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<p align="center"><font size="3"><strong>UNITED STATES</br>
SECURITIES AND EXCHANGE COMMISSION</br>
Washington, D.C. 20549</strong></font></p>


<HR align=center SIZE=2 width="25%">
<br>
<p align="center"><font size="5"><strong>FORM 10-Q</strong></center></font></p>
<HR align=center SIZE=2 width="25%">

<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<i>(Mark One)</i>


<p align="center"><font size="3"><strong>
   [X]       QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
             SECURITIES EXCHANGE ACT OF 1934
</strong></font></p>
<p align="center"><font size="4" color="FF0000"><strong>
        for the period ended March 25, 2000
</strong></font></p>

<p align="center"><font size="3"><strong> OR </strong></font></p>

<p align="center"><font size="3"><strong>
[&nbsp;&nbsp;]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934
</strong></font></p>
<p align="center"><font size="3"><strong>
 For the transition period from ________to _________
</strong></font></p>
<p align="center"><font size="3"><strong>
                       <u>Commission file number 0-24617</u>
</strong></font></p>
<p align="center"><font size="6" color="#0000FF"><strong>
                         <u>IDG BOOKS WORLDWIDE, INC.</u>
</strong></font></br>
<font size="2">
               (Exact name of Registrant as specified in its Charter)
</font></p>

<P>&nbsp;
<TABLE COLS=2 WIDTH="100%" >
<TR>
<TD>
<font size="3"><strong>
<CENTER><u>Delaware</u></CENTER>
</font></strong>
</TD>
<TD>
<font size="3"><strong>
<CENTER><u>04-3078409</u></CENTER>
</font></strong>
</TD>
</TR>
<TR>
<TD>
<font size="2">
<CENTER>&nbsp; (State or Other Jurisdiction of Incorporation or Organization)&nbsp;</CENTER>
</font>
</TD>
<TD>
<font size="2">
<CENTER>(I.R.S. Employer Identification Number)</CENTER>
</font>
</TD>
</TR>
</TABLE>
<BR>



<p align="center"><font size="3"><strong>
                            919 East Hillsdale Blvd.<br>
                       <u>Suite 400, Foster City, CA  &nbsp;&nbsp;94404
</strong></font></u><br>

<font size="2">
        (Address of Principal Executive Offices including Zip Code)
</font></p>

<p align="center"><font size="3"><strong><u>
                                 (650) 653-7000
</strong></font></u><br>

<font size="2">
                 (Registrant's Telephone Number, Including Area Code)
<br>
<br>
<br>
(Former name, former address and former fiscal year if changed
 since last report)

</font></p>




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<p>&nbsp;&nbsp;&nbsp;
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 reports), and (2) has been subject to such filing
requirements for the past 90 days. &nbsp; YES [&nbsp;&nbsp;] &nbsp;&nbsp; NO [X] </p>

The number of shares outstanding of the issuer's Common Stock as of April 30,
2000 was 14,720,944.

This quarterly report on Form 10-Q contains a total of 17 pages, of which this
page is page 1.




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</strong></p>
<p align="center"><strong>

                   IDG BOOKS WORLDWIDE, INC. AND SUBSIDIARIES<br>
                                    FORM 10-Q<br>
                                     INDEX
</strong></p>
<p align="center"><strong>
PART I. Financial Information
</strong></p>

<p>  Item 1. Financial statements

<BLOCKQUOTE>
<p><A HREF="#bs"> Condensed Consolidated Balance Sheets as of
            March 31, 2000 (Unaudited) and September 30, 1999</A>


<p><A HREF="#ops">
           Condensed Consolidated Statements of Income for the three and six months ended
             March 31, 2000 and March 31, 1999 (Unaudited)</A>



<p><A HREF="#flows">
          Condensed Consolidated Statements of Cash Flows for the
            six months ended March 31, 2000 and March 31, 1999 (Unaudited)</A>




<p><A HREF="#notes">
         Notes to Condensed Consolidated Financial
         Statements</A>

</BLOCKQUOTE>

<p><A HREF="#mda">
<p>Item 2.   Management's Discussion and Analysis of Financial Condition and Results of
          Operations</A>



<p align="center"><strong>
PART II. Other Information
</strong></p>



<p>Item 6:  Exhibits and Reports on Form 8-K

<p align="left"><strong>
<A HREF="#sign">
Signatures</A>
</strong></p>
<br>
<br>
<br>
<br>
<br>
<br>
<br>
<br>
<br>
<br>

<p align="center"><strong>
PART I -- FINANCIAL INFORMATION
</strong></p>
<p>Item 1.  Financial Statements

<br>
<br>
<br>
<HR WIDTH="85%">
<br>
<br>
<br>
<A NAME="bs"></A>
<p align="center"></font><strong>
             IDG BOOKS WORLDWIDE, INC. AND SUBSIDIARIES<br>
                      CONDENSED CONSOLIDATED BALANCE SHEETS<br>
                     (in thousands, except share amounts)
</strong>

<pre>

                           ASSETS
                                                    March 31,     September 30,
                                                         2000          1999
                                                    ------------- -------------
Current Assets:                                       (unaudited)
     Cash and equivalents...................              $2,439        $2,084
     Accounts receivable - net..............              62,507        46,294
     Inventory - net........................              25,859        31,024
     Other current assets...................               4,447         4,092
     Deferred tax assets....................              24,745        21,334
                                                    ------------- -------------
             Total current assets...........             119,997       104,828
Royalty advances - net......................              12,317        12,110
Property and equipment - net................               9,334         6,032
Intangible assets - net ....................              79,003        90,221
Other assets ...............................               2,945         3,280
                                                    ------------- -------------
             TOTAL..........................            $223,596      $216,471
                                                    ============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
     Accounts payable.......................              $8,556        $9,666
     Accrued liabilities....................              57,196        57,815
                                                    ------------- -------------
             Total current liabilities......              65,752        67,481

Long-term debt..............................              80,000        82,000
Deferred tax liability (note 1).............               4,919         4,950
                                                    ------------- -------------
             Total liabilities..............             150,671       154,431

Minority interest...........................                 119            95

Commitments and contingencies


Stockholders' Equity:
     Preferred stock, $.001 par value;
        authorized: 5,000,000 shares;
        issued and outstanding: 0 shares....                --            --
     Common stock, $.001 par value;
        authorized:  25,000,000 Class A
        shares and 400,000 Class B shares;
        issued and outstanding:
        FY 2000 - 14,620,944 Class A and
          100,000 Class B...................                  15
        FY 1999 - 14,278,825 Class A and
          200,000 Class B...................                                14
     Additional paid-in-capital.............              49,552        46,637
     Retained earnings......................              23,240        15,284
     Accumulated other comprehensive
      income (loss) ........................                  (1)           10
                                                    ------------- -------------
             Total stockholders' equity.....              72,806        61,945
                                                    ------------- -------------
             TOTAL..........................            $223,596      $216,471
                                                    ============= =============
</pre>

<p align="center"></font><strong>
          See notes to condensed consolidated financial statements
</strong>

<br>
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<br>
<br>
<br>
<A NAME="ops"></A>
<p align="center"></font><strong>
             IDG BOOKS WORLDWIDE, INC. AND SUBSIDIARIES<br>
                    CONDENSED CONSOLIDATED STATEMENTS OF INCOME<br>
                     (in thousands, except share amounts)
</strong>


<pre>

                                              THREE MONTHS ENDED    SIX MONTHS ENDED
                                                 MARCH 31,             MARCH 31,
                                            --------------------- ---------------------
                                                 2000       1999       2000       1999
                                            ---------- ---------- ---------- ----------
                                            (unaudited)(unaudited)

Revenue:
   Net sales ..............................   $62,022    $43,159   $115,795    $79,253
   Licensing revenues and other ...........     2,510      1,527      6,546      2,738
                                            ---------- ---------- ---------- ----------
      Net revenue .........................    64,532     44,686    122,341     81,991
                                            ---------- ---------- ---------- ----------
Operating costs and expenses:
   Cost of sales ..........................    35,181     21,873     68,601     40,170
   Selling, general and administrative ....    18,461     13,457     34,014     25,940
   Depreciation and amortization ..........     1,430      1,283      2,744      2,469
                                            ---------- ---------- ---------- ----------
      Total operating costs and expenses ..    55,072     36,613    105,359     68,579
                                            ---------- ---------- ---------- ----------
Operating income ..........................     9,460      8,073     16,982     13,412
   Interest income (expense) - net ........    (1,577)      (122)    (3,266)       (18)
                                            ---------- ---------- ---------- ----------
Income before provision for income taxes ..     7,883      7,951     13,716     13,394
   Provision for income taxes .............     3,311      3,400      5,761      5,663
                                            ---------- ---------- ---------- ----------
Net income ................................    $4,572     $4,551     $7,955     $7,731
                                            ========== ========== ========== ==========

Net income per share:
   Basic ..................................     $0.31      $0.32      $0.55      $0.54
                                            ========== ========== ========== ==========
   Diluted ................................     $0.31      $0.31      $0.54      $0.53
                                            ========== ========== ========== ==========
Shares used in per share calculations:
  Basic ...................................    14,675     14,397     14,593     14,350
                                            ========== ========== ========== ==========
  Diluted .................................    14,739     14,747     14,793     14,578
                                            ========== ========== ========== ==========

</pre>

<p align="center"></font><strong>
          See notes to condensed consolidated financial statements
</strong>

<br>
<br>
<br>
<HR WIDTH="85%">
<br>
<br>
<br>
<A NAME="flows"></A>
<p align="center"></font><strong>
             IDG BOOKS WORLDWIDE, INC. AND SUBSIDIARIES<br>
        UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS<br>
                           (in thousands)
</strong>

<pre>

                                                           SIX MONTHS ENDED
                                                              MARCH 31,
                                                    ----------------------------
                                                         2000           1999
                                                    -------------  -------------
Cash Flows from Operating Activities:
  Net Income ......................................       $7,955         $7,731
  Adjustments to reconcile net income to net cash
    provided (used) by operating activities:
      Depreciation and amortization ...............        2,743          2,469
      Deferred income taxes........................       (3,411)        (1,897)
      Changes in operating assets and liabilities
        (net of effects of dispositions):
        Accounts receivable .......................      (16,196)       (13,677)
        Inventory .................................        5,165          1,069
        Royalty advances ..........................       (2,290)          (567)
        Other current assets ......................         (219)         1,010
        Accounts payable ..........................       (1,110)        (1,308)
        Accrued liabilities .......................          274          8,519
                                                    -------------  -------------
           Net cash provided (used) by operating
            activities ............................       (7,089)         3,349
                                                    -------------  -------------
Cash Flows from Investing Activities:
  Capital expenditures ............................       (4,621)        (1,594)
  Divestitures ....................................       11,819           --
  Acquisitions ....................................         --          (17,118)
  Other investments ...............................          206         (1,896)
                                                    -------------  -------------
           Net cash provided (used) by investing
            activities ............................        7,404        (20,608)
                                                    -------------  -------------
Cash Flows from Financing Activities:
  Advances (payments) on the credit facility ......       (2,000)         2,375
  Proceeds from Exercises of stock options ........        2,040           --
  Payment of Cliffs Notes, Inc. line of credit ....         --             (342)
                                                    -------------  -------------
           Net cash provided by financing
            activities ............................           40          2,033
                                                    -------------  -------------
Net increase (decrease) in cash and equivalents ...          355        (15,226)
Cash and equivalents, Beginning of Period .........        2,084         15,466
                                                    -------------  -------------
Cash and equivalents, End of Period ...............       $2,439           $240
                                                    =============  =============

