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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549-1004
   FORM 10-Q/A  þ
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934  For the quarterly period ended March 31, 2004OR  o
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 COMMISSION FILE NUMBER 1-14337 PENTON MEDIA, INC. 
  DELAWARE
    
    
    36-2875386(State of Incorporation)
    
    (I.R.S. Employer Identification No.)1300 East Ninth Street, Cleveland, OH
    
    
    44114(Address of Principal Executive Offices)
    
    (Zip Code)
 216-696-7000 
  Indicate by check mark whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes þ No o Indicate by check mark whether the registrant is an accelerated filer as defined in Rule 12b-2 of the Exchange Act.
Yes o No þ Indicate the number of shares outstanding of each of the issuers classes of common stock, as
of the latest practicable date (May 7, 2004). Common Stock: 33,507,320 shares




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PENTON MEDIA, INC.
Form 10-Q/A INDEX PagePart I  FINANCIAL INFORMATIONItem 1. Financial StatementsRestated Consolidated Balance Sheets at March 31, 2004 and December 31, 2003
    
    
    4Restated Consolidated Statements of Operations for the Three Months Ended
March 31, 2004 and 2003
    
    
    6Restated Condensed Consolidated Statements of Cash Flows for the Three Months Ended
March 31, 2004 and 2003
    
    
    7Notes to Consolidated Financial Statements
    
    
    8Item 2. Managements Discussion and Analysis of Financial Condition and Results
of Operations
    
    
    32Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    40Item 4. Controls and Procedures
    
    
    41Part II - OTHER INFORMATIONItem 6. Exhibits and Reports on Form 8-K
    
    
    42Signature
    
    
    43Exhibit Index
    
    
    44EX-31.1 CEO Certification Pursuant to Section 302EX-31.2 CFO Certification Pursuant to Section 302EX-32 Certification Pursuant to 18 U.S.C. Section 1350
  2




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EXPLANATORY NOTE This Amendment No. 1 (Amendment) to Penton Media, Inc.s (the Company) Quarterly Report on
Form 10-Q for the quarterly period ended March 31, 2004 (the Form 10-Q) includes unaudited,
restated consolidated financial statements as of March 31, 2004 and for the three months ended
March 31, 2004 and 2003, and a restated consolidated balance sheet as of December 31, 2003. The
accompanying restated consolidated financial statements, including the notes thereto, have been
revised to reflect the restatement adjustments related to our deferred taxes and other
accounting adjustments previously identified and deemed to be immaterial. The Company has restated, by means of its Annual Report on Form 10-K for the year ended December
31, 2004 (the 2004 Form 10-K) filed on April 15, 2005, its consolidated balance sheet as of
December 31, 2003, and consolidated statements of operations, cash flows, and shareholders
equity (deficit) for the years ended December 31, 2003 and 2002. Quarterly financial
information for 2004, 2003 and 2002 was also affected by the restatement. The restated amounts
for the three months ended March 31, 2004 and the comparable interim period in 2003 are
presented in this Amendment. Refer to Note 2  Restatement in this Amendment for further information on the restatement
impact for the three months ended March 31, 2004 and 2003. Refer also to Note 2  Restatement
in the Companys 2004 Form 10-K, for additional discussion on the nature of the restatement
adjustments, the impact of the restatement adjustments on net income (loss) and the cumulative
impact of the adjustments on the consolidated statement of income and consolidated balance sheet
for each annual period. This Amendment amends and restates Items 1, 2 and 4 of Part I and Item 6 of Part II of the Form
10-Q to revise the disclosure contained therein in connection with the restatement. All referenced amounts in this Amendment for prior periods and prior period comparisons reflect
the balances and amounts on a restated basis, as applicable. Except as otherwise described in Item 4 of Part I, this Amendment has not been updated for
changes in events, estimates or other developments subsequent to May 17, 2004, the date of the
original filing of the Form 10-Q. For a discussion of subsequent events and developments as
well as revisions to prior estimates, please refer to the Companys filings with the Securities
and Exchange Commission subsequent to May 17, 2004. 3




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Part I - FINANCIAL INFORMATION 
 ITEM 1. FINANCIAL STATEMENTS PENTON MEDIA, INC. 
 CONSOLIDATED BALANCE SHEETS
 (Unaudited, Dollars in thousands)
 RestatedMarch 31,
    
    
    December 31,2004
    
    
    2003AssetsCurrent assets:Cash and cash equivalents
    
    $
    30,450
    
    
    $
    29,626Restricted cash
    
    
    193
    
    
    
    Accounts receivable, less allowance for doubtful
accounts of $3,282 and $3,703 in 2004 and 2003, respectively
    
    
    30,669
    
    
    
    27,170Notes receivable
    
    
    473
    
    
    
    571Inventories
    
    
    878
    
    
    
    875Deferred tax asset
    
    
    253
    
    
    
    253Prepayments, deposits and other
    
    
    10,950
    
    
    
    9,625Total current assets
    
    
    73,866
    
    
    
    68,120Property, plant and equipment:Land, buildings and improvements
    
    
    8,664
    
    
    
    8,810Machinery and equipment
    
    
    47,104
    
    
    
    46,45055,768
    
    
    
    55,260Less: accumulated depreciation
    
    
    37,826
    
    
    
    36,33217,942
    
    
    
    18,928Other assets:Goodwill
    
    
    214,411
    
    
    
    214,411Other intangibles, less accumulated amortization of
$13,813 and $13,189 in 2004 and 2003, respectively
    
    
    10,346
    
    
    
    10,883Other non-current assets
    
    
    8,212
    
    
    
    9,102232,969
    
    
    
    234,396$
    324,777
    
    
    $
    321,444
 The accompanying notes are an integral part of these consolidated financial statements. 4




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PENTON MEDIA, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited, dollars in thousands, except share and per share data) RestatedMarch 31,
    
    
    December 31,2004
    
    
    2003Liabilities and stockholders deficitCurrent liabilities:Accounts payable
    
    $
    7,898
    
    
    $
    6,402Accrued compensation and benefits
    
    
    10,090
    
    
    
    8,458Other accrued expenses
    
    
    33,484
    
    
    
    22,747Unearned income, principally trade
show and conference deposits
    
    
    17,523
    
    
    
    22,535Total current liabilities
    
    
    68,995
    
    
    
    60,142Long-term liabilities and deferred credits:Senior secured notes, net of discount
    
    
    156,946
    
    
    
    156,915Senior subordinated notes, net of discount
    
    
    171,773
    
    
    
    171,698Net deferred pension credits
    
    
    10,905
    
    
    
    11,040Deferred tax liability
    
    
    17,940
    
    
    
    17,245Other non-current liabilities
    
    
    8,597
    
    
    
    9,270366,161
    
    
    
    366,168Commitments and contingenciesMinority interest
    
    
    423
    
    
    
    450Mandatorily redeemable convertible preferred stock, par value $0.01
per share; 50,000 shares authorized, issued and outstanding;
redeemable at $1,000 per share
    
    
    60,164
    
    
    
    54,972Redeemable common stock, par value $0.01 per share; 4,191
shares issued and outstanding at December 31, 2003
    
    
    
    
    
