Online

     Our online business consists primarily of Law.com. Effective May 1, 2002, we acquired Law.com, a provider of web content and seminars for the legal industry. The acquired businesses include practice centers for specialty law practice areas, state Web sites and information sites for in-house counsel, law students and legal technology professionals. Total revenues for Online from May 1, 2002, the date of the Law.com acquisition, until December 31, 2002, totaled $3.0 million, or 2.2%, of our revenues. Operating expenses for Online totaled $25.6 million from May 1, 2002 until December 31, 2002. During the fourth quarter of 2002, we completed our annual impairment review under the new accounting rules for goodwill and other intangible assets effective January 1, 2002. As a result of our review, we recorded an impairment for goodwill and our trademark intangible all of which was generated from our acquisition of Law.com. The impairment totaled $19.5 million and is reflected as a component of operating expenses in our Consolidated Statement of Operations for 2002. As a result, operating loss was $22.6 million from the date of acquisition.

Liquidity and Capital Resources

     Capital expenditures. Capital expenditures totaled $3.0 million for the year ended December 31, 2002. Database and website development, computer system enhancements and implementation costs and hardware upgrades totaled $2.1 million, with the balance used primarily for leasehold improvements on our owned building in Georgia along with leasehold improvements on our new Washington, D.C. leased space. During 2002, we continued to focus our capital spending on the development of our litigation services database, strengthening our systems infrastructure and the modernization of our disaster recovery plan.

     Net cash used in operating activities. Net cash used in operating activities was $2.0 million for the year ended December 31, 2002, which primarily reflects a net loss of $25.8 million, a decrease in deferred tax benefit of $13.8 million, a decrease in accounts payable of $3.2 million, a decrease in accrued expense payable of $3.3 million, a decrease in other liabilities of $1.8 million and a decrease in deferred income of $1.1 million. This was partially offset by a one-time goodwill and intangible impairment charge of $19.5 million, depreciation and amortization of $16.5 million, accretion of interest on the Senior Discount Notes of $6.8 million, non-cash interest of $1.1 million, a decrease of accounts receivable of $1.0 million and an increase in inventory reserve of $0.9 million.

     Net cash used in investing activities. Net cash used in investing activities was $3.3 million for the year ended December 31, 2002, primarily resulting from capital expenditures of $3.0 million and deferred payments from our 2001 and 2000 acquisitions.

     Net cash provided by financing activities. Net cash provided by financing activities totaled $3.8 million for the year ended December 31, 2002, which reflects a net drawdown of $5.3 million under the GECC Facility and deferred financing cost payments of $1.5 million.

     Working capital. We traditionally have favorable cash flow characteristics resulting from our high level of advance payments by subscribers, low working capital investment, low capital expenditure needs, predictable cost structure and high margins. Because cash receipts associated with subscriptions are received toward the beginning of a subscription cycle, our business requires minimal investment in working capital.

     During 2002, we incurred losses from pre-tax restructuring charges of $1.5 million, incurred acquisition costs of $1.9 million related to the acquisition of Law.com, refinanced our line of credit with GE Corporate Finance at a cost of $1.5 million and recorded declines in deferred income. In addition, we made an additional capital investment in our systems and facilities of $3.0 million. These factors combined to produce a reduced cash flow for 2002.

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     Liquidity. Our principal sources of funds are anticipated to be cash flows from operating activities, which may be supplemented by borrowings under the GECC Facility. The GECC Facility had $32.3 million outstanding as of December 31, 2002 and accrues interest as described in Note 14 to the Consolidated Financial Statements. For details relating to the terms of our GECC Facility entered into on May 1, 2002, see Note 14 to the Consolidated Financial Statements. We believe that these funds will be sufficient to meet our current financial obligations, including the payment of interest on the $175,000,000 of 9 3/4% Senior Notes due 2007 and on the outstanding balance under our GECC Facility, working capital, capital expenditures and other obligations for the next 12 months. No assurance can be given, however, that this will be the case. Our future operating performance and ability to service or refinance our debt, meet future debt covenants, and to repay, extend or refinance any credit agreements to which we are a party will be subject to future economic conditions and to financial, business and other factors, many of which are beyond our control.

Reconciliations of GAAP to Non-GAAP Financial Measures

     Reconciliations of GAAP to non-GAAP financial measures are provided below. We believe that the use of non-GAAP financial measures enables us and investors to evaluate, and compare from period to period our results from ongoing operations in a more meaningful and consistent manner.

Material Financings

     We have borrowed funds to finance our operations through the transactions described below.