Noncash Investing Activity:
  Acquisitions (Note 3):
    Tangible assets ...............................      $  --           $5,217
    Intangible assets .............................         --           16,149
    Less: cash paid ...............................         --          (17,118)
                                                    -------------  -------------
    Liabilities assumed ...........................      $  --           $4,248
                                                    =============  =============

Noncash Financing Activity:
  Issuance of Class A common stock under the
   ESOP plan ......................................         $566         $1,513
                                                    =============  =============
   Payroll withheld to fund ESPP purchase .........         $309           $743
                                                    =============  =============

</pre>

<p align="center"></font><strong>
          See notes to condensed consolidated financial statements
</strong>


<br>
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<HR WIDTH="85%">
<br>
<br>
<br>
<A NAME="notes"></A>
<p align="center"></font><strong>
                   IDG BOOKS WORLDWIDE, INC. AND SUBSIDIARIES<br>
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS<br>

Three and Six Months Ended March 31, 2000 and 1999 and as of March 31, 2000 and
September 30, 1999
</strong>


<p><strong>1. Basis of  Presentation </strong></p>


<p>The accompanying interim consolidated financial statements for the three and six
months ended March 31, 2000 and 1999, and as of March 31, 2000 are
unaudited, but have been prepared in accordance with generally accepted
accounting principles for interim consolidated financial statements.
Certain information or footnote disclosure normally included in the
financial statements prepared in accordance with generally accepted
accounting principles has been condensed or omitted in accordance with
guidance 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 the operations for the full year.  These consolidated
financial statements should be read in conjunction with the audited,
consolidated financial statements as of and for the year ended September
30, 1999, and the related notes thereto, included in the Company's Form
10-K filed with the SEC.

<p><i>Organization and Description of Business</i> -- IDG Books Worldwide, Inc. (the
"Company"), a Massachusetts company, was founded in 1990 as a wholly-owned
subsidiary (through intermediate companies) of International Data Group,
Inc. (the "Parent"). On March 24, 1998, the Company was reincorporated in
Delaware. On July 31, 1998, the Company consummated its initial public
offering (the "Offering") of 3,180,000 shares of Class A common stock at
an offering price of $15.50 per share pursuant to a Registration Statement
declared effective by the SEC on July 27, 1998. After deducting expenses,
the net proceeds to the Company from the Offering were $44,032,000. The
Company used $38,400,000 of the net proceeds of the Offering to repay
indebtedness owed to the Parent.

<p>The Company is a leading global knowledge company featuring a diverse
portfolio of technology, consumer, and general how-to book brands,
computer-based learning tools, Web sites and Internet e-services. The
Company publishes and markets under well-known brand names, including <i>For
Dummies&reg;, 3-D Visual&reg;, Bible, CliffsNotes&trade;, Frommer's&reg; travel guides, Betty Crocker's&reg;,
Weight Watchers&reg;</i> and <i>Webster's New World&trade;</i>.

<p><i>Principles of Consolidation</i> -- The consolidated financial statements
include the accounts of IDG Books Worldwide, Inc. and its majority
controlled subsidiaries (collectively referred to as the Company). All
significant intercompany accounts and transactions have been eliminated.

<p><i>Reclassifications</i> -- Certain amounts in prior years' financial statements
and related notes have been reclassified to conform to the fiscal year
2000 presentation. The accompanying consolidated balance sheet as of March
31, 2000 reports a deferred tax liability of $5.0 million with a
corresponding addition to goodwill to reflect the book/tax difference
related to the carrying value of Cliff's Notes intangible assets. The
accompanying consolidated balance sheet as of September 30, 1999 has been
reclassified to conform to this presentation.

<p><strong>2. Significant Accounting Policies</strong></p>

<p><i>Fiscal Year</i> -- The Company's fiscal year ends on the last Saturday of each
September. Fiscal year 1999, ended on September 25, 1999, and consisted of
52 weeks. For convenience, fiscal year-ends are denoted in the
accompanying consolidated financial statements as September 30. Similarly,
the thirteen- and twenty-six-week periods ended March 25, 2000 and March
27, 1999 are referred to as the three and six months ended March 31, 2000
and 1999, respectively.

<p><i>Intangible Assets</i> -- Intangible assets represent trademarked brand names,
goodwill, publishing rights and other intangible assets. Amortization is
provided on a straight-line method over the estimated useful lives of
these assets not exceeding forty years.

<p><i>Net Income Per Share</i> -- 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 into common stock. For
the three and six month  ended March 31, 2000, respectively, approximately
64,000 and 200,000 shares, reflecting the dilutive effects of outstanding
stock options, were included in computing diluted net income per share.


<p><i>Comprehensive Income</i> - Comprehensive income for the three months ended
March 31, 2000 was $4,563,000 and $4,551,000 for the three months ended
March 31, 1999.

<p><strong>3. Acquisitions and Divestitures</strong></p>

<p>In August 1999, the Company acquired a portfolio of book and online brands
from the Macmillan General Reference Group (the Reference Brands) of
Pearson Education for $83.0 million, plus $0.5 million in transaction
costs. The acquisition was accounted for as a purchase business
combination and, accordingly, the acquisition cost has been allocated to
the fair value of the assets acquired and liabilities assumed. Assumed
liabilities include $2.0 million for the costs of a restructuring plan
involving various settlements and contract terminations ($1.2 million) and
estimated severance and relocation of personnel ($0.8 million). As of
March 31, 2000, $1.3 million of costs had been incurred.

<p>The purchase price allocation is preliminary and subject to revision upon
receipt of final information concerning valuation of intangible assets,
working capital received at closing, and the actual costs of the
restructuring plan.

<p>In November and December 1999, the Company sold the J.K. Lasser&trade; and Chek-
Chart brands, respectively, which were purchased in the above-mentioned
acquisition, to unaffiliated companies. The $12.3 million received has
been reported as a reduction to branded trademarks in the first quarter of
fiscal 2000, with no gain or loss resulting from the sale. Transaction
costs of $0.5 million resulted in net proceeds of $11.8 million.

<p><strong>4. Accounts Receivable</strong></p>

<p>Accounts receivable consisted of the following (in thousands):

<pre>

                                               March 31,   September 30,
                                                  2000         1999
                                              ------------ ------------
                                              (unaudited)

Accounts receivable .....................        $103,232      $83,300
Allowance for doubtful accounts .........          (5,283)      (5,010)
Allowance for sales returns .............         (35,442)     (31,996)
                                              ------------ ------------
    Total ...............................         $62,507      $46,294
                                              ============ ============
</pre>


<p><strong>5. Inventories </strong></p>

<p>Inventories consisted of the following (in thousands):

<pre>


                                               March 31,   September 30,
                                                  2000         1999
                                              ------------ ------------
                                              (unaudited)

Books (finished goods) ..................         $35,801      $40,167
Paper ...................................           3,655        5,364
                                              ------------ ------------
    Total Inventory......................          39,456       45,531
Reserve for obsolescence ................         (13,597)     (14,507)
                                              ------------ ------------
    Net Inventory .......................         $25,859      $31,024
                                              ============ ============

</pre>


<p><strong>6. Intangible Assets</strong></p>

<p>Intangible assets consisted of the following (in thousands):

<pre>


                                               March 31,   September 30,
                                                  2000         1999
                                              ------------ ------------
                                              (unaudited)

Branded trademarks.......................         $57,749      $70,000
Goodwill ................................          18,530       16,149
Publishing rights .......................           5,000        5,000
Other intangible assets .................             700          700
                                              ------------ ------------
    Total gross intangible assets .......          81,979       91,849
Less: accumulated amortization ...........         (2,976)      (1,628)
                                              ------------ ------------
    Net intangible assets ...............         $79,003      $90,221
                                              ============ ============

</pre>


<p><strong>7. Accrued Liabilities </strong></p>

<p>Accrued liabilities consisted of the following (in thousands):

<pre>

                                                 March 31,   September 30,
                                                    2000         1999
                                                ------------ ------------
                                                (unaudited)

Accrued royalties ............................      $17,255      $16,276
Accrued promotions ...........................       16,994       14,068
Accrued compensation and benefits ............        7,097        8,689
Accrued inventory and fulfillment ............        2,741        8,086
Other accrued liabilities ....................        6,469        7,348
Accrued acquistion restructuring costs .......        1,194        2,437
Accrued taxes ................................        5,446          911
                                                ------------ ------------
      Total ..................................      $57,196      $57,815
                                                ============ ============
</pre>


<p><strong>8. Segment Information</strong></p>

<p>The Company adopted SFAS No. 131, <i>"Disclosures about Segments of an
Enterprise and Related Information,"</i> in fiscal year 1999.  SFAS No. 131
establishes standards for reporting information about operating segments
and related disclosures about geographic information and major customers.

<p>The Company has two general publishing groups:  Technology and Consumer.
The two segments share the same infrastructure and personnel,
and are not managed as separate operating divisions.  Management evaluates
the performance of these segments at the revenue and gross profit level;
the Company's reporting systems do not track or allocate operating
expenses or fixed assets by segment.

<p>The Technology Group consists of brands targeted for computer users, from
beginning through advanced level users, including information technology
professionals and software developers. The Consumer Group
includes brands targeted at the general consumer, including ,<i>For Dummies&reg;,
CliffsNotes&trade;</i> , and the recently acquired Reference Brands (Note 3). Net
revenue by segment is as follows (in thousands):

<pre>
                                                    Three Months Ended
                                                       March 31,
                                                -------------------------
                                                    2000         1999
                                                ------------ ------------


  Technology group .......................          $36,882      $36,290
  Consumer group .........................           27,650        8,396
                                                ------------ ------------
     Total Net Revenue ...................          $64,532      $44,686
                                                ============ ============
</pre>


<p>The gross profit for the Technology Group and the Consumer Group,
respectively, was $17.0 million and $12.4 million for the second quarter
of fiscal year 2000; and $18.6 million and $4.2 million for the first
three months of fiscal year 1999.