    
    2Stockholders deficit:Preferred stock, par value $0.01 per share; 1,950,000 shares
authorized; none issued or outstanding
    
    
    
    
    
    
    Common stock, par value $0.01 per share; 155,000,000 shares
authorized; 33,496,070 and 33,220,877 shares issued and outstanding
at March 31, 2004 and December 31, 2003, respectively
    
    
    333
    
    
    
    332Capital in excess of par value
    
    
    221,432
    
    
    
    226,355Retained deficit
    
    
    (388,777
    )
    
    
    (382,876
    )Notes receivable from officers, less reserve of $7,600 at
December 31, 2003 and March 31, 2004
    
    
    (1,904
    )
    
    
    (1,897
    )Accumulated other comprehensive loss
    
    
    (2,050
    )
    
    
    (2,204
    )(170,966
    )
    
    
    (160,290
    )$
    324,777
    
    
    $
    321,444
 The accompanying notes are an integral part of these consolidated financial statements. 5




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PENTON MEDIA, INC. 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (Unaudited; dollars and shares in thousands, except per share data)
 RestatedThree Months EndedMarch 31,2004
    
    
    2003Revenues
    
    $
    54,467
    
    
    $
    54,392Operating expenses:Editorial, production and circulation
    
    
    21,381
    
    
    
    22,353Selling, general and administrative (including $2.4 million of
executive separation costs in 2004)
    
    
    24,494
    
    
    
    23,637Restructuring and other charges (credits)
    
    
    868
    
    
    
    (84
    )Depreciation and amortization
    
    
    3,021
    
    
    
    3,72649,764
    
    
    
    49,632Operating income
    
    
    4,703
    
    
    
    4,760Other income (expense):Interest expense
    
    
    (9,458
    )
    
    
    (10,338
    )Interest income
    
    
    102
    
    
    
    109Other, net
    
    
    (6
    )
    
    
    (374
    )(9,362
    )
    
    
    (10,603
    )Loss from continuing operations before income taxes
    
    
    (4,659
    )
    
    
    (5,843
    )Provision for income taxes
    
    
    (1,243
    )
    
    
    (4,889
    )Loss from continuing operations
    
    
    (5,902
    )
    
    
    (10,732
    )Discontinued operations:Income from discontinued operations (including
gain on disposal of $1.4 million in 2003), net of taxes
    
    
    
    
    
    
    866Net loss
    
    
    (5,902
    )
    
    
    (9,866
    )Amortization of deemed dividend and accretion
of preferred stock
    
    
    (5,193
    )
    
    
    (767
    )Net loss applicable to common stockholders
    
    $
    (11,095
    )
    
    $
    (10,633
    )Net loss per common share  basic and diluted:Loss from continuing operations applicable
to common stockholders
    
    $
    (0.33
    )
    
    $
    (0.35
    )Discontinued operations, net of taxes
    
    
    
    
    
    
    0.03Net loss applicable to common stockholders
    
    $
    (0.33
    )
    
    $
    (0.32
    )Weighted-average number of shares outstanding:Basic and diluted
    
    
    33,536
    
    
    
    33,118
 The accompanying notes are an integral part of these consolidated financial statements. 6




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PENTON MEDIA, INC. 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Unaudited; dollars in thousands)
 RestatedThree Months EndedMarch 31,2004
    
    
    2003Net cash provided by operating activities
    
    $
    2,040
    
    
    $
    47,265Cash flows from investing activities:Capital expenditures
    
    
    (875
    )
    
    
    (562
    )Earnouts paid
    
    
    
    
    
    
    (7
    )Decreases in notes receivable
    
    
    98
    
    
    
    1,758Proceeds from sale of Professional Trade Shows group
    
    
    
    
    
    
    3,250Net cash provided by (used for) investing activities
    
    
    (777
    )
    
    
    4,439Cash flows from financing activities:Repayment of senior secured credit facility
    
    
    
    
    
    
    (4,500
    )Employee stock purchase plan payments
    
    
    
    
    
    
    (32
    )Proceeds from repayment of officers loans
    
    
    
    
    
    
    250Decrease (increase) in restricted cash
    
    
    (193
    )
    
    
    48Payment of financing costs
    
    
    
    
    
    
    (97
    )Decrease in book overdrafts
    
    
    (220
    )
    
    
    (494
    )Net cash used for financing activities
    
    
    (413
    )
    
    
    (4,825
    )Effect of exchange rate changes on cash
    
    
    (26
    )
    
    
    (17
    )Net increase in cash and cash equivalents
    
    
    824
    
    
    
    46,862Cash and cash equivalents at beginning of period
    
    
    29,626
    
    
    
    6,771Cash and cash equivalents at end of period
    
    $
    30,450
    
    
    $
    53,633
 The accompanying notes are an integral part of these consolidated financial statements. 7




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PENTON MEDIA, INC. 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 NOTE 1  BASIS OF PRESENTATION These financial statements have been prepared by management in accordance with generally accepted
accounting principles (GAAP) for interim financial information and the applicable rules and
regulations of the Securities and Exchange Commission. Accordingly, they do not include all
information and footnotes required by GAAP for complete financial statements. However, in the
opinion of management, the interim financial statements reflect all adjustments, which are of a
normal recurring nature, necessary for a fair presentation of the results of the periods presented.
The results of operations for the interim periods are not necessarily indicative of the results of
operations to be expected for the full year. The accompanying unaudited interim consolidated financial statements should be read together with
the Companys Annual Report on Form 10-K for the year ended December 31, 2003. Reclassifications Certain reclassifications have been made to the 2003 financial statements to conform to the 2004
presentation. These reclassifications did not change previously reported net income (loss), cash
flows or stockholders deficit. Use of Estimates The preparation of financial statements in accordance with GAAP requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of
contingent assets and liabilities at the date of the financial statements and reported amounts of
revenues and expenses during the reporting period. Actual results could differ from these
estimates. Accounting for Stock-Based Compensation The Company accounts for stock-based compensation plans under Accounting Principles Board Opinion
No. 25 Accounting for Stock Issued to Employees. Pro forma information regarding net income
(loss) and earnings per share is required by SFAS No. 123, Accounting for Stock-Based
Compensation (SFAS 123), as amended by SFAS No. 148, Accounting for Stock-Based Compensation
Transition and Disclosure, and has been determined as if Penton had accounted for its employee
stock options under SFAS 123. The weighted-average fair value of options granted during the first three months of 2004 and 2003
was $0.84 and $0.32, respectively. The fair value of the options was estimated on the date of
grant using the Black-Scholes option-pricing model, under the following assumptions: 2004
    
    
    2003Risk-free interest rate
    
    
    3.65
    %
    
    
    3.62
    %Dividend yield
    
    
    0.00
    %
    
    
    0.00
    %Expected volatility
    
    
    136.29
    %
    
    
    104.79
    %Expected life
    
    7years
    
    7years
 Had compensation cost for Pentons stock-based compensation plans been determined based on the fair
value methodologies consistent with SFAS 123, Pentons net loss and earnings per share for the
three months ended March 31, 2004 and 2003 would have been as follows (in thousands, except per
share data): 8




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PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) RestatedThree Months EndedMarch 31,2004
    