     Revolving Credit Facility. On March 25, 1998, we entered into a $40 million, five-year senior secured revolving credit facility (the “Revolving Credit Facility”) with a group of banks to be available for working capital and general corporate purposes, including acquisitions and capital expenditures. Effective May 1, 2002, the outstanding balance under the Revolving Credit Facility was repaid and the Revolving Credit Facility was terminated.

     On May 1, 2002, we, The New York Law Publishing Company (“NYLP”) and ALM entered into a credit agreement, dated as of May 1, 2002, with GE Corporate Finance (“GECC”) and the lenders signatory thereto in accordance with which GECC has provided our operating subsidiary, NYLP, with a $40 million revolving credit facility (the “GECC Facility”). The GECC Facility replaces our Revolving Credit Facility and proceeds from the GECC Facility were used to refinance existing indebtedness, provide working capital and finance capital expenditures. The obligations of NYLP under the GECC Facility are guaranteed by us, ALM and all of our domestic subsidiaries, and are secured by all of the personal property assets of us, ALM and our domestic subsidiaries (including the stock of all our domestic subsidiaries and 65% of the stock of our first-tier foreign subsidiaries). The GECC Facility bears interest at a fluctuating rate determined by reference to (i) the index rate plus a margin of 2.00%, or (ii) the Eurodollar Rate (“LIBOR”) plus a margin of 3.5%. We are also required to pay customary fees with respect to the GECC Facility, including an up-front arrangement fee, monthly administrative agency fees and commitment fees on the unused portion of the GECC Facility. The GECC Facility includes both affirmative and negative covenants that include meeting certain financial ratios. The term of the GECC Facility is 60 months.

     On November 13, 2002, the GECC Facility was amended to clarify language in the GECC credit agreement, as well as to allow us to assume a lease by and between 1140 Associates, Inc. and Law.com. In addition, on February 27, 2003, the GECC Facility was amended to modify the covenants relating to the total leverage ratio, interest coverage ratio and fixed charge ratio until December 2004. These covenants now provide alternative compliance levels and associated incremental interest rates. In addition, the GECC

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facility was amended to allow for the Senior Discount Note transaction described in Recent Developments above. See – Recent Developments.

     At December 31, 2002, the amount outstanding under the GECC Facility was $32.3 million. The available balance under the unused commitment is reduced by any letters of credit outstanding, which totaled $6.6 million at December 31, 2002. A 10% increase in the average interest rate of borrowing under the Revolving Credit Facility and GECC Facility during the year ended December 31, 2002 would have increased our net loss to approximately $25.9 million.

     Senior Notes Financing. In December 1997, ALM issued $175,000,000 aggregate principal amount of 9¾ % Senior Notes due 2007 (the “Notes”). The Notes are unsecured general obligations and are fully and unconditionally guaranteed on a joint and several and senior unsecured basis, by ALM and each of its existing and future subsidiaries. The subsidiary guarantors comprise all of ALM’s direct and indirect subsidiaries and each of the subsidiary guarantors is a wholly-owned subsidiary of ALM. Separate financial statements of, and other disclosures concerning the subsidiary guarantors are not included herein because of the subsidiary guarantors’ full and unconditional guarantee of the Notes and management has determined that separate financial statements and other disclosures concerning the subsidiary guarantors are not material and would not provide any additional meaningful disclosure. There are currently no contractual or regulatory restrictions limiting the ability of the subsidiary guarantors to make distributions to ALM. The Notes may be redeemed at any time by us, in whole or in part, at various redemption prices that include accrued and unpaid interest. The Notes contain certain covenants that, among other things, limit the incurrence of additional indebtedness by ALM and our subsidiaries, the payment of dividends and other restricted payments by ALM and its subsidiaries, asset sales, transactions with affiliates, the incurrence of liens, and mergers and consolidations. Assuming there is no redemption of the Notes prior to maturity, the entire principal will be payable on December 15, 2007.

     Senior Discount Notes Financing. In December 1997, we issued $63,275,000 aggregate principal amount at maturity of 12¼% Senior Discount Notes dues 2008 (the “Discount Notes”), at a discount rate of $553.14 per Discount Note. The Discount Notes accrete interest compounded semi-annually at a rate of 12.25% to an aggregate principal amount of $63,275,000 by December 2002. Commencing in June 2003, cash interest will be payable semi-annually until maturity each June 15 and December 15. The Discount Notes are senior, unsecured obligations. The Discount Notes may be redeemed at any time by us, in whole or in part, at various redemption prices that include accrued and unpaid interest as well as any existing liquidating damages. The Discount Notes contain certain covenants that, among other things, limit the incurrence of additional indebtedness, by us and our subsidiaries, the payment of dividends and other restricted payments by us and our subsidiaries, restrictions on distributions from certain restricted subsidiaries, asset sales, transactions with affiliates, incurrence of liens and mergers and consolidations. Assuming that there is no redemption of the Discount Notes prior to maturity, the entire principal will be payable on December 15, 2008. On February 27, 2003, we received a waiver and consent from the holders of the 12¼% Senior Discount Notes. See Recent Developments for subsequent information related to the Senior Discount Notes.