<br>


<A NAME="mda"></A>
<p><strong>Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations</strong></p>

<p><strong>Overview</strong></p>

<p>IDG Books Worldwide, Inc. is a leading global knowledge company
featuring a diverse portfolio of technology, consumer, and general how-to
book brands, computer-based learning tools, Web sites and Internet e-
services. The Company publishes and markets under well-known brand names,
including  <i>For Dummies&reg;, 3-D Visual&reg;, Bible, CliffsNotes&trade;, Frommer's&reg;travel guides, Betty Crocker's&reg;,
Weight Watchers&reg;</i> and <i>Webster's New World&trade;</i>.
These books have created widespread recognition of the Company's
brands by consumers, enabling the Company to successfully publish across a
variety of categories in technology, business, and general how-to. The
Company's portfolio of brand names comprises more than 4,000 active
titles. The Company has over 100 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.

<p>Sales of technology-related books account for a majority of the
Company's net revenue. Sales of books devoted to the use of software
products sold by Microsoft, including its Windows operating system,
accounted for approximately 22% and 43% of the Company's net revenue for
the three months ended March 31, 2000 and 1999, respectively. The Company
does not expect the percentage of net revenue from the sale of books
related to Microsoft software products to continue to be as significant.

<p>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 three and six
months ended March 31, 2000, the Company's top three customers accounted
for approximately 38% and 39% of the Company's net revenue as compared to
35% and 36% in 1999. The Company's top ten customers accounted for
approximately 60% of the Company's six-month net revenue in 2000 as
compared to 68% in 1999.

<p><strong>Results of Operations</strong></p>

<p>The following table summarizes the results of operations as a percentage
of net revenue for the periods shown:

<pre>

                                              THREE MONTHS ENDED    SIX MONTHS ENDED
                                                 MARCH 31,             MARCH 31,
                                            --------------------- ---------------------
                                                 2000       1999       2000       1999
                                            ---------- ---------- ---------- ----------

CONDENSED CONSOLIDATED STATEMENT OF INCOME DATA:
Net Revenue:
Technology group .........................       57.2%      81.2%      55.2%      65.1%
Consumer  group...........................       42.8%      18.8%      44.8%      34.9%
                                            ---------- ---------- ---------- ----------
Total Net Revenue ........................      100.0%     100.0%     100.0%     100.0%
                                            ========== ========== ========== ==========

Cost of sales ............................       54.5%      48.9%      56.1%      49.0%
Selling, general and administrative ......       28.6%      30.1%      27.8%      31.6%
Depreciation and amortization ............        2.2%       2.9%       2.2%       3.0%
                                            ---------- ---------- ---------- ----------
Operating income .........................       14.7%      18.1%      13.9%      16.4%
   Interest income (expense) - net .......       -2.5%      -0.3%      -2.7%      -0.0%
                                            ---------- ---------- ---------- ----------
Income before provision for income taxes .       12.2%      17.8%      11.2%      16.4%
                                            ---------- ---------- ---------- ----------
Net income ...............................        7.1%      10.2%       6.5%       9.4%
                                            ========== ========== ========== ==========

Other Data:
EBITDA(1) ................................       16.9%      20.9%      16.1%      19.4%
                                            ========== ========== ========== ==========

</pre>
<p>_______________________
<font size="2">
<p>  (1) "EBITDA" is defined as income before provision for income taxes, interest, 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
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. EBITDA for the three and six months ended March 31, 2000 was $10.9 million and
$19.7 million, respectively, compared to $9.4 million and $15.9 million for the three and six months ended March 31,
1999.
</font size="2">

<p><strong><i>Three Months Ended March 31, 2000 Compared to Three Months Ended March 31, 1999</strong></i>


<p><i>Net Revenue.</i>  Net revenue increased $19.8 million, or 44.4%, to $64.5
million for the three months ended March 31, 2000 from $44.7 million for
the three months ended March 31, 1999. This increase was primarily the
result of an increase in net revenues of $19.2 million for the Company's
Consumer Group, which includes the <i>For Dummies&reg;</i> and <i>CliffsNotes&trade;</i> consumer
titles, and acquired Reference Brands. The acquired Reference Brands
accounted for $16.7 million of the Consumer Group growth, which were not
included in the second fiscal quarter of 1999. Excluding the acquired
Reference Brands, the Consumer Group's growth was 30.5% for the
three months ended March 31, 2000 compared to the comparable period in
1999. The Technology Group contributed the remaining $0.6 million increase
in net revenues, an increase of 1.6% over the 1999 fiscal second quarter.
Of the Company's net revenue for the three months ended March 31, 2000,
$8.3 million was attributable to sales of titles (including new editions)
first published during that period, as compared to $7.3 million for titles
(including new editions) first published during the same period for 1999.

<p><i>Cost of Sales.</i>  Cost of sales increased $13.3 million, or 60.8%, to
$35.2 million for the three months ended March 31, 2000 from $21.9 million
for the three months ended March 31, 1999.  Cost of sales as a percentage
of net revenue was 54.5% for 2000 and 49.0% for 1999. Product costs,
including paper, printing, and binding expenses, royalty expense and
inventory obsolescence expense increased as a percentage of net revenue to
34.9% for the three months ended March 31, 2000 from 32.7% for the three
months ended March 31, 1999 as a result of a change in product mix.
Product development costs, which are relatively fixed, increased as a
percentage of net revenue to 10.3% for the three months ended March 31,
2000 from 9.6% for the three months ended March 31, 1999, reflecting an
increase in the development of new cross-branded titles.  Fulfillment and
distribution expenses increased as a percentage of net revenue to 9.3% for
the three months ended March 31, 2000 from 6.7% for the three months ended
March 31, 1999 as a result of one-time costs incurred in the relocation of
product to the Company's new distribution facility.

<p><i>Selling, General, and Administrative Expenses.</i>  Selling, general, and
administrative expenses increased $5.0 million, or 37.1%, to $18.5 million
for the three months ended March 31, 2000 from $13.5 million for the three
months ended March 31, 1999.  Approximately 64% or $3.2 million of this
increase was attributable to increased selling and marketing expenses,
including increases as a result of the retail marketing incentive program
and expenses for other marketing programs where costs increase as net
revenues increase. A significant portion of the increase was also
attributable to a $1.8 million increase in general and administrative
expenses. Selling, general and administrative expenses as a percentage of
net revenue decreased to 30.8% for the three months ended March 31, 2000
from 33.0% for the three months ended March 31, 1999, which can be
attributable to operating leverage and efficiencies achieved for the
incremental business associated with the acquired Reference Brands. The
Company's sales and marketing costs as a percentage of net revenue
decreased to 17.3% for the three months ended March 31, 2000 from 17.8%
for the three months ended March 31, 1999, due to performance-based
customer incentive programs which are driven by net revenue results.

<p><i>Depreciation and Amortization.</i> The increase of $0.1 million was due to
a larger depreciable asset base and the amortization of intangible assets
offset by other assets, which have become fully depreciated.

<p><i>Operating Income.</i> Operating income increased $1.4 million, or 17.2%, to
$9.5 million for the three months ended March 31, 2000 from $8.1 million
for the three months ended March 31, 1999. Operating income decreased as a
percentage of net revenue to 14.7% for the three months ended March 31,
2000 from 18.1% for the same period the prior year due to an increase in
product development and distribution expenses, as percentages of net
revenue, as described above.

<p><i>Income Before Provision for Income Taxes.</i> Income before provision for
income taxes decreased $0.1 million, or less than one percent to $7.9
million for the three months ended March 31, 2000 from $8.0 million for
the three months ended March 31, 1999.  Income before provision for income
taxes decreased as a percentage of net revenue to 12.2% for the three
months ended March 31, 2000 from 17.8% for the three months ended March
31, 1999 due to an increase in product development and distribution
expenses, as percentages of net revenue, as described above. In addition,
net interest expense of $1.6 million for the three months ended March 31,
2000 compared to $0.1 million for the same period in 1999 on borrowings
used to fund the acquisition of the Reference Brands reduced income before
provision for income taxes.

<p><i>Net Income.</i>  Net income of $4.6 million for the three months ended
March 31, 2000 was unchanged from net income of $4.6 million for the three
months ended March 31, 1999 for the same reasons as described above.



<p><strong><i>Six Months Ended March 31, 2000 Compared to Six Months Ended March 31, 1999</strong></i>


<p><i>Net Revenue.</i>  Net revenue increased $40.3 million, or 49.2%, to $122.3
million for the six months ended March 31, 2000 from $82.0 million for the
six months ended March 31, 1999. This increase was primarily the result of
an increase in net revenues of $37.9 million for the Company's Consumer
Group, which includes the <i>For Dummies&reg;</i> and  <i>CliffsNotes&trade;</i> consumer titles,
and acquired Reference Brands. The acquired Reference Brands accounted for
$35.0 million of the Consumer Group growth, which were not included in the
first six-months of 1999. Excluding the acquired Reference Brands, the
Consumer Group's growth rate was 17.1% for the six months ended
March 31, 2000 compared to the comparable period in 1999. The Technology
Group contributed the remaining $2.4 million increase in net revenues, an
increase of 3.7% over the comparable six-month period in 1999. Of the
Company's net revenue for the six months ended March 31, 2000, $14.3
million was attributable to sales of titles (including new editions) first
published during that period, as compared to $13.3 million for titles
(including new editions) first published during the same period for 1999.

<p><i>Cost of Sales.</i>  Cost of sales increased $28.4 million, or 70.8%, to
$68.6 million for the six months ended March 31, 2000 from $40.2 million
for the six months ended March 31, 1999.  Cost of sales as a percentage of
net revenue was 56.1% for 1999 and 49.0% for 1999. Product costs,
including paper, printing, and binding expenses, royalty expense and
inventory obsolescence expense increased as a percentage of net revenue to
33.9% for the six months ended March 31, 2000 from 32.2% for the six
months ended March 31, 1999 as a result of a change in product mix.
Product development costs, which are relatively fixed, increased as a
percentage of net revenue to 11.6% for the six months ended March 31, 2000
from 9.8% for the six months ended March 31, 1999, reflecting an increase
in the development of new cross-branded titles.  Fulfillment and
distribution expenses increased as a percentage of net revenue to 10.6%
for the six months ended March 31, 2000 from 7.0% for the six months ended
March 31, 1999 as a result of one-time costs incurred in the relocation of
product to the Company's new distribution facility.

<p><i>Selling, General, and Administrative Expenses.</i>  Selling, general, and
administrative expenses increased $8.1 million, or 31.1%, to $34.0 million
for the six months ended March 31, 2000 from $25.9 million for the six
months ended March 31, 1999.  Approximately 65% or $5.3 million of this
increase was attributable to increased selling and marketing expenses,
including increases as a result of the retail marketing incentive program
and expenses for other marketing programs where costs increase as net
revenues increase. A significant portion of the increase was also
attributable to a $2.8 million increase in general and administrative
expenses. Selling, general and administrative expenses as a percentage of
net revenue decreased to 30.1% for the six months ended March 31, 2000
from 34.7% for the six months ended March 31, 1999, which can be
attributable to operating leverage and efficiencies achieved for the
incremental business associated with the acquired Reference Brands. The
Company's sales and marketing costs as a percentage of net revenue
decreased to 16.9% for the six months ended March 31, 2000 from 18.8% for
the six months ended March 31, 1999, due to performance-based customer
incentive programs which are driven by net revenue results.