    
    2003Net loss applicable to common stockholders:As reported
    
    $
    (11,095
    )
    
    $
    (10,633
    )Add: Compensation expense included in net loss applicable to common
stockholders, net of related tax effects
    
    
    127
    
    
    
    920Less: Total stock-based compensation expense determined under fair
value based methods for all awards, net of related tax effects
    
    
    (360
    )
    
    
    (1,291
    )Pro forma
    
    $
    (11,328
    )
    
    $
    (11,004
    )Basic and diluted earnings per share:As reported
    
    $
    (0.33
    )
    
    $
    (0.32
    )Pro forma
    
    $
    (0.34
    )
    
    $
    (0.33
    )
 New Accounting Pronouncements In December 2003, the Financial Accounting Standards Board (FASB) issued SFAS No. 132 (revised
2003), Employers Disclosures about Pensions and Other Postretirement Benefits (SFAS 132-R).
The provisions of this statement do not change the measurement and recognition provisions of SFAS
No. 87, Employers Accounting for Pensions, SFAS No. 88, Employers Accounting for Settlements
and Curtailments of Defined Benefit Pension Plans and for Termination Benefits, and SFAS No. 106,
Employers Accounting for Postretirement Benefits Other Than Pensions. SFAS 132-R replaces SFAS
No. 132, Employers Disclosures about Pensions and Other Postretirement Benefits and adds
additional disclosures. SFAS 132-R is effective for fiscal years ending after December 15, 2003.
The Company adopted SFAS 132-R as of December 31, 2003 and has included all required disclosures in
these consolidated financial statements. In January 2003, FASB Interpretation No. 46, Consolidation of Variable Interest Entities was
issued which, among other things, provides guidance on identifying variable interest entities
(VIE) and determining when assets, liabilities, non-controlling interests, and operating results
of a VIE should be included in a companys consolidated financial statements, and also requires
additional disclosures by primary beneficiaries and other significant variable interest holders. In
December 2003, the FASB issued a revision of FIN 46 (FIN 46-R), clarifying certain provisions and
partially deferring the effective dates. The Company presently does not hold an interest in a
variable interest entity; therefore, application of FIN 46-R has not affected the Companys
financial statements, results of operations or disclosures. In March 2004, the Emerging Issues Task Force (EITF) reached a final consensus on EITF Issue
03-6, Participating Securities and the Two-Class Method Under FASB Statement 128, Earnings Per
Share (EITF 03-6). EITF 03-6 addresses the computation of earnings per share by companies that
have issued securities other than common stock that participate in dividends and earnings of the
issuing entity. EITF 03-6 is effective for the quarter ended June 30, 2004 and requires the
restatement of previously reported earnings per share. The Company does not expect the adoption of
this Issue to have an effect on its earnings per share as the Company currently uses the two-class
method for its participating securities. 9




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PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 2  RESTATEMENT The consolidated financial statements have been restated in order to reflect certain adjustments to
Pentons financial statements for 2004 as previously reported in Pentons Quarterly Report on Form
10-Q for the quarterly period ended March 31, 2004 filed on May 17, 2004. The restatement also
affects the three month period ended March 31, 2003. All amounts are before any tax effect unless
otherwise noted. Refer to Note 2  Restatement, in the 2004 Form 10-K for further discussion of this restatement
including the adjustments recorded in annual and quarterly periods other than the first quarter of
2004 and 2003. Accordingly, this footnote discusses the restatement adjustments included in the
2004 Form 10-K related only to the three months ended March 31, 2004 and 2003. Restatements Included in 2004 Form 10-K The Company has restated by means of its Annual Report on Form 10-K for the year ended December 31,
2004, filed on April 15, 2005, its consolidated balance sheet as of December 31, 2003, and
consolidated statement of operations, cash flows and shareholders deficit for the years ended
December 31, 2003 and 2002. In addition, the Companys 2004 and 2003 quarterly financial
information had been restated to reflect adjustments to the Companys previously reported financial
information on Form 10-Q for the quarters ended March 31, 2004, June 30, 2004 and September 30,
2004. These adjustments increased previously reported net loss by $0.7 million for the three
months ended March 31, 2004. The Company intends to file amendments to its June 30, 2004 and
September 30, 2004 Forms 10-Q as expeditiously as possible. The Company performed a comprehensive review of the Companys deferred tax assets and deferred tax
liabilities and determined that certain deferred tax liabilities had been incorrectly offset
against its deferred tax assets. In addition to correcting the deferred tax issue, the restatement
also includes other accounting adjustments that were deemed in earlier periods to be immaterial.
The corrections are further described as follows: Deferred Tax Adjustments The Companys management concluded that its previously issued consolidated financial statements for
the three months ended March 31, 2004 and 2003 should be restated to increase income tax expense by
$0.7 million and $4.8 million, respectively, and to establish a corresponding net deferred tax
liability of $17.7 million and $14.9 million for the period ended March 31, 2004 and 2003,
respectively, to correct the computation of our valuation allowance for deferred tax assets over
those periods. Management reached this conclusion following a comprehensive review of the Companys deferred tax
assets and deferred tax liabilities. Under SFAS 109, taxable temporary differences related to
indefinite-lived intangible assets or tax-deductible goodwill (for which reversal cannot be
anticipated) should not have been offset by the Company against deductible temporary differences
for other indefinite-lived intangible assets or tax-deductible goodwill when scheduling reversals
of temporary differences. Other Accounting Adjustments Other accounting adjustments represent items previously identified but deemed to be immaterial and
recorded in the period Penton identified the error or in a subsequent period. Adjustments in this
category change the timing of income and expense items that were previously recognized. These
adjustments had no impact on our net loss for the three months ended March 31, 2004 and 2003,
respectively. The only other adjustment to the consolidated statement of operations for both
periods was a reclassification between selling, general and administrative expenses and
depreciation and amortization expense related to the classification of certain tenant improvement
reimbursements in 2001. The amortization of deemed dividend and accretion of preferred stock increased by $0.1 million for
the three months ended March 31, 2003 as it was discovered in June 2003 that the Company should not
have only been accruing the dividends on the preferred stock from the time of issuance but should
have also been accreting some of the preferred stock. The following adjustments affected the classification of certain balance sheet accounts:  
    In February 2004, a tentative settlement agreement was reached in the Meckler Media
lawsuit. The settlement amount of $4.6 million, which was paid in its entirety by Pentons
insurance company, should have been recorded as 10




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PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)  a liability and corresponding receivable at March 31, 2004, as required by FIN 39,
Offsetting of Amounts Related to Certain Contracts. The March 31, 2004 restated balance sheet
includes the $4.6 million in current assets under prepayments, deposits and other and in current
liabilities under other accrued expenses.
    At March 31, 2004, certain trade show receivables were recorded at their full contract
amounts even though the contract stipulated that only a portion of the contract was due.
This correction reduced accounts receivable and unearned income by $2.1 million at March
31, 2004.
    In September 2003, our minority interest in consolidated subsidiaries balance should
have been reduced by $2.0 million, when certain assets contributed in 2002 by our minority
interest partner were impaired.
    Other less significant balance sheet adjustments were also recorded for items related to
tenant improvements, subscription revenues and restructuring charges. Other All previously reported amounts affected by the restatement that appear elsewhere in these notes to
the consolidated financial statements have also been restated. The following table sets forth the effects of the restatement adjustments discussed above on the
Consolidated Statement of Operations for the three months ended March 31, 2004 and 2003. Three Months Ended March 31,As Previously
    
    
    
    
    
    
    As PreviouslyReported
    
    
    Restated
    
    
    Reported
    
    
    Restated2004
    
    
    2004
    
    
    2003
    
    
    2003(Dollars and shares in thousands,except per share data)Revenues
    
    $
    54,467
    
    
    $
    54,467
    
    
    $
    54,392
    
    
    $
    54,392Editorial, production and circulation
    
    
    21,381
    
    
    
    21,381
    
    
    
    22,353
    
    
    
    22,353Selling, general and administrative
    
    
    24,499
    
    
    
    24,494
    
    
    
    23,641
    
    
    
    23,637Restructuring and other charges (credits)
    
    
    868
    
    
    
    868
    
    
    
    (84
    )
    
    
    (84
    )Depreciation and amortization
    
    
    3,016
    
    
    
    3,021
    
    
    
    3,722
    
    
    
    3,726Interest expense
    
    
    9,458
    
    
    
    9,458
    
    
    
    10,338
    
    
    
    10,338Interest income
    
    
    (102
    )
    
    
    (102
    )
    
    
    (109
    )
    
    
    (109
    )Other, net
    
    
    6
    
    
    
    6
    
    
    
    374
    
    
    
    374Loss from continuing operations before income taxes
    
    
    (4,659
    )
    
    
    (4,659
    )
    
    
    (5,843
    )
    
    
    (5,843
    )Provision (benefit) for income taxes
    
    
    548
    
    
    
    1,243
    
    
    
    126
    
    
    
    4,889Gain (loss) from discontinued operations
    
    
    
    
    
    
    
    
    
    
    866
    
    
    
    866Net loss
    
    
    (5,207
    )
    
    
    (5,902
    )
    
    
    (5,103
    )
    
    
    (9,866
    )Amortization of deemed dividend and accretion of
preferred stock
    
    
    (5,193
    )
    
    
    (5,193
    )
    
    
    (655
    )
    
    
    (767
    )Net loss applicable to common stockholders
    
    $
    (10,400
    )
    
    $
    (11,095
    )
    
    $
    (5,758
    )
    
    $
    (10,633
    )Earnings per common share  basic and diluted:Loss from continuing operations applicable to common
    
    $
    (0.31
    )
    
    $
    (0.33
    )
    
    $
    (0.20
    )
    
    $
    (0.35
    )Discontinued operations, net of taxes
    
    
    
    
    
    
    
    
    
    
    0.03
    
    
    
    0.03Net loss applicable to common stockholders
    
    $
    (0.31
    )
    
    $
    (0.33
    )
    
    $
    (0.17
    )
    
    $
    (0.32
    )Weighted-average number of shares outstanding:Basic and diluted
    
    
    33,536
    
    
    
    33,536
    
    
    
    33,118
    
    
    
    33,118
 11




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##### Table of Contents



PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) The following table sets forth the effects of the restatement adjustments discussed above on
the Consolidated Balance Sheet at March 31, 2004. March 31, 2004As PreviouslyReported
    
    
    Restated(Dollars in thousands)AssetsCurrent assets:Cash and cash equivalents
    
    $
    30,450
    
    
    $
    30,450Restricted cash
    
    
    193
    
    
    
    193Accounts receivable, net
    
    
    32,812
    
    
    
    30,669Notes receivable
    
    
    473
    
    
    
    473Inventories
    
    
    878
    
    
    
    878Deferred tax assets
    
    
    
    
    
    
    253Prepayments, deposits and other
    
    
    6,325
    
    
    
    10,950Total current assets
    
    
    71,131
    
    
    
    73,866Property and equipment, net
    
    
    17,822
    
    
    
    17,942Goodwill
    
    
    214,411
    
    
    
    214,411Other intangible assets, net
    
    
    10,346
    
    
    
    10,346Other non-current assets
    
    
    8,212
    
    
    
    8,212Total Assets
    
    $
    321,922
    
    
    $
    324,777Liabilities and stockholders deficitCurrent liabilities:Accounts payable
    
    $
    7,898
    
    
    $
    7,898Accrued compensation and benefits
    
    
    9,045
    
    
    
    10,090Other accrued expenses
    
    
    29,698
    
    
    
    33,484Unearned income, principally trade show and conference deposits
    
    
    19,351
    
    
    
    17,523Total current liabilities
    
    
    65,992
    
    
    
    68,995Senior secured notes, net of discount
    
    
    156,946
    
    
    
    156,946Senior subordinated notes, net of discount
    
    
    171,773
    
    
    
    171,773Net deferred pension credits
    
    
    10,905
    
    
    
    10,905Deferred tax liability
    
    
    
    
    
    
    17,940Other non-current liabilities
    
    
    8,495
    
    
    
    8,597Total Liabilities
    
    
    414,111
    
    
    
    435,156Commitments and contingenciesMinority interest
    
    
    2,460
    
    
    
    423Mandatorily redeemable convertible preferred stock
    
    
    60,253
    
    
    
    60,164Stockholders deficit:Preferred stock, par value $0.01 per share; 1,800,000
shares authorized; none issued
or outstanding
    
    
    
    
    
    
    Common stock, par value $0.01 per share; 155,000,000 shares authorized;
33,220,877 shares issued and outstanding at 2003, respectively
    
    
    333
    
    
    
    333Capital in excess of par value
    
    
    221,343
    
    
    
    221,432Retained deficit
    
    
    (372,656
    )
    
    
    (388,777
    )Notes receivable from officers
    
    
    (1,904
    )
    
    
    (1,904
    )Accumulated other comprehensive loss
    
    
    (2,018
    )
    
    
    (2,050
    )Total Stockholders Deficit
    
    
    (154,902
    )
    
    
    (170,966
    )Total Liabilities and Stockholders Deficit
    
    $
    321,922
    
    
    $
    324,777
 12




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##### Table of Contents



PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) The following table sets forth the effects of the restatement adjustments discussed above on
the Consolidated Statements of Cash Flows for the years ended March 31, 2004 and 2003: Three Months Ended March 31,As Previously
    
    
    
    
    
    
    As PreviouslyReported
    
    
    Restated
    
    
    Reported
    
    
    Restated2004
    
    
    2004
    
    
    2003
    
    
    2003(Dollars in thousands)Cash flow from operating activities
    
    $
    2,040
    
    
    $
    2,040
    
    
    $
    47,265
    
    
    $
    47,265Cash flow from investing activities
    
    $
    (1,068
    )
    
    $
    (777
    )
    
    $
    2,729
    
    
    $
    4,439Cash flow from financing activities
    
    $
    (122
    )
    
    $
    (413
    )
    
    $
    (3,115
    )
    
    $
    (4,825
    )Cash and cash equivalents
    
    $
    30,450
    
    
    $
    30,450
    
    
    $
    53,633
    
    
    $
    53,633
 NOTE 3  GOODWILL AND OTHER INTANGIBLES There were no changes in the Companys goodwill for the first three months of 2004. Following is a
summary, by business segment, of the balances in goodwill as of March 31, 2004 (in thousands): GoodwillDecember 31,
    
    
    
    
    
    
    March 31,2003
    
    
    Activity
    
    
    2004Industry
    
    $
    36,278
    
    
    $
    
    
    
    $
    36,278Technology
    
    
    67,385
    
    
    
    
    
    
    
    67,385Lifestyle
    
    
    84,924
    
    
    
    
    
    
    
    84,924Retail
    
    
    25,824
    
    
    
    
    
    
    
    25,824Total
    
    $
    214,411
    
    
    $
    
    
    
    $
    214,411
 At March 31, 2004, other intangibles recorded in the consolidated balance sheets are comprised of
the following (in thousands): Gross
    
    
    
    
    
    
    NetCarrying
    
    
    Accumulated
    
    
    BookValue
    
    
    Amortization
    
    
    ValueTrade names
    
    $
    5,277
    
    
    $
    (3,883
    )
    
    $
    1,394Mailing/exhibitor lists
    
    
    9,408
    
    
    
    (5,087
    )
    
    
    4,321Advertiser relationships
    
    
    7,200
    
    
    
    (3,603
    )
    
    
    3,597Subscriber relationships
    
    
    2,100
    
    
    
    (1,075
    )
    
    
    1,025Noncompete agreements
    
    
    174
    
    
    
    (165
    )
    
    
    9Balance at March 31, 2004
    
    $
    24,159
    
    
    $
    (13,813
    )
    
    $
    10,346
 Other intangibles are being amortized over 3 to 10 years. Total amortization expense for the three
months ended March 31, 2004 and 2003 were $0.6 million and $1.1 million, respectively.
Amortization expense estimated for these intangibles for 2004 through 2008 are as follows (in
thousands): Year EndedDecember 31,
    
    Amount2004
    
    $
    2,4742005
    
    $
    2,4412006
    
    $
    2,2142007
    
    $
    1,3002008
    
    $
    404
 13




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##### Table of Contents



PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 4  DISPOSALS At December 31, 2002, the net assets of our Professional Trade Shows (PTS) were classified as
held for sale. The sale was completed in January 2003 for approximately $3.8 million, including an
earnout of $0.6 million based on reaching certain performance objectives in 2003, which were not
met. The sale resulted in a gain of approximately $1.4 million, which was recorded in the first
quarter of 2003. The results of PTS are reported as discontinued operations for all periods
presented. PTS was part of our Industry segment. Operating results for the discontinued operations for the three months ended March 31, 2003 are as
follows (in thousands): Three Months EndedMarch 31,2003Revenues
    
    $
    Loss from operations, net of taxes
    
    $
    (521
    )Gain on sale of properties, net of taxes
    
    
    1,387Income from discontinued operations
    
    $
    866
 NOTE 5  DEBT Loan and Security Agreement In August 2003, the Company replaced its senior secured credit facility with a new four-year loan
and security agreement. Pursuant to the terms of the revolving loan and security agreement, the
Company can borrow up to the lesser of (i) $40.0 million; (ii) 2.5x the Companys last twelve
months adjusted EBITDA measured monthly during the first year, 2.25x during the second year and
2.0x thereafter; (iii) 40% of the Companys last six months of revenues; or (iv) 25% of the
Companys enterprise value, as determined annually by a third party. The revolving credit facility
bears interest at LIBOR plus 5.0% subject to a LIBOR minimum of 1.5%. The Company must comply with
a quarterly financial covenant limiting the ratio of maximum bank debt to the last twelve months
adjusted EBITDA to 2.5x through March 31, 2004, 2.25x from June 30, 2004 through March 31, 2005 and
2.0x thereafter. The loan agreement permits the Company to sell assets of up to $12.0 million in
the aggregate during the term or $5.0 million in any single asset sale; and complete acquisitions
of up to $5.0 million per year. Included in the loan agreement are two stand-by letters of credit
of $0.1 million and $0.2 million, respectively, required by two of the Companys facility leases.
The amounts of the letters of credit reduce the availability under the credit facility. As of
March 31, 2004, no amounts were drawn under the stand-by letters of credit. Costs representing
bank fees and other professional fees of $1.9 million are being amortized over the life of the loan
agreement. As of March 31, 2004, $39.7 million was available under the loan agreement. There were
no amounts outstanding. The loan and security agreement contains several provisions, which could have a significant impact
as to the classification as well as the acceleration of payments for borrowings outstanding under
the agreement, including the following: (i) the obligation of the lender to provide any advances
under the loan agreement is subject to no material adverse change events; (ii) reserves may be
established against the borrowing base for sums that the Company is required to pay, such as taxes
and assessments and other types of required payments, and has failed to pay; (iii) in the event of
a default under the loan agreement, the lender has the right to direct all cash that is deposited
in the Companys lock boxes to be sent to the lender to pay down outstanding borrowings; (iv) the
loan agreement establishes cross-defaults to the Companys other indebtedness (such as the Senior
Secured Notes and Senior Subordinated Notes) such that a default under the loan agreement could
cause a default under the note agreements and vice versa; however, default-triggering thresholds
are different in the loan agreement and the notes; (v) if the Company is in default of any material
agreement to which it is a party and the counter-party to that agreement has the right to terminate
such agreement as a result of the default, this constitutes an event of default under the loan
agreement. Under the loan agreement, the lenders reserve the right to deem the notes in default,
and in those limited circumstances, could accelerate payment of the outstanding loan balances
should the Company undergo a material adverse event. Even though the criteria defining a material
adverse event are subjective, the Company does not believe exercise of the lenders right is
probable nor does it foresee any material adverse events in 2004. In addition, the Company
believes that 14




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##### Table of Contents



PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) the note agreements are long-term in nature. Accordingly, the Company continues to classify
its loans as long term. At March 31, 2004, the Company was in compliance with all of the above
provisions. Senior Secured Credit Facility In January 2003, the Company amended its senior secured credit facility, and as previously noted,
this facility was replaced in August 2003. The amendment permitted the Company to sell certain
properties in excess of the $5.0 million aggregate limit required by the original amended
agreement. In return, the revolving commitment was ultimately reduced from $40.0 million to $20.1
million. The reduction of the revolver resulted in the write-off of unamortized financing fees of
$0.9 million. This charge has been classified as part of interest expense on the consolidated
statements of operations in 2003. Senior Secured Notes In March 2002, Penton issued $157.5 million of 11-7/8% senior secured notes (the Secured Notes)
due in 2007. Interest is payable on the Secured Notes semiannually on April 1 and October 1. The
Secured Notes were offered at a discount of $0.8 million, which is being amortized using the
interest method, over the term of the Secured Notes. Amortization of the discount was immaterial
for the three months ended March 31, 2004 and 2003. Senior Subordinated Notes In June 2001, Penton issued $185.0 million of 10-3/8% senior subordinated notes (the Subordinated
Notes) due in 2011. Interest is payable on the Subordinated Notes semiannually on June 15 and
December 15. The Subordinated Notes were offered at a discount of $4.2 million, which is being
amortized using the interest method, over the term of the Subordinated Notes. Amortization of the
discount was approximately $0.1 million for the three months ended March 31, 2004 and 2003. Interest Payments No interest payments were made in the first quarter of 2004 or 2003. At March 31, 2004 and
December 31, 2003, interest of $14.6 million and $5.4 million were accrued for, respectively, and
included in other accrued expenses on the balance sheet. NOTE 6  MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED STOCK Preferred Stock Leverage Ratio Event of Non-Compliance At March 31, 2004, an event of non-compliance continues to exist under our Series B Convertible
Preferred Stock (the preferred stock) because the Companys leverage ratio of 13.2 (defined as
debt less cash balances in excess of $5.0 million plus the liquidation value of the preferred stock
and unpaid dividends divided by adjusted EBITDA) exceeds 7.5. Upon the occurrence of this event of
non-compliance, the 5% per annum dividend rate on the preferred stock increased by one percentage
point as of April 1, June 30, September 28 and December 27, 2003 and March 26, 2004 to the current
maximum rate of 10% per annum. The conversion price of the preferred stock decreased by $0.76 as
of April 1, June 30, September 28 and December 27, 2003 and March 26, 2004 to its maximum reduction
related to this event of non-compliance of $3.80 per share. The conversion price is currently
$3.81. The conversion price will adjust to what it would have been absent such event (to the
extent of any preferred shares still outstanding) once the leverage ratio is less than 7.5.
Furthermore, the dividend rate will adjust back to 5% as of the date on which the leverage ratio is
less than 7.5. Under the preferred stock agreement, if the leverage ratio exceeds 7.5 for four
consecutive quarters, the preferred stockholders will have the right to cause the Company to seek a
buyer for all of the assets or issued and outstanding capital stock of the Company. As of December
31, 2003, the leverage ratio had exceeded 7.5 for four consecutive quarters giving the preferred
stockholders the right to cause the Company to seek a buyer. If the Company had been sold on March
31, 2004, the bondholders would have been entitled to receive $335.8 million and the preferred
stockholders would have been entitled to receive $226.6 million before the common stockholders
would have received any amounts for their common shares. The leverage ratio event of
non-compliance does not represent an event of default or violation under any of the Companys
outstanding notes or the loan agreement. As such, there is no acceleration of any outstanding
indebtedness as a result of this event. In addition, this event of non-compliance and the
resulting consequences have not resulted in any cash outflow from the Company. Under the conversion terms of the preferred stock, each holder has a right to convert dividends
into additional shares of common stock. At March 31, 2004, no dividends have been declared.
However, in light of each holders conversion right 15




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##### Table of Contents



PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) and considering the increase in the dividend rate and the concurrent reduction of the
conversion price as noted above, the Company has recognized a deemed dividend for the beneficial
conversion feature inherent in the accumulated dividend based on the original commitment date(s).
All such accruals have been reported as an increase in the carrying value of the preferred stock
and a charge to capital in excess of par value in light of the stockholders deficit. See Note 18
 Subsequent Events. In June 2003, it was discovered that in addition to accruing the dividends on the preferred stock
from the time of issuance, the Company should have also been accreting some of the preferred stock.
The impact on net loss applicable to common stockholders at March 31, 2003 was an increase of $0.1
million. NOTE 7  COMMON STOCK AND COMMON STOCK AWARD PROGRAMS Redeemable Common Stock At December 31, 2003, the Company had classified 4,191 common shares outside of stockholders
deficit because the redemption of the stock was not within the control of the Company. Redeemable
common stock relates to common stock that may be subject to rescissionary rights. The purchase of
common stock by certain employees in the Companys 401(k) plan from May 2001 through March 2003 was
not registered under the federal securities laws. As a result, such purchasers of our common stock
during that period may have had the right to rescind their purchases for an amount equal to the
purchase price paid for the shares, plus interest from the date of purchase. On March 14, 2004,
all possible rescissionary rights expired. Management Stock Purchase Plan For the three months ended March 31, 2004 and 2003, respectively, an immaterial amount of expense
was recognized related to the Management Stock Purchase Plan. In February 2004, a total of 595
restricted stock units (RSUs) were granted at $0.84 per share, which represents 80% of the fair
market value of Penton stock on the date of grant. During the first three months of 2004, 11,217
shares of the Companys common stock were issued under this plan leaving a balance of 95,770 RSUs
outstanding at March 31, 2004. Equity and Performance Incentive Plan Stock Options In February 2004, 473,700 options were granted to certain executives and other eligible employees
at an exercise price of $0.90 per share. During the first three months of 2004, 17,000 options
were exercised. At March 31, 2004, 2,338,380 options are outstanding. Deferred Shares For the three months ended March 31, 2004 and 2003, approximately $0.1 million and $0.9 million,
respectively, were recognized as expense related to deferred shares. In February 2004, 445,000
deferred shares were granted to certain executives and 400,056 shares of the Companys common stock
were issued under this plan. At March 31, 2004, 445,000 deferred shares remain outstanding. Performance Shares For the three months ended March 31, 2004, no compensation expense was recognized related to
performance shares. For the three months ended March 31, 2003, an immaterial amount was credited
to compensation expense, which resulted from the decrease in the Companys stock price. At March
31, 2004, a total of 381,250 performance shares remain outstanding, of which 11,250 shares have
been earned. Performance shares are not issuable until earned. Performance Units In the second quarter of 2003, the Company granted 490,155 performance units to certain key
executives. Subject to the attainment of certain performance goals over a three-year period from
January 1, 2003 through December 31, 2005, each grantee can earn a cash award in respect to each
performance unit. For the three months ended March 31, 2004, approximately $0.1 million was
recognized as expense related to these performance units. 16




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##### Table of Contents



PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Treasury Stock In the first quarter 2004, 157,271 shares were returned to the Company by executives to cover taxes
for deferred shares issued during the quarter. Treasury stock is carried at cost and is recorded
as a net decrease in capital in excess of par value. NOTE 8  EMPLOYEE BENEFIT PLANS Effective January 1, 2004, the Companys defined benefit plan was amended to freeze benefit
accruals. Beginning in 2004, the Company began providing benefits by contributing to a new
retirement account in the 401(k) Plan, which has been renamed the Penton Media, Inc. Retirement and
Savings Plan (RSP). Thus, the RSP will include the new retirement account and the old 401(k)
savings account. There are no changes to the 401(k) savings account as a result of this change.
Beginning in 2004, the Company will make monthly contributions to each employees retirement
account equal to between 3% and 6% of the employees annual salary, based on age and years of
service. The Companys contributions become fully vested once the employee has completed five
years of service. The Company expects to make contributions to the RSP of approximately $1.8
million in 2004. During the first three months of 2004, contributions of $0.5 million were made. Effective January 1, 2004, Pentons supplemental executive retirement plan (SERP) was amended to
freeze benefits. In place of the SERP, the Company will accrue an amount equal to between 3% and
6% of the participants eligible salary plus an investment return equal to the Moodys Aa Corporate
Bond note. The accrued percentage is based on each executives age and years of service. The following table summarizes the components of our defined benefit pension expenses and SERP
pension expense for the three months ended March 31, 2004 and 2003 (in thousands): Retirement Plan
    
    
    SERP2004
    
    
    2003
    
    
    2004
    
    
    2003Service cost
    
    
    
    
    
    
    468
    
    
    
    
    
    
    
    18Interest cost
    
    
    612
    
    
    
    660
    
    
    
    13
    
    
    
    13Expected return on plan assets
    
    
    (721
    )
    
    
    (751
    )
    
    
    
    
    
    
    Amortization of prior service costs
    
    
    
    
    
    
    17
    
    
    
    
    
    
    
    7Amortization of actuarial gain
    
    
    (26
    )
    
    
    (138
    )
    
    
    
    
    
    
    Net periodic benefit cost (benefit)
    
    $
    (135
    )
    
    $
    256
    
    
    $
    13
    
    
    $
    38
 The Company previously disclosed in its financial statements for the year ended December 31, 2003
that it expects to contribute $1.5 million to its defined benefit plan in 2004. As of March 31,
2004, no contribution has been made. 17




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##### Table of Contents



PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 9  EARNINGS PER SHARE Earnings per share have been computed pursuant to the provisions of SFAS No. 128, Earnings Per
Share. Computations of basic and diluted earnings per share for the three months ended March 31,
2004 and 2003 are as follows (in thousands, except per share amounts): RestatedThree Months EndedMarch 31,2004
    
    
    2003Net loss applicable to common stockholders
    
    $
    (11,095
    )
    
    $
    (10,633
    )Number of shares:Weighted average shares outstanding -
basic and diluted
    
    
    33,536
    
    
    
    33,118Per share amount:Loss applicable to common stockholders -
basic and diluted
    
    $
    (0.33
    )
    
    $
    (0.32
    )
 Our preferred stock and RSUs are participating securities, such that in the event a dividend is
declared or paid on the common stock, the Company must simultaneously declare and pay a dividend on
the preferred stock and the RSUs as if the preferred stock and the RSUs had been converted into
common stock. EITF Topic D-95, Effect of Participating Convertible Securities on the Computation
of Basic Earnings per Share requires that the participating securities be included in the
computation of basic earnings per share if the effect of inclusion is dilutive. Vested RSUs and
deferred shares are always included in the computation of basic earnings per share as they are
considered equivalent to common stock. For participating securities, the Companys accounting
policy requires the use of the two-class method to determine whether the inclusion of such
securities is dilutive. To the extent not included in basic earnings per share, the redeemable
preferred stock and the non-vested RSUs are considered in the diluted earnings per share
calculation under the if-converted method and treasury stock method, respectively. At March
31, 2004 and 2003, redeemable preferred stock and non-vested RSUs were excluded from the
calculation of basic earnings per share as the results were anti-dilutive. Due to the loss from continuing operations for the three months ended March 31, 2004, 2,338,380
stock options, 381,250 performance shares, 445,000 non-vested deferred shares, 83,882 non-vested
RSUs, 50,000 redeemable preferred shares and 1,600,000 warrants were excluded from the calculation
of diluted earnings per share, as the result would have been anti-dilutive. Due to the loss from
continuing operations for the three months ended March 31, 2003, 2,124,305 stock options, 471,487
performance shares, 538,968 non-vested deferred shares, 120,329 non-vested RSUs, 50,000 redeemable
preferred shares, and 1,600,000 warrants were excluded from the calculation of diluted earnings per
share as the result would have been anti-dilutive. NOTE 10  COMPREHENSIVE LOSS Comprehensive loss represents net loss plus the results of certain stockholders equity changes not
reflected in the consolidated statements of operations. The after-tax component of comprehensive
loss for the three months ended March 31, 2004 and 2003 are as follows (in thousands): RestatedThree Months EndedMarch 31,2004
    
    
    2003Net loss
    
    $
    (5,902
    )
    
    $
    (9,866
    )Other comprehensive loss:Change in accumulated translation adjustment
    
    
    155
    
    
    
    336Total comprehensive loss
    
    $
    (5,747
    )
    
    $
    (9,530
    )
 18




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PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 11  RELATED PARTY TRANSACTIONS During the first quarter of 2004, the Company recorded $2.4 million of severance and other related
costs as part of the separation of the Companys Chief Executive Officer as announced on March 24,
2004. Actual amounts may differ based on final negotiations of a separation agreement.
Accordingly, the Company may record future adjustments. At March 31, 2004, this amount is included
in accrued compensation and benefits on the accompanying consolidated balance sheets. In the first quarter 2004, 157,271 shares were returned to the Company by executives to cover taxes
for deferred shares issued during the quarter. In December 2003, the Company entered into an agreement with a former employee to provide trade
show and conference services to selected Penton events in 2004 and 2005. Under the agreement, the
former employee will receive guaranteed minimum payments of $0.4 million and $0.7 million in 2004
and 2005, respectively. In addition, Penton will provide, for an immaterial charge to the former
employee, office space and related office services, including utilities, computer and office
equipment, telephone service, janitorial services and other typical office services. At March 31, 2004, Neue
Medien Ulm Holdings GmbH (Neue Medien) owed PM Germany, a consolidated
subsidiary, $0.4 million. This amount is classified on the consolidated balance sheets as notes
receivable. Neue Medien and Penton jointly own PM Germany. The notes are due on demand and bear
interest at the German Federal rate plus 3%, or 4.14% at March 31, 2004. NOTE 12  INCOME TAXES The Company assesses the recoverability of its deferred tax assets in accordance with the
provisions of SFAS No. 109, Accounting for Income Taxes (SFAS 109). In the first quarter of
2004 the Company recorded a valuation allowance of $0.4 million against its net foreign deferred
tax assets. In recording the valuation allowance, management considered it more likely than not
that all of the foreign net deferred tax asset would not be realized. As of December 31, 2003 (as
restated) and March 31, 2004 (as restated) the valuation allowance for its net deferred tax assets
and net operating loss carryforwards, excluding the deferred tax liability related to
indefinite-lived intangibles, totaled $72.1 million and $74.4 million, respectively. See Note 2 
Restatement. In January 2003, the Company received a tax refund of $52.7 million. This amount is included in
net cash provided by operating activities in the condensed consolidated statements of cash flows. NOTE 13  CONTINGENCIES In connection with the acquisition of Mecklermedia Corporation in 1998, a lawsuit was brought
against the Company on December 1, 1998 by Ariff Alidina (the Plaintiff), a former stockholder of
Mecklermedia Corporation, in the United States Federal District Court in the Southern District of
New York for an unspecified amount, as well as other relief. The Plaintiff had claimed that the
Company violated the federal securities laws by selling Mr. Meckler, a beneficial owner of
approximately 26% of the shares of Mecklermedia, an 80.1% interest in Jupitermedia Corporation for
what the Plaintiff alleges was a below-market price, thereby giving to Mr. Meckler more
consideration for his common stock in Mecklermedia Corporation than was paid to other stockholders
of Mecklermedia Corporation. On May 16, 2001, the United States District Court for the Southern
District of New York granted the Plaintiffs motion for certification of a class consisting of all
former stockholders of Mecklermedia who tendered their shares in the tender offer. By letter dated
November 3, 2003, plaintiffs counsel informed the Court that a settlement had been reached in this
case and that a request for preliminary approval of the settlement will be submitted to the Court
once the settlement papers are finalized. The parties have submitted papers to the Court and are
awaiting its approval of the settlement. The class settlement fund will consist entirely of
insurance proceeds. In the normal course of business, Penton is subject to a number of lawsuits and claims, both actual
and potential in nature. While management believes that resolution of existing claims and lawsuits
will not have a material adverse effect on Pentons financial statements, management is unable to
estimate the magnitude or financial impact of claims and lawsuits that may be filed in the future. 19




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PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 14  BUSINESS RESTRUCTURING CHARGES In 2001, 2002, 2003 and the first quarter 2004, the Company implemented a number of cost reduction
initiatives to improve its operating cost structure. The cost reduction initiatives included
workforce reductions, the consolidation and closure of over 30 facilities, and the cancellation of
various contracts. The costs associated with restructuring activities are included in
restructuring and other charges in the accompanying consolidated statements of operations. For facilities that the Company no longer occupies, management makes assumptions, including the
number of years a property will be subleased, square footage, market trends, property location and
the price per square foot based on discussions with realtors and/or parties that have shown
interest in the space and records estimated sublease income accordingly. The Company is actively
attempting to sublease all vacant premises. Personnel costs include payments for severance, benefits and outplacement services. 2004 Restructuring Plan Due to the slow recovery in several markets that we serve, the Company recorded restructuring
charges of $0.7 million related primarily to personnel costs in the first quarter 2004. These
costs are associated with the elimination of 21 employees, primarily in the United States. As of
March 31, 2004, the elimination of 16 positions and payments of $0.1 million had been completed.
Activity and liability balances related to the 2004 restructuring plan are as follows (in
thousands): Severanceand Other
    
    
    OtherPersonnel Costs
    
    
    Exit Costs
    
    
    TotalCharged to costs and expenses
    
    $
    695
    
    
    $
    37
    
    
    $
    732Cash payments
    
    
    (85
    )
    
    
    (25
    )
    
    
    (110
    )Restructuring balance, March 31, 2004
    
    $
    610
    
    
    $
    12
    
    
    $
    622
 Payments of severance costs are expected to be completed in the second quarter 2005. 2003 Restructuring Plan In order to meet continued revenue challenges in 2003, the Company implemented a number of
additional expense reduction and restructuring activities. The Company recorded restructuring
charges of $4.9 million in 2003 (restated). Included in this amount is $2.7 million (restated) for
personnel costs associated with the elimination of 85 positions, primarily in the United States.
Furthermore, facility closing costs of $3.8 million relate primarily to the closure of one floor at
the Companys corporate headquarters and the partial closure of one additional facility. This
charge was offset by $2.3 million of estimated sublease income related to these facilities. The
charge for other exit costs of $0.7 million relates primarily to equipment lease payments at closed
office facilities, the cancellation of certain contracts, and broker commissions. Activity and liability balances related to the 2003 restructuring plan are as follows (in
thousands): Severanceand Other
    
    
    Facility
    
    
    OtherPersonnel Costs
    
    
    Closing Costs
    
    
    Exit Costs
    
    
    TotalCharged to costs and expenses
    
    $
    2,736
    
    
    $
    1,505
    
    
    $
    661
    
    
    $
    4,902Adjustments
    
    
    35
    
    
    
    (11
    )
    
    
    
    
    
    
    24Cash payments
    
    
    (1,105
    )
    
    
    (500
    )
    
    
    (233
    )
    
    
    (1,838
    )Restructuring balance, December 31, 2003 (restated)
    
    
    1,666
    
    
    
    994
    
    
    
    428
    
    
    
    3,088Adjustments
    
    
    29
    
    
    
    
    
    
    
    
    
    
    
    29Cash payments
    
    
    (774
    )
    
    
    (102
    )
    
    
    (105
    )
    
    
    (981
    )Restructuring balance, March 31, 2004 (restated)
    
    $
    921
    
    
    $
    892
    
    
    $
    323
    
    
    $
    2,136
 20




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PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Payments of severance costs are expected to be completed by the first quarter 2005. Facility
closing costs and other exit costs, which consist of equipment leases, will be paid over their
respective lease terms, which expire at various dates through 2010. 2002 Restructuring Plan In 2002, the Company announced a number of expense reduction and restructuring initiatives intended
to further improve its operating cost structure. The actions include costs of $5.1 million related
to the closure of nine additional offices worldwide. These amounts were offset in part by
approximately $1.7 million related to our New York, NY and Burlingame, CA offices that we were able
to sublease in 2002. In addition, the Company reduced the workforce by approximately 316 employees
and recorded a liability for other contractual obligations related primarily to the cancellation of
trade show venues, hotel contracts and service agreements. Adjustments of $1.7 million primarily
relate to rent escalation provisions, which had not been taken into consideration when the original
2002 liability was recorded. Activity and liability balances related to the 2002 restructuring plan are as follows (in
thousands): Severanceand Other
    
    
    Facility
    
    
    OtherPersonnel Costs
    
    
    Closing Costs
    
    
    Exit Costs
    
    
    TotalCharged to costs and expenses
    
    $
    10,344
    
    
    $
    3,421
    
    
    $
    1,648
    
    
    $
    15,413Adjustments
    
    
    200
    
    
    
    1,705
    
    
    
    59
    
    
    
    1,964Cash payments
    
    
    (5,440
    )
    
    
    (693
    )
    
    
    (967
    )
    
    
    (7,100
    )Restructuring balance, December 31, 2002
    
    
    5,104
    
    
    
    4,433
    
    
    
    740
    
    
    
    10,277Adjustments
    
    
    (45
    )
    
    
    (604
    )
    
    
    (92
    )
    
    
    (741
    )Cash payments
    
    
    (4,928
    )
    
    
    (1,469
    )
    
    
    (375
    )
    
    
    (6,772
    )Restructuring balance, December 31, 2003
    
    
    131
    
    
    
    2,360
    
    
    
    273
    
    
    
    2,764Adjustments
    
    
    27
    
    
    
    
    
    
    
    
    
    
    
    27Cash payments
    
    
    (30
    )
    
    
    (173
    )
    
    
    
    
    
    
    (203
    )Restructuring balance, March 31, 2004
    
    $
    128
    
    
    $
    2,187
    
    
    $
    273
    
    
    $
    2,588
 The balance of severance costs relate to an executive who will be paid through 2007. Other exit
costs are expected to be paid in the second half of 2004, and obligations for the non-cancelable
leases will be paid over their respective lease terms, which expire at various dates through 2010. In 2002, restructuring charges of $1.0 million were classified as part of discontinued operations. 2001 Restructuring Plan During 2001, as part of a broad cost reduction initiative, the Company announced certain expense
reduction initiatives, including a reduction in workforce, which reduced headcount by approximately
400 employees, the closure of more than 20 offices worldwide and other exit costs primarily related
to the write-off of computerized software development costs. Adjustments to other exit costs of
approximately $1.0 million in 2001 and $0.4 million in 2002 primarily relate to the reversal of
certain restructuring initiatives that did not require the level of spending that had originally
been estimated. 21




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PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Activity and liability balances related to the 2001 restructuring plan are as follows (in
thousands): Severanceand Other
    
    
    Facility
    
    
    OtherPersonnel Costs
    
    
    Closing Costs