Contractual Obligations

     Contractual obligations as of December 31, 2002 were as follows (in thousands):

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

     We and ALM have entered into the GECC Facility. Each revolving loan within the GECC Facility bears interest on the outstanding principal amount from the borrowing date until it becomes due at a rate per annum equal to the “Base Rate” or the Eurodollar rate plus the “Applicable Margin”. The Applicable Margin varies depending on our total leverage ratio. As of March 28, 2003, the Applicable Margin was 3.25% for Base Rate loans and 4.75% for Eurodollar rate loans. The Base Rate is the higher of the Bank of America publicly announced “Reference Rate” or the Federal Funds rate plus 0.5%. The amount outstanding under the GECC

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Facility was $32.3 million at December 31, 2002. The blended interest rate at December 31, 2002 was 5.1%. A 10% increase in the average rate during 2002 would have increased our net loss to approximately $22.4 million.

Item 8. Financial Statements and Supplementary Data

     See Index to Financial Statements and Exhibits, which appears on Page F-1 hereof.

Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure

     None.

PART III

Item 10. Directors, Executive Officers and Key Employees of the Registrant

     The following table sets forth certain information regarding each of the executive officers and directors of us and ALM as of March 28, 2003.

     On July 24, 2002, James A. Finkelstein resigned as a director of us and of ALM.

     Each Director is elected annually and serves until the next annual meeting of stockholders or until his or her successor is duly elected and qualified. The Independent Directors are each compensated $20,000 per year for their service as Directors and receive reimbursement of expenses incurred from their attendance at Board of Directors meetings.

     The Board has established an executive committee (the “Executive Committee”) consisting of three members, currently Bruce Wasserstein, George Majoros and Anup Bagaria. The Executive Committee has been delegated the authority to approve (i) the acquisition and divestiture by us or our affiliates of all or a portion of one or more business entities for a price of up to $25 million, (ii) the appointment of our senior officers and the senior officers of our affiliates and termination of such employment, (iii) the preparation and approval of short-term and long-term budgets and (iv) other material policy-level decisions to the extent permitted by the Delaware General Corporation Law.

Executive Officers, Directors and Key Employees of the Company and ALM

     Bruce Wasserstein has served as Chairman of the Board of Directors of us and ALM since both our and its founding in December 1997. He is Head of Lazard LLC, and Chairman of Wasserstein & Co., LP, the private merchant bank that controls Holdings. Previously, he was Executive Chairman of Dresdner Kleinwort Wasserstein and Chairman and founder of Wasserstein Perella Group, Inc. (“WPG”). Mr. Wasserstein is also on the boards of numerous private companies.

     William L. Pollak has served as President, Chief Executive Officer and Director of us and ALM since March 1998. Prior to joining us, Mr. Pollak spent 16 years at The New York Times, where he held a variety of positions, most recently as Executive Vice President,

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Circulation.

     Anup Bagaria has served as a Vice President and Director of us and ALM since both our and its founding in December 1997. He is a Managing Director of Wasserstein & Co., LP. He graduated from the Massachusetts Institute of Technology. Mr. Bagaria also serves on the board of various private companies.

     Michael J. Biondi has served as a Director of us and ALM since both our and its founding in December 1997. He is Chairman and Co-Chief Executive Officer of Dresdner Kleinwort Wasserstein, North and South America. Previously, Mr. Biondi was Chairman and Chief Executive Officer of Wasserstein Perella & Co., Inc. Mr. Biondi holds M.B.A. and J.D. degrees from the Wharton School and the University of Pennsylvania Law School, respectively. Prior to joining Wasserstein Perella & Co., Mr. Biondi was a member of the First Boston Mergers & Acquisitions Group, and practiced law at Skadden, Arps, Slate, Meagher & Flom LLP.

     Robert C. Clark has served as a Director of us and ALM since our and its founding in December 1997. He has been Dean of the Harvard Law School since 1989 and is the Royall Professor of Law at Harvard Law School. Mr. Clark is a trustee of Teachers Insurance Annuity Association (TIAA). He is currently a Director of Collins & Aikman Corp and Omnicom Group Inc.