<p><i>Depreciation and Amortization.</i> The increase of $0.3 million was due to
a larger depreciable asset base and the amortization of intangible assets
offset by other assets, which have become fully depreciated.

<p><i>Operating Income.</i> Operating income increased $3.6 million, or 26.6%, to
$17.0 million for the six months ended March 31, 2000 from $13.4 million
for the six months ended March 31, 1999. Operating income decreased as a
percentage of net revenue to 13.9% for the six months ended March 31, 2000
from 16.4% for the same period the prior year due to an increase in
product development and distribution expenses, as percentages of net
revenue, as described above.

<p><i>Income Before Provision for Income Taxes.</i> Income before provision for
income taxes increased $0.3 million, or 2.4% to $13.7 million for the six
months ended March 31, 2000 from $13.4 million for the six months ended
March 31, 1999.  Income before provision for income taxes decreased as a
percentage of net revenue to 11.2% for the six months ended March 31, 2000
from 16.3% for the six months ended March 31, 1999 due to an increase in
product development and distribution expenses, as percentages of net
revenue, as described above. In addition, net interest expense of $3.3
million for the six months ended March 31, 2000 compared to $0.1 million
for the same period in 1999 on borrowings used to fund the acquisition of
the Reference Brands reduced income before provision for income taxes.

<p><i>Net Income.</i>  Net income of $7.9 million for the six months ended March
31, 2000 increased $0.2 million, or 2.9%, from net income of $7.7 million
for the six months ended March 31, 1999 for the same reason as described
above.





<p><strong>Financial Condition, Liquidity, and Capital Resources </strong></p>

<p>As of March 31, 2000, the Company's working capital increased $16.9
million to $54.2 million from $37.3 million as of September 30, 1999. This
increase in working capital was the result of an increase in cash of $0.4
million, an increase in net accounts receivable of $16.2 million, a $5.2
million decrease in net inventory, and a $3.8 million increase in other
current assets and deferred tax assets. Additionally, there was a $1.1
million decrease in accounts payable and a $0.1 million decrease in
accrued liabilities. These changes in working capital can be attributed to
the acquisition of the Reference Brands and Cliffs Notes, Inc. as well as
growth in the core Company business.

<p>The net cash provided by operating activities for the three
months ended March 31, 2000 and 1999 was $6.4 million and $2.3 million,
respectively.  For the six months ended March 31, 2000 and 1999 the net
cash provided (used) by operating activities was ($7.1) million and $3.3
million, respectively. The fluctuations are due primarily to changes in
accounts receivable.

<p>The Company's net cash provided by investing activities for the six
months ended March 31, 2000 was $7.4 million. In December 1999 the Company
sold the J.K. Lasser and Chek-Chart brands, which were acquired in August
1999 from Pearson Education, Inc., for $12.3 million less transaction
costs of $0.5 million. Capital expenditures for the three and six months
ended March 31, 2000 were $2.4 million and $4.6 million, respectively,
compared to $1.1 million and $1.6 million for the three and six months
ended March 31, 1999, which include leasehold improvements and equipment
for the Company's new Indianapolis and San Francisco offices.

<p>The Company's net cash provided by financing activities was $0.1
million for the six months ended March 31, 2000 as a result of payments on
the Company's credit agreement and issuances of common stock as a result
of option exercises, and $2.0 million for the six months ended March 31,
1999.

<p>The Company had $0.6 million in cash invested in short-term financial
instruments as of March 31, 2000. The Company believes that its remaining
borrowing capacity, together with any cash generated from operations and
any funds available under any future credit facilities, will be sufficient
to meet the liquidity requirements of the Company 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
available cash, 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, can be obtained on terms favorable to the Company.

<p><strong>Factors Affecting Future Operating Results</strong></p>

<p>Dependence on Microsoft Products and Competition with Microsoft Press.
Sales of books devoted to the use of software products sold by Microsoft
Corporation ("Microsoft"), including its Windows operating system,
accounted for approximately 22% of the Company's net revenue in the three
months ended March 31, 2000. As a result, future financial results will
depend in part on continued consumer demand for Microsoft products. A
decline in the use of Microsoft products would likely result in decreased
demand for the Company's books and could adversely affect future financial
results.

<p>In addition to relying on the sales of books devoted to Microsoft
products, the Company competes 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 the Company 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 the
Company in providing books devoted to the use of software products sold by
Microsoft.

<p>Dependence on For Dummies? Publications.  The Company derives a
material portion of its net revenue from the sale of the For Dummies?
brand of books. In addition, the Company has devoted substantial resources
to the publication of these books and the development of the For Dummies?
brand name. As a result, any change in reader preferences leading to a
decline in demand for the For Dummies? books would likely have a material
adverse effect on future financial results.

<p>Risks of New Product Introductions.  Generally, as a particular book
gets older, the Company sells fewer copies of that book.  Consequently,
the Company's future success depends on its ability to identify trends in
the technology, business, and self-help markets and to offer new titles,
as well as other products and services, that address the changing needs of
the target audiences. To establish market acceptance of a new publication,
the Company 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. Investors should note, however, that there can
be no assurance that the Company's efforts to introduce new publications
or other products or services will be successful or profitable.

<p>The Company records as an expense the costs related to the development
of new publications and products, other than author advances, as products
are introduced. As a result, the Company's 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.

<p>Risks Associated with Fluctuations in Paper Costs.  Paper is the
principal raw material used in the Company's business. The Company
generally purchases paper from merchants representing the paper mills. The
Company does not have long-term paper supply contracts with these paper
merchants. The 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. Consequently, the Company's 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
the Company's future financial condition or operating results.

<p>Fluctuations in Quarterly Results and Cyclicality of Revenue.  The
Company's operating expenses, which include product development costs and
selling, general, and administrative expenses, are relatively fixed in the
short term and are based on our long term revenue expectations. If the
Company sells fewer books or otherwise has lower revenue than expected,
the Company may not be able to quickly reduce its spending.  Any shortfall
in the Company's revenue would have a direct impact on its results of
operations, and fluctuations in quarterly results could affect the market
price of its common stock in a manner unrelated to the Company's long-term
operating performance. The Company typically sells more books during the
first and second quarters of its September fiscal year because of
increased sales during the Christmas season. In addition, the Company
typically sells more books in quarters in which software manufacturers
release new or updated versions of popular software products. 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 net revenue due to seasonal or other factors discussed above.

<p>In addition, the Company typically publishes 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 sold.

<p>Risks Associated with Product Distribution Channels; Risk of Product
Returns.  The Company sells its books primarily to large retail chains,
large wholesalers, warehouse clubs, office superstores, and computer and
electronics superstores. For the three months ended March 31, 2000 the
Company's three largest customers, Barnes & Noble, Inc., Borders, Inc.,
and Ingram Book Company accounted for approximately 16%, 13%, and 9% of
net revenue, respectively. The Company's future financial results depend
in large part on its relationships with its customers. Any disruption in
relationships with its customers could adversely affect financial
performance.

<p>The Company's sales policy generally permits book customers to return
any unsold or damaged books for full credit. The Company records as
revenue all books sold to its customers in a particular quarter and, at
the same time, records a provision for estimated returns. During the three
months ended March 31, 2000, the Company recorded a provision for returns
of approximately 22% of its gross sales. If, during any period, customers
return more books than previously estimated, the Company's financial
results in that period would be adversely affected.

<p>Competition.  The Company faces competition directly from other book
publishers and indirectly from non-print media.  Competition in book
publishing stems mainly from editorial quality, timely introduction of new
titles, product positioning, pricing, and brand name recognition. In
addition to the Company, Pearson Education, Inc., Microsoft Press, and
McGraw-Hill all have a strong market presence in the United States and
internationally in technology publishing.  The principal competitors for
the Company's business and self-help titles include Random House, Simon &
Schuster, and HarperCollins.  Each of these competitors has substantially
greater financial resources than the Company.

<p>Non-print 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, the Company's
business could be adversely affected.

<p>Control by IDG (Parent); Potential Conflicts of Interests; Benefits to
IDG.  The parent 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 has approximately 76% of the combined voting power of both
classes of common stock as of March 31, 2000. The remaining holders of the
shares of Class A common stock are entitled to one vote per share and have
approximately 24% of the combined voting power. The parent has two
representatives on the Company's Board of Directors and has enough votes
to elect all members of the Board of Directors. As a result of its stock
ownership, the parent is in a position, without the approval of the
Company's public stockholders, to amend the Company's 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 the Company's public stockholders; and otherwise control the
Company's management and operations and the outcome of all matters
submitted for a stockholder vote that could conflict with the interests of
its public stockholders. In January 2000, the parent announced its plans
to purchase up to 500,000 shares of IDGB common stock from time to time at
prevailing market prices.

<p>Dependence on Key Personnel. The Company relies, and will continue to
rely, on its senior executive officers and other key management personnel.
During the second fiscal quarter the Company completed its search for two
key executive officers, a President and Chief Financial Officer, to fill
two open positions due to prior resignations. In January 2000, the Company
announced the appointment of William G. Barry as President and Chief
Operating Officer, effective March 1, 2000. Mr. Barry is the former Senior
Vice President, Corporate Development of Random House, Inc. In April 2000
the Company announced the appointment of John M. Harris as Senior Vice
President and Chief Financial Officer, effective May 1, 2000. Mr. Harris
is the former Chief Financial Officer of Marketplace by Marriott, a $4
billion global procurement startup. If any senior executives or key
management leave the Company, the relationships that these people have
with the Company's authors, customers, manufacturers, or investors could
be lost, and the Company would need to find people who could develop new
relationships. In addition, the Company expects that it will need to hire
additional employees, including key management positions for Internet
business development. The competition for employees at all levels of the
book publishing and Internet industries is intense and is increasing. In
our Northern California operations, in particular, the Company has
experienced increased turnover of employees and is experiencing difficulty
in attracting new employees. If the Company does not succeed in attracting
new employees or retaining and motivating current employees, the Company's
business could suffer significantly.

<p>Transition to New Distribution Service. The Company historically
outsourced distribution and fulfillment functions to retail and wholesale
customers through two vendors. During the first fiscal quarter of 2000,
the Company began the transition of these services to a new single source
facility in Virginia. This transition was substantially completed at the
end of the fiscal second quarter with the exception of the acquired
Reference Brands. The Company has continued to transition the distribution
and fulfillment operations of the acquired Reference Brands to its new
facility, a process which was begun in January 2000 and is expected to be
completed by the end of the fiscal third quarter. Any difficulties in
completing transition to the new distribution vendor could adversely
impact day-to-day operating performance and future financial results.

<p>Risks Associated with Acquisitions. As part of the Company's growth
strategy, it may buy or make significant investments in, complementary
companies, publications or products. The Company has completed the
acquisition of Cliffs Notes, Inc. and recently completed the acquisition
of the Reference Brands. These acquisitions, as well as any future
acquisition, will be accompanied by the risks commonly encountered in
making acquisitions of products, companies, and technologies.

<p>For example, it could have difficulty assimilating the personnel and
operations of the acquired company.  This could cause a disruption of its
ongoing business, distraction of management and other resources, and
difficulty in maintaining uniform standards, controls, and procedures.
There can be no assurance that the Company would succeed in overcoming
these risks or any other problems encountered in connection with any
acquisitions it may make. In addition, the Company may be required to
incur additional debt or issue equity to pay for any future acquisitions


<p><strong>Financial Market Risks</strong></p>

<p>For the three months ended March 31, 2000, there were no material changes
in the Company's exposure to financial market risks, including changes in
interest rates and foreign currency exchange rates.

<p><strong>Forward-Looking Statements</strong></p>

<p>In addition to historical information, this Quarterly Report contains
forward-looking statements. The forward-looking statements are subject to
certain risks and uncertainties that could cause actual results to differ
materially from those reflected in such forward-looking statements.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which reflect management's opinion only as of the date hereof.
The Company undertakes no obligation to revise or publicly release the
results of any revision to these forward-looking statements. Readers
should carefully review the risk factors described in other documents the
Company files from time to time with the SEC, including the Company's
Registration Statement on Form S-1 (file no. 333-53433) filed in
connection with the Company's initial public offering, and Form 10-K as of
and for the year ended September 30, 1999.


<p align="center"><strong>PART II -- OTHER INFORMATION</strong></p>




<p><strong>Item 6. Exhibits and Reports on Form 8-K</strong></p>

<p>&nbsp;&nbsp;&nbsp;&nbsp;(a) Exhibits
<p>&nbsp;&nbsp;&nbsp;&nbsp;27 - Financial Data Schedule

<p>&nbsp;&nbsp;&nbsp;&nbsp;(b) Reports on Form 8-K
<p>&nbsp;&nbsp;&nbsp;&nbsp;None


<p><strong> Items 1, 2, 3, 4 and 5 are not applicable and have been omitted.</strong></p>


<br>
<br>
<br>
<HR WIDTH="85%">
<br>
<br>
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<A NAME="sign"></A>
<p align="center"><strong>

                               IDG BOOKS WORLDWIDE, INC.
<br>
<br>
                                   SIGNATURES
</strong></p>


<p>Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.


<P>
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                               IDG BOOKS WORLDWIDE, INC.
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<I>(Registrant)</I>
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<p>Dated: May 9, 2000


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    <TD>By:&nbsp;</TD>
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                /s/ JOHN J. KILCULLEN
</TD></TR></TABLE>


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    <TD>&nbsp;</TD>
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        John J. Kilcullen
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         Chairman and Chief Executive Officer
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(Principal Executive Officer and Duly Authorized Officer)
  </I></TD></TR></TABLE></P>

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[{"type": "10-Q", "sequence": "1", "description": "FORM 10-Q FOR PERIOD ENDED MARCH 25, 2000", "secsgml_size_bytes": 65787}]
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10Q doc
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X]       QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
             SECURITIES EXCHANGE ACT OF 1934
for the period ended March 25, 2000
OR
[  ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934
For the transition period from ________to _________
Commission file number 0-24617
IDG BOOKS WORLDWIDE, INC.
(Exact name of Registrant as specified in its Charter)
Delaware
04-3078409
(State or Other Jurisdiction of Incorporation or Organization)
(I.R.S. Employer Identification Number)
919 East Hillsdale Blvd.
Suite 400, Foster City, CA    94404
(Address of Principal Executive Offices including Zip Code)
(650) 653-7000
(Registrant's Telephone Number, Including Area Code)
(Former name, former address and former fiscal year if changed
 since last report)
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 reports), and (2) has been subject to such filing
requirements for the past 90 days.   YES [  ]    NO [X]
The number of shares outstanding of the issuer's Common Stock as of April 30,
2000 was 14,720,944.

This quarterly report on Form 10-Q contains a total of 17 pages, of which this
page is page 1.
IDG BOOKS WORLDWIDE, INC. AND SUBSIDIARIES
FORM 10-Q
INDEX
PART I. Financial Information
Item 1. Financial statements
Condensed Consolidated Balance Sheets as of
            March 31, 2000 (Unaudited) and September 30, 1999
Condensed Consolidated Statements of Income for the three and six months ended
             March 31, 2000 and March 31, 1999 (Unaudited)
Condensed Consolidated Statements of Cash Flows for the
            six months ended March 31, 2000 and March 31, 1999 (Unaudited)
Notes to Condensed Consolidated Financial
         Statements
Item 2.   Management's Discussion and Analysis of Financial Condition and Results of
          Operations
PART II. Other Information
Item 6:  Exhibits and Reports on Form 8-K
Signatures
PART I -- FINANCIAL INFORMATION
Item 1.  Financial Statements
IDG BOOKS WORLDWIDE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
ASSETS
                                                    March 31,     September 30,
                                                         2000          1999
                                                    ------------- -------------
Current Assets:                                       (unaudited)
     Cash and equivalents...................              $2,439        $2,084
     Accounts receivable - net..............              62,507        46,294
     Inventory - net........................              25,859        31,024
     Other current assets...................               4,447         4,092
     Deferred tax assets....................              24,745        21,334
                                                    ------------- -------------
             Total current assets...........             119,997       104,828
Royalty advances - net......................              12,317        12,110
Property and equipment - net................               9,334         6,032
Intangible assets - net ....................              79,003        90,221
Other assets ...............................               2,945         3,280
                                                    ------------- -------------
             TOTAL..........................            $223,596      $216,471
                                                    ============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
     Accounts payable.......................              $8,556        $9,666
     Accrued liabilities....................              57,196        57,815
                                                    ------------- -------------
             Total current liabilities......              65,752        67,481

Long-term debt..............................              80,000        82,000
Deferred tax liability (note 1).............               4,919         4,950
                                                    ------------- -------------
             Total liabilities..............             150,671       154,431

Minority interest...........................                 119            95

Commitments and contingencies

Stockholders' Equity:
     Preferred stock, $.001 par value;
        authorized: 5,000,000 shares;
        issued and outstanding: 0 shares....                --            --
     Common stock, $.001 par value;
        authorized:  25,000,000 Class A
        shares and 400,000 Class B shares;
        issued and outstanding:
        FY 2000 - 14,620,944 Class A and
          100,000 Class B...................                  15
        FY 1999 - 14,278,825 Class A and
          200,000 Class B...................                                14
     Additional paid-in-capital.............              49,552        46,637
     Retained earnings......................              23,240        15,284
     Accumulated other comprehensive
      income (loss) ........................                  (1)           10
                                                    ------------- -------------
             Total stockholders' equity.....              72,806        61,945
                                                    ------------- -------------
             TOTAL..........................            $223,596      $216,471
                                                    ============= =============
See notes to condensed consolidated financial statements
IDG BOOKS WORLDWIDE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share amounts)
THREE MONTHS ENDED    SIX MONTHS ENDED
                                                 MARCH 31,             MARCH 31,
                                            --------------------- ---------------------
                                                 2000       1999       2000       1999
                                            ---------- ---------- ---------- ----------
                                            (unaudited)(unaudited)

Revenue:
   Net sales ..............................   $62,022    $43,159   $115,795    $79,253
   Licensing revenues and other ...........     2,510      1,527      6,546      2,738
                                            ---------- ---------- ---------- ----------
      Net revenue .........................    64,532     44,686    122,341     81,991
                                            ---------- ---------- ---------- ----------
Operating costs and expenses:
   Cost of sales ..........................    35,181     21,873     68,601     40,170
   Selling, general and administrative ....    18,461     13,457     34,014     25,940
   Depreciation and amortization ..........     1,430      1,283      2,744      2,469
                                            ---------- ---------- ---------- ----------
      Total operating costs and expenses ..    55,072     36,613    105,359     68,579
                                            ---------- ---------- ---------- ----------
Operating income ..........................     9,460      8,073     16,982     13,412
   Interest income (expense) - net ........    (1,577)      (122)    (3,266)       (18)
                                            ---------- ---------- ---------- ----------
Income before provision for income taxes ..     7,883      7,951     13,716     13,394
   Provision for income taxes .............     3,311      3,400      5,761      5,663
                                            ---------- ---------- ---------- ----------
Net income ................................    $4,572     $4,551     $7,955     $7,731
                                            ========== ========== ========== ==========

Net income per share:
   Basic ..................................     $0.31      $0.32      $0.55      $0.54
                                            ========== ========== ========== ==========
   Diluted ................................     $0.31      $0.31      $0.54      $0.53
                                            ========== ========== ========== ==========
Shares used in per share calculations:
  Basic ...................................    14,675     14,397     14,593     14,350
                                            ========== ========== ========== ==========
  Diluted .................................    14,739     14,747     14,793     14,578
                                            ========== ========== ========== ==========
See notes to condensed consolidated financial statements
IDG BOOKS WORLDWIDE, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
SIX MONTHS ENDED
                                                              MARCH 31,
                                                    ----------------------------
                                                         2000           1999
                                                    -------------  -------------
Cash Flows from Operating Activities:
  Net Income ......................................       $7,955         $7,731
  Adjustments to reconcile net income to net cash
    provided (used) by operating activities:
      Depreciation and amortization ...............        2,743          2,469
      Deferred income taxes........................       (3,411)        (1,897)
      Changes in operating assets and liabilities
        (net of effects of dispositions):
        Accounts receivable .......................      (16,196)       (13,677)
        Inventory .................................        5,165          1,069
        Royalty advances ..........................       (2,290)          (567)
        Other current assets ......................         (219)         1,010
        Accounts payable ..........................       (1,110)        (1,308)
        Accrued liabilities .......................          274          8,519
                                                    -------------  -------------
           Net cash provided (used) by operating
            activities ............................       (7,089)         3,349
                                                    -------------  -------------
Cash Flows from Investing Activities:
  Capital expenditures ............................       (4,621)        (1,594)
  Divestitures ....................................       11,819           --
  Acquisitions ....................................         --          (17,118)
  Other investments ...............................          206         (1,896)
                                                    -------------  -------------
           Net cash provided (used) by investing
            activities ............................        7,404        (20,608)
                                                    -------------  -------------
Cash Flows from Financing Activities:
  Advances (payments) on the credit facility ......       (2,000)         2,375
  Proceeds from Exercises of stock options ........        2,040           --
  Payment of Cliffs Notes, Inc. line of credit ....         --             (342)
                                                    -------------  -------------
           Net cash provided by financing
            activities ............................           40          2,033
                                                    -------------  -------------
Net increase (decrease) in cash and equivalents ...          355        (15,226)
Cash and equivalents, Beginning of Period .........        2,084         15,466
                                                    -------------  -------------
Cash and equivalents, End of Period ...............       $2,439           $240
                                                    =============  =============

Noncash Investing Activity:
  Acquisitions (Note 3):
    Tangible assets ...............................      $  --           $5,217
    Intangible assets .............................         --           16,149
    Less: cash paid ...............................         --          (17,118)
                                                    -------------  -------------
    Liabilities assumed ...........................      $  --           $4,248
                                                    =============  =============

Noncash Financing Activity:
  Issuance of Class A common stock under the
   ESOP plan ......................................         $566         $1,513
                                                    =============  =============
   Payroll withheld to fund ESPP purchase .........         $309           $743
                                                    =============  =============
See notes to condensed consolidated financial statements
IDG BOOKS WORLDWIDE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three and Six Months Ended March 31, 2000 and 1999 and as of March 31, 2000 and
September 30, 1999
1. Basis of  Presentation
The accompanying interim consolidated financial statements for the three and six
months ended March 31, 2000 and 1999, and as of March 31, 2000 are
unaudited, but have been prepared in accordance with generally accepted
accounting principles for interim consolidated financial statements.
Certain information or footnote disclosure normally included in the
financial statements prepared in accordance with generally accepted
accounting principles has been condensed or omitted in accordance with
guidance 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 the operations for the full year.  These consolidated
financial statements should be read in conjunction with the audited,
consolidated financial statements as of and for the year ended September
30, 1999, and the related notes thereto, included in the Company's Form
10-K filed with the SEC.
Organization and Description of Business
-- IDG Books Worldwide, Inc. (the
"Company"), a Massachusetts company, was founded in 1990 as a wholly-owned
subsidiary (through intermediate companies) of International Data Group,
Inc. (the "Parent"). On March 24, 1998, the Company was reincorporated in
Delaware. On July 31, 1998, the Company consummated its initial public
offering (the "Offering") of 3,180,000 shares of Class A common stock at
an offering price of $15.50 per share pursuant to a Registration Statement
declared effective by the SEC on July 27, 1998. After deducting expenses,
the net proceeds to the Company from the Offering were $44,032,000. The
Company used $38,400,000 of the net proceeds of the Offering to repay
indebtedness owed to the Parent.
The Company is a leading global knowledge company featuring a diverse
portfolio of technology, consumer, and general how-to book brands,
computer-based learning tools, Web sites and Internet e-services. The
Company publishes and markets under well-known brand names, including
For
Dummies®, 3-D Visual®, Bible, CliffsNotes™, Frommer's® travel guides, Betty Crocker's®,
Weight Watchers®
and
Webster's New World™
.
Principles of Consolidation
-- The consolidated financial statements
include the accounts of IDG Books Worldwide, Inc. and its majority
controlled subsidiaries (collectively referred to as the Company). All
significant intercompany accounts and transactions have been eliminated.
Reclassifications
-- Certain amounts in prior years' financial statements
and related notes have been reclassified to conform to the fiscal year
2000 presentation. The accompanying consolidated balance sheet as of March
31, 2000 reports a deferred tax liability of $5.0 million with a
corresponding addition to goodwill to reflect the book/tax difference
related to the carrying value of Cliff's Notes intangible assets. The
accompanying consolidated balance sheet as of September 30, 1999 has been
reclassified to conform to this presentation.
2. Significant Accounting Policies
Fiscal Year
-- The Company's fiscal year ends on the last Saturday of each
September. Fiscal year 1999, ended on September 25, 1999, and consisted of
52 weeks. For convenience, fiscal year-ends are denoted in the
accompanying consolidated financial statements as September 30. Similarly,
the thirteen- and twenty-six-week periods ended March 25, 2000 and March
27, 1999 are referred to as the three and six months ended March 31, 2000
and 1999, respectively.
Intangible Assets
-- Intangible assets represent trademarked brand names,
goodwill, publishing rights and other intangible assets. Amortization is
provided on a straight-line method over the estimated useful lives of
these assets not exceeding forty years.
Net Income 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 into common stock. For
the three and six month  ended March 31, 2000, respectively, approximately
64,000 and 200,000 shares, reflecting the dilutive effects of outstanding
stock options, were included in computing diluted net income per share.
Comprehensive Income
- Comprehensive income for the three months ended
March 31, 2000 was $4,563,000 and $4,551,000 for the three months ended
March 31, 1999.
3. Acquisitions and Divestitures
In August 1999, the Company acquired a portfolio of book and online brands
from the Macmillan General Reference Group (the Reference Brands) of
Pearson Education for $83.0 million, plus $0.5 million in transaction
costs. The acquisition was accounted for as a purchase business
combination and, accordingly, the acquisition cost has been allocated to
the fair value of the assets acquired and liabilities assumed. Assumed
liabilities include $2.0 million for the costs of a restructuring plan
involving various settlements and contract terminations ($1.2 million) and
estimated severance and relocation of personnel ($0.8 million). As of
March 31, 2000, $1.3 million of costs had been incurred.
The purchase price allocation is preliminary and subject to revision upon
receipt of final information concerning valuation of intangible assets,
working capital received at closing, and the actual costs of the
restructuring plan.
In November and December 1999, the Company sold the J.K. Lasser™ and Chek-
Chart brands, respectively, which were purchased in the above-mentioned
acquisition, to unaffiliated companies. The $12.3 million received has
been reported as a reduction to branded trademarks in the first quarter of
fiscal 2000, with no gain or loss resulting from the sale. Transaction
costs of $0.5 million resulted in net proceeds of $11.8 million.
4. Accounts Receivable
Accounts receivable consisted of the following (in thousands):
March 31,   September 30,
                                                  2000         1999
                                              ------------ ------------
                                              (unaudited)

Accounts receivable .....................        $103,232      $83,300
Allowance for doubtful accounts .........          (5,283)      (5,010)
Allowance for sales returns .............         (35,442)     (31,996)
                                              ------------ ------------
    Total ...............................         $62,507      $46,294
                                              ============ ============
5. Inventories
Inventories consisted of the following (in thousands):
March 31,   September 30,
                                                  2000         1999
                                              ------------ ------------
                                              (unaudited)

Books (finished goods) ..................         $35,801      $40,167
Paper ...................................           3,655        5,364
                                              ------------ ------------
    Total Inventory......................          39,456       45,531
Reserve for obsolescence ................         (13,597)     (14,507)
                                              ------------ ------------
    Net Inventory .......................         $25,859      $31,024
                                              ============ ============
6. Intangible Assets
Intangible assets consisted of the following (in thousands):
March 31,   September 30,
                                                  2000         1999
                                              ------------ ------------
                                              (unaudited)

Branded trademarks.......................         $57,749      $70,000
Goodwill ................................          18,530       16,149
Publishing rights .......................           5,000        5,000
Other intangible assets .................             700          700
                                              ------------ ------------
    Total gross intangible assets .......          81,979       91,849
Less: accumulated amortization ...........         (2,976)      (1,628)
                                              ------------ ------------
    Net intangible assets ...............         $79,003      $90,221
                                              ============ ============
7. Accrued Liabilities
Accrued liabilities consisted of the following (in thousands):
March 31,   September 30,
                                                    2000         1999
                                                ------------ ------------
                                                (unaudited)

Accrued royalties ............................      $17,255      $16,276
Accrued promotions ...........................       16,994       14,068
Accrued compensation and benefits ............        7,097        8,689
Accrued inventory and fulfillment ............        2,741        8,086
Other accrued liabilities ....................        6,469        7,348
Accrued acquistion restructuring costs .......        1,194        2,437
Accrued taxes ................................        5,446          911
                                                ------------ ------------
      Total ..................................      $57,196      $57,815
                                                ============ ============
8. Segment Information
The Company adopted SFAS No. 131,
"Disclosures about Segments of an
Enterprise and Related Information,"
in fiscal year 1999.  SFAS No. 131
establishes standards for reporting information about operating segments
and related disclosures about geographic information and major customers.
The Company has two general publishing groups:  Technology and Consumer.
The two segments share the same infrastructure and personnel,
and are not managed as separate operating divisions.  Management evaluates
the performance of these segments at the revenue and gross profit level;
the Company's reporting systems do not track or allocate operating
expenses or fixed assets by segment.
The Technology Group consists of brands targeted for computer users, from
beginning through advanced level users, including information technology
professionals and software developers. The Consumer Group
includes brands targeted at the general consumer, including ,
For Dummies®,
CliffsNotes™
, and the recently acquired Reference Brands (Note 3). Net
revenue by segment is as follows (in thousands):
Three Months Ended
                                                       March 31,
                                                -------------------------
                                                    2000         1999
                                                ------------ ------------

  Technology group .......................          $36,882      $36,290
  Consumer group .........................           27,650        8,396
                                                ------------ ------------
     Total Net Revenue ...................          $64,532      $44,686
                                                ============ ============
The gross profit for the Technology Group and the Consumer Group,
respectively, was $17.0 million and $12.4 million for the second quarter
of fiscal year 2000; and $18.6 million and $4.2 million for the first
three months of fiscal year 1999.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Overview
IDG Books Worldwide, Inc. is a leading global knowledge company
featuring a diverse portfolio of technology, consumer, and general how-to
book brands, computer-based learning tools, Web sites and Internet e-
services. The Company publishes and markets under well-known brand names,
including
For Dummies®, 3-D Visual®, Bible, CliffsNotes™, Frommer's®travel guides, Betty Crocker's®,
Weight Watchers®
and
Webster's New World™
.
These books have created widespread recognition of the Company's
brands by consumers, enabling the Company to successfully publish across a
variety of categories in technology, business, and general how-to. The
Company's portfolio of brand names comprises more than 4,000 active
titles. The Company has over 100 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.
Sales of technology-related books account for a majority of the
Company's net revenue. Sales of books devoted to the use of software
products sold by Microsoft, including its Windows operating system,
accounted for approximately 22% and 43% of the Company's net revenue for
the three months ended March 31, 2000 and 1999, respectively. The Company
does not expect the percentage of net revenue from the sale of books
related to Microsoft software products to continue to be as significant.
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 three and six
months ended March 31, 2000, the Company's top three customers accounted
for approximately 38% and 39% of the Company's net revenue as compared to
35% and 36% in 1999. The Company's top ten customers accounted for
approximately 60% of the Company's six-month net revenue in 2000 as
compared to 68% in 1999.
Results of Operations
The following table summarizes the results of operations as a percentage
of net revenue for the periods shown:
THREE MONTHS ENDED    SIX MONTHS ENDED
                                                 MARCH 31,             MARCH 31,
                                            --------------------- ---------------------
                                                 2000       1999       2000       1999
                                            ---------- ---------- ---------- ----------

CONDENSED CONSOLIDATED STATEMENT OF INCOME DATA:
Net Revenue:
Technology group .........................       57.2%      81.2%      55.2%      65.1%
Consumer  group...........................       42.8%      18.8%      44.8%      34.9%
                                            ---------- ---------- ---------- ----------
Total Net Revenue ........................      100.0%     100.0%     100.0%     100.0%
                                            ========== ========== ========== ==========

Cost of sales ............................       54.5%      48.9%      56.1%      49.0%
Selling, general and administrative ......       28.6%      30.1%      27.8%      31.6%
Depreciation and amortization ............        2.2%       2.9%       2.2%       3.0%
                                            ---------- ---------- ---------- ----------
Operating income .........................       14.7%      18.1%      13.9%      16.4%
   Interest income (expense) - net .......       -2.5%      -0.3%      -2.7%      -0.0%
                                            ---------- ---------- ---------- ----------
Income before provision for income taxes .       12.2%      17.8%      11.2%      16.4%
                                            ---------- ---------- ---------- ----------
Net income ...............................        7.1%      10.2%       6.5%       9.4%
                                            ========== ========== ========== ==========

Other Data:
EBITDA(1) ................................       16.9%      20.9%      16.1%      19.4%
                                            ========== ========== ========== ==========
_______________________
(1) "EBITDA" is defined as income before provision for income taxes, interest, 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
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. EBITDA for the three and six months ended March 31, 2000 was $10.9 million and
$19.7 million, respectively, compared to $9.4 million and $15.9 million for the three and six months ended March 31,
1999.
Three Months Ended March 31, 2000 Compared to Three Months Ended March 31, 1999
Net Revenue.
Net revenue increased $19.8 million, or 44.4%, to $64.5
million for the three months ended March 31, 2000 from $44.7 million for
the three months ended March 31, 1999. This increase was primarily the
result of an increase in net revenues of $19.2 million for the Company's
Consumer Group, which includes the
For Dummies®
and
CliffsNotes™
consumer
titles, and acquired Reference Brands. The acquired Reference Brands
accounted for $16.7 million of the Consumer Group growth, which were not
included in the second fiscal quarter of 1999. Excluding the acquired
Reference Brands, the Consumer Group's growth was 30.5% for the
three months ended March 31, 2000 compared to the comparable period in
1999. The Technology Group contributed the remaining $0.6 million increase
in net revenues, an increase of 1.6% over the 1999 fiscal second quarter.
Of the Company's net revenue for the three months ended March 31, 2000,
$8.3 million was attributable to sales of titles (including new editions)
first published during that period, as compared to $7.3 million for titles
(including new editions) first published during the same period for 1999.
Cost of Sales.
Cost of sales increased $13.3 million, or 60.8%, to
$35.2 million for the three months ended March 31, 2000 from $21.9 million
for the three months ended March 31, 1999.  Cost of sales as a percentage
of net revenue was 54.5% for 2000 and 49.0% for 1999. Product costs,
including paper, printing, and binding expenses, royalty expense and
inventory obsolescence expense increased as a percentage of net revenue to
34.9% for the three months ended March 31, 2000 from 32.7% for the three
months ended March 31, 1999 as a result of a change in product mix.
Product development costs, which are relatively fixed, increased as a
percentage of net revenue to 10.3% for the three months ended March 31,
2000 from 9.6% for the three months ended March 31, 1999, reflecting an
increase in the development of new cross-branded titles.  Fulfillment and
distribution expenses increased as a percentage of net revenue to 9.3% for
the three months ended March 31, 2000 from 6.7% for the three months ended
March 31, 1999 as a result of one-time costs incurred in the relocation of
product to the Company's new distribution facility.
Selling, General, and Administrative Expenses.
Selling, general, and
administrative expenses increased $5.0 million, or 37.1%, to $18.5 million
for the three months ended March 31, 2000 from $13.5 million for the three
months ended March 31, 1999.  Approximately 64% or $3.2 million of this
increase was attributable to increased selling and marketing expenses,
including increases as a result of the retail marketing incentive program
and expenses for other marketing programs where costs increase as net
revenues increase. A significant portion of the increase was also
attributable to a $1.8 million increase in general and administrative
expenses. Selling, general and administrative expenses as a percentage of
net revenue decreased to 30.8% for the three months ended March 31, 2000
from 33.0% for the three months ended March 31, 1999, which can be
attributable to operating leverage and efficiencies achieved for the
incremental business associated with the acquired Reference Brands. The
Company's sales and marketing costs as a percentage of net revenue
decreased to 17.3% for the three months ended March 31, 2000 from 17.8%
for the three months ended March 31, 1999, due to performance-based
customer incentive programs which are driven by net revenue results.
Depreciation and Amortization.
The increase of $0.1 million was due to
a larger depreciable asset base and the amortization of intangible assets
offset by other assets, which have become fully depreciated.
Operating Income.
Operating income increased $1.4 million, or 17.2%, to
$9.5 million for the three months ended March 31, 2000 from $8.1 million
for the three months ended March 31, 1999. Operating income decreased as a
percentage of net revenue to 14.7% for the three months ended March 31,
2000 from 18.1% for the same period the prior year due to an increase in
product development and distribution expenses, as percentages of net
revenue, as described above.
Income Before Provision for Income Taxes.
Income before provision for
income taxes decreased $0.1 million, or less than one percent to $7.9
million for the three months ended March 31, 2000 from $8.0 million for
the three months ended March 31, 1999.  Income before provision for income
taxes decreased as a percentage of net revenue to 12.2% for the three
months ended March 31, 2000 from 17.8% for the three months ended March
31, 1999 due to an increase in product development and distribution
expenses, as percentages of net revenue, as described above. In addition,
net interest expense of $1.6 million for the three months ended March 31,
2000 compared to $0.1 million for the same period in 1999 on borrowings
used to fund the acquisition of the Reference Brands reduced income before
provision for income taxes.
Net Income.
Net income of $4.6 million for the three months ended
March 31, 2000 was unchanged from net income of $4.6 million for the three
months ended March 31, 1999 for the same reasons as described above.
Six Months Ended March 31, 2000 Compared to Six Months Ended March 31, 1999
Net Revenue.
Net revenue increased $40.3 million, or 49.2%, to $122.3
million for the six months ended March 31, 2000 from $82.0 million for the
six months ended March 31, 1999. This increase was primarily the result of
an increase in net revenues of $37.9 million for the Company's Consumer
Group, which includes the
For Dummies®
and
CliffsNotes™
consumer titles,
and acquired Reference Brands. The acquired Reference Brands accounted for
$35.0 million of the Consumer Group growth, which were not included in the
first six-months of 1999. Excluding the acquired Reference Brands, the
Consumer Group's growth rate was 17.1% for the six months ended
March 31, 2000 compared to the comparable period in 1999. The Technology
Group contributed the remaining $2.4 million increase in net revenues, an
increase of 3.7% over the comparable six-month period in 1999. Of the
Company's net revenue for the six months ended March 31, 2000, $14.3
million was attributable to sales of titles (including new editions) first
published during that period, as compared to $13.3 million for titles
(including new editions) first published during the same period for 1999.
Cost of Sales.
Cost of sales increased $28.4 million, or 70.8%, to
$68.6 million for the six months ended March 31, 2000 from $40.2 million
for the six months ended March 31, 1999.  Cost of sales as a percentage of
net revenue was 56.1% for 1999 and 49.0% for 1999. Product costs,
including paper, printing, and binding expenses, royalty expense and
inventory obsolescence expense increased as a percentage of net revenue to
33.9% for the six months ended March 31, 2000 from 32.2% for the six
months ended March 31, 1999 as a result of a change in product mix.
Product development costs, which are relatively fixed, increased as a
percentage of net revenue to 11.6% for the six months ended March 31, 2000
from 9.8% for the six months ended March 31, 1999, reflecting an increase
in the development of new cross-branded titles.  Fulfillment and
distribution expenses increased as a percentage of net revenue to 10.6%
for the six months ended March 31, 2000 from 7.0% for the six months ended
March 31, 1999 as a result of one-time costs incurred in the relocation of
product to the Company's new distribution facility.
Selling, General, and Administrative Expenses.
Selling, general, and
administrative expenses increased $8.1 million, or 31.1%, to $34.0 million
for the six months ended March 31, 2000 from $25.9 million for the six
months ended March 31, 1999.  Approximately 65% or $5.3 million of this
increase was attributable to increased selling and marketing expenses,
including increases as a result of the retail marketing incentive program
and expenses for other marketing programs where costs increase as net
revenues increase. A significant portion of the increase was also
attributable to a $2.8 million increase in general and administrative
expenses. Selling, general and administrative expenses as a percentage of
net revenue decreased to 30.1% for the six months ended March 31, 2000
from 34.7% for the six months ended March 31, 1999, which can be
attributable to operating leverage and efficiencies achieved for the
incremental business associated with the acquired Reference Brands. The
Company's sales and marketing costs as a percentage of net revenue
decreased to 16.9% for the six months ended March 31, 2000 from 18.8% for
the six months ended March 31, 1999, due to performance-based customer
incentive programs which are driven by net revenue results.
Depreciation and Amortization.
The increase of $0.3 million was due to
a larger depreciable asset base and the amortization of intangible assets
offset by other assets, which have become fully depreciated.
Operating Income.
Operating income increased $3.6 million, or 26.6%, to
$17.0 million for the six months ended March 31, 2000 from $13.4 million
for the six months ended March 31, 1999. Operating income decreased as a
percentage of net revenue to 13.9% for the six months ended March 31, 2000
from 16.4% for the same period the prior year due to an increase in
product development and distribution expenses, as percentages of net
revenue, as described above.
Income Before Provision for Income Taxes.
Income before provision for
income taxes increased $0.3 million, or 2.4% to $13.7 million for the six
months ended March 31, 2000 from $13.4 million for the six months ended
March 31, 1999.  Income before provision for income taxes decreased as a
percentage of net revenue to 11.2% for the six months ended March 31, 2000
from 16.3% for the six months ended March 31, 1999 due to an increase in
product development and distribution expenses, as percentages of net
revenue, as described above. In addition, net interest expense of $3.3
million for the six months ended March 31, 2000 compared to $0.1 million
for the same period in 1999 on borrowings used to fund the acquisition of
the Reference Brands reduced income before provision for income taxes.
Net Income.
Net income of $7.9 million for the six months ended March
31, 2000 increased $0.2 million, or 2.9%, from net income of $7.7 million
for the six months ended March 31, 1999 for the same reason as described
above.
Financial Condition, Liquidity, and Capital Resources
As of March 31, 2000, the Company's working capital increased $16.9
million to $54.2 million from $37.3 million as of September 30, 1999. This
increase in working capital was the result of an increase in cash of $0.4
million, an increase in net accounts receivable of $16.2 million, a $5.2
million decrease in net inventory, and a $3.8 million increase in other
current assets and deferred tax assets. Additionally, there was a $1.1
million decrease in accounts payable and a $0.1 million decrease in
accrued liabilities. These changes in working capital can be attributed to
the acquisition of the Reference Brands and Cliffs Notes, Inc. as well as
growth in the core Company business.
The net cash provided by operating activities for the three
months ended March 31, 2000 and 1999 was $6.4 million and $2.3 million,
respectively.  For the six months ended March 31, 2000 and 1999 the net
cash provided (used) by operating activities was ($7.1) million and $3.3
million, respectively. The fluctuations are due primarily to changes in
accounts receivable.
The Company's net cash provided by investing activities for the six
months ended March 31, 2000 was $7.4 million. In December 1999 the Company
sold the J.K. Lasser and Chek-Chart brands, which were acquired in August
1999 from Pearson Education, Inc., for $12.3 million less transaction
costs of $0.5 million. Capital expenditures for the three and six months
ended March 31, 2000 were $2.4 million and $4.6 million, respectively,
compared to $1.1 million and $1.6 million for the three and six months
ended March 31, 1999, which include leasehold improvements and equipment
for the Company's new Indianapolis and San Francisco offices.
The Company's net cash provided by financing activities was $0.1
million for the six months ended March 31, 2000 as a result of payments on
the Company's credit agreement and issuances of common stock as a result
of option exercises, and $2.0 million for the six months ended March 31,
1999.
The Company had $0.6 million in cash invested in short-term financial
instruments as of March 31, 2000. The Company believes that its remaining
borrowing capacity, together with any cash generated from operations and
any funds available under any future credit facilities, will be sufficient
to meet the liquidity requirements of the Company 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
available cash, 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, can be obtained on terms favorable to the Company.
Factors Affecting Future Operating Results
Dependence on Microsoft Products and Competition with Microsoft Press.
Sales of books devoted to the use of software products sold by Microsoft
Corporation ("Microsoft"), including its Windows operating system,
accounted for approximately 22% of the Company's net revenue in the three
months ended March 31, 2000. As a result, future financial results will
depend in part on continued consumer demand for Microsoft products. A
decline in the use of Microsoft products would likely result in decreased
demand for the Company's books and could adversely affect future financial
results.
In addition to relying on the sales of books devoted to Microsoft
products, the Company competes 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 the Company 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 the
Company in providing books devoted to the use of software products sold by
Microsoft.
Dependence on For Dummies? Publications.  The Company derives a
material portion of its net revenue from the sale of the For Dummies?
brand of books. In addition, the Company has devoted substantial resources
to the publication of these books and the development of the For Dummies?
brand name. As a result, any change in reader preferences leading to a
decline in demand for the For Dummies? books would likely have a material
adverse effect on future financial results.
Risks of New Product Introductions.  Generally, as a particular book
gets older, the Company sells fewer copies of that book.  Consequently,
the Company's future success depends on its ability to identify trends in
the technology, business, and self-help markets and to offer new titles,
as well as other products and services, that address the changing needs of
the target audiences. To establish market acceptance of a new publication,
the Company 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. Investors should note, however, that there can
be no assurance that the Company's efforts to introduce new publications
or other products or services will be successful or profitable.
The Company records as an expense the costs related to the development
of new publications and products, other than author advances, as products
are introduced. As a result, the Company's 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.  Paper is the
principal raw material used in the Company's business. The Company
generally purchases paper from merchants representing the paper mills. The
Company does not have long-term paper supply contracts with these paper
merchants. The 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. Consequently, the Company's 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
the Company's future financial condition or operating results.
Fluctuations in Quarterly Results and Cyclicality of Revenue.  The
Company's operating expenses, which include product development costs and
selling, general, and administrative expenses, are relatively fixed in the
short term and are based on our long term revenue expectations. If the
Company sells fewer books or otherwise has lower revenue than expected,
the Company may not be able to quickly reduce its spending.  Any shortfall
in the Company's revenue would have a direct impact on its results of
operations, and fluctuations in quarterly results could affect the market
price of its common stock in a manner unrelated to the Company's long-term
operating performance. The Company typically sells more books during the
first and second quarters of its September fiscal year because of
increased sales during the Christmas season. In addition, the Company
typically sells more books in quarters in which software manufacturers
release new or updated versions of popular software products. 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 net revenue due to seasonal or other factors discussed above.
In addition, the Company typically publishes 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 sold.
Risks Associated with Product Distribution Channels; Risk of Product
Returns.  The Company sells its books primarily to large retail chains,
large wholesalers, warehouse clubs, office superstores, and computer and
electronics superstores. For the three months ended March 31, 2000 the
Company's three largest customers, Barnes & Noble, Inc., Borders, Inc.,
and Ingram Book Company accounted for approximately 16%, 13%, and 9% of
net revenue, respectively. The Company's future financial results depend
in large part on its relationships with its customers. Any disruption in
relationships with its customers could adversely affect financial
performance.
The Company's sales policy generally permits book customers to return
any unsold or damaged books for full credit. The Company records as
revenue all books sold to its customers in a particular quarter and, at
the same time, records a provision for estimated returns. During the three
months ended March 31, 2000, the Company recorded a provision for returns
of approximately 22% of its gross sales. If, during any period, customers
return more books than previously estimated, the Company's financial
results in that period would be adversely affected.
Competition.  The Company faces competition directly from other book
publishers and indirectly from non-print media.  Competition in book
publishing stems mainly from editorial quality, timely introduction of new
titles, product positioning, pricing, and brand name recognition. In
addition to the Company, Pearson Education, Inc., Microsoft Press, and
McGraw-Hill all have a strong market presence in the United States and
internationally in technology publishing.  The principal competitors for
the Company's business and self-help titles include Random House, Simon &
Schuster, and HarperCollins.  Each of these competitors has substantially
greater financial resources than the Company.
Non-print 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, the Company's
business could be adversely affected.
Control by IDG (Parent); Potential Conflicts of Interests; Benefits to
IDG.  The parent 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 has approximately 76% of the combined voting power of both
classes of common stock as of March 31, 2000. The remaining holders of the
shares of Class A common stock are entitled to one vote per share and have
approximately 24% of the combined voting power. The parent has two
representatives on the Company's Board of Directors and has enough votes
to elect all members of the Board of Directors. As a result of its stock
ownership, the parent is in a position, without the approval of the
Company's public stockholders, to amend the Company's 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 the Company's public stockholders; and otherwise control the
Company's management and operations and the outcome of all matters
submitted for a stockholder vote that could conflict with the interests of
its public stockholders. In January 2000, the parent announced its plans
to purchase up to 500,000 shares of IDGB common stock from time to time at
prevailing market prices.
Dependence on Key Personnel. The Company relies, and will continue to
rely, on its senior executive officers and other key management personnel.
During the second fiscal quarter the Company completed its search for two
key executive officers, a President and Chief Financial Officer, to fill
two open positions due to prior resignations. In January 2000, the Company
announced the appointment of William G. Barry as President and Chief
Operating Officer, effective March 1, 2000. Mr. Barry is the former Senior
Vice President, Corporate Development of Random House, Inc. In April 2000
the Company announced the appointment of John M. Harris as Senior Vice
President and Chief Financial Officer, effective May 1, 2000. Mr. Harris
is the former Chief Financial Officer of Marketplace by Marriott, a $4
billion global procurement startup. If any senior executives or key
management leave the Company, the relationships that these people have
with the Company's authors, customers, manufacturers, or investors could
be lost, and the Company would need to find people who could develop new
relationships. In addition, the Company expects that it will need to hire
additional employees, including key management positions for Internet
business development. The competition for employees at all levels of the
book publishing and Internet industries is intense and is increasing. In
our Northern California operations, in particular, the Company has
experienced increased turnover of employees and is experiencing difficulty
in attracting new employees. If the Company does not succeed in attracting
new employees or retaining and motivating current employees, the Company's
business could suffer significantly.
Transition to New Distribution Service. The Company historically
outsourced distribution and fulfillment functions to retail and wholesale
customers through two vendors. During the first fiscal quarter of 2000,
the Company began the transition of these services to a new single source
facility in Virginia. This transition was substantially completed at the
end of the fiscal second quarter with the exception of the acquired
Reference Brands. The Company has continued to transition the distribution
and fulfillment operations of the acquired Reference Brands to its new
facility, a process which was begun in January 2000 and is expected to be
completed by the end of the fiscal third quarter. Any difficulties in
completing transition to the new distribution vendor could adversely
impact day-to-day operating performance and future financial results.
Risks Associated with Acquisitions. As part of the Company's growth
strategy, it may buy or make significant investments in, complementary
companies, publications or products. The Company has completed the
acquisition of Cliffs Notes, Inc. and recently completed the acquisition
of the Reference Brands. These acquisitions, as well as any future
acquisition, will be accompanied by the risks commonly encountered in
making acquisitions of products, companies, and technologies.
For example, it could have difficulty assimilating the personnel and
operations of the acquired company.  This could cause a disruption of its
ongoing business, distraction of management and other resources, and
difficulty in maintaining uniform standards, controls, and procedures.
There can be no assurance that the Company would succeed in overcoming
these risks or any other problems encountered in connection with any
acquisitions it may make. In addition, the Company may be required to
incur additional debt or issue equity to pay for any future acquisitions
Financial Market Risks
For the three months ended March 31, 2000, there were no material changes
in the Company's exposure to financial market risks, including changes in
interest rates and foreign currency exchange rates.
Forward-Looking Statements
In addition to historical information, this Quarterly Report contains
forward-looking statements. The forward-looking statements are subject to
certain risks and uncertainties that could cause actual results to differ
materially from those reflected in such forward-looking statements.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which reflect management's opinion only as of the date hereof.
The Company undertakes no obligation to revise or publicly release the
results of any revision to these forward-looking statements. Readers
should carefully review the risk factors described in other documents the
Company files from time to time with the SEC, including the Company's
Registration Statement on Form S-1 (file no. 333-53433) filed in
connection with the Company's initial public offering, and Form 10-K as of
and for the year ended September 30, 1999.
PART II -- OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 - Financial Data Schedule
(b) Reports on Form 8-K
None
Items 1, 2, 3, 4 and 5 are not applicable and have been omitted.
IDG BOOKS WORLDWIDE, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
IDG BOOKS WORLDWIDE, INC.
(Registrant)
Dated: May 9, 2000
By:
/s/ JOHN J. KILCULLEN
John J. Kilcullen
Chairman and Chief Executive Officer
(Principal Executive Officer and Duly Authorized Officer)