     Donald G. Drapkin has served as a Director of us and ALM since our and its founding in December 1997. He has been a Director and Vice Chairman of MacAndrews & Forbes Holdings Inc. and various of its affiliates since 1987. Prior to joining MacAndrews & Forbes, Mr. Drapkin was a partner in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP for more than five years. Mr. Drapkin also is a Director of the following corporations which file reports pursuant to the Securities Exchange Act of 1934: Anthracite Capital, Inc., BlackRock Asset Investors, The Molson Companies Limited, Panavision, Inc., Playboy.com. Inc., Playboy Enterprises, Inc., Revlon Consumer Products Corporation, Revlon, Inc., Siga Technologies, Inc. and The Warnaco Group, Inc.

     George L. Majoros, Jr. has served as a Director of us and ALM since June 5, 2000. He has been President and Chief Operating Officer of Wasserstein & Co., LP since its inception in January 2001. Prior thereto, he was a Managing Director of Wasserstein Perella & Co., Inc. and the Chief Operating Officer of its Merchant Banking Group. He joined Wasserstein Perella & Co., Inc. in early 1993 after practicing law with Jones Day Reavis & Pogue since September 1986. Mr. Majoros also serves on the board of directors of American Seafoods Group and numerous private companies.

     Andrew G. T. Moore, II has served as a Director of us and ALM since our and its founding in December 1997. He is a senior advisor to Dresdner Kleinwort Wasserstein and previously was a senior managing director of the firm. Justice Moore is also a former Justice of the Delaware Supreme Court. Justice Moore served on the Delaware Supreme Court for 12 years until 1994, when he joined Wasserstein Perella & Co. Justice Moore has served as the Lehmann Distinguished Visiting Professor of Law at Washington University in St. Louis. He has also served as an adjunct professor of law at the Georgetown University Law Center, University of Iowa College of Law and Widener University School of Law, where he taught seminars in advanced corporation law. He also teaches comparative principles of international corporation law at the Tulane University Institute of European Legal Studies in Paris, and has been a guest lecturer at various law schools and national corporate law programs in the United States, Canada and Europe.

     Jack Berkowitz has served as Senior Vice President of us and ALM since August 2002 and Vice President, Strategic Planning of us and ALM since January 1999. Prior to joining us, Mr. Berkowitz served as a consultant to us during 1998. Mr. Berkowitz is a 26-year veteran of the publishing industry. As a consultant, in addition to us, his client roster has included Cowles Business Media, Hearst Magazines, Time Inc., The Rockefeller Associates, Associated Newspapers and Adweek. Mr. Berkowitz had previously served as Executive Vice President of the Village Voice, President and Publisher of NewsInc. and President of The Nation.

     Sara Diamond has served as Vice President, Book and Directory Publishing of us and ALM since September 2000. Prior to that she was Publisher of Law Journal Press, our book division, which she joined in 1992. Prior to joining us, Ms. Diamond served in a variety of positions at Matthew Bender & Company.

     Allison C. Hoffman has served as Vice President, General Counsel and Secretary of us and ALM since August 2001. Prior to that she was Assistant General Counsel of us and ALM since June 1999. Prior to joining us, Ms. Hoffman was an associate in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP.

     Stephen C. Jacobs has served as Vice President, Chief Financial Officer of us and ALM since August 2001. Prior to that he was Vice President, General Counsel and Secretary of us and ALM since May 1998. Prior to joining us, Mr. Jacobs was Assistant General Counsel, Global Transactions for American International Group, Inc.

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     Eric F. Lundberg has served as Vice President of Finance of us and ALM since August 2001. Prior to that he was the Publisher of Texas Lawyer, and prior to that held a number of financial positions with us and our predecessor, most recently as Corporate Controller and Director of Financial Planning since November 1995.

     Iain Murray has served as Vice President, Information Systems of us and ALM since January 1, 2003. Prior to that he was Chief Technology Officer since January 3, 2000. Prior to joining us, Mr. Murray held a number of technology positions at Conde Nast Publications.

     Kevin Vermeulen has served as Vice President, Group Publisher of us and ALM since May 1999, and served as Vice President, National Advertising from 1998 - 1999. Prior to that he was a Vice President of Sales for National Law Publishing Company, Inc., one of our predecessors, which he joined in October 1992.

Item 11. Executive Compensation

     The following Summary Compensation Table includes individual compensation information for the Chief Executive Officer and certain other executive officers of us and ALM for the year ended December 31, 2002 (collectively, the “Named Executive Officers”) for services rendered in all capacities to us and ALM during the year ended December 31, 2002. All numbers relating to option grants relate to options to purchase our shares.

Summary Compensation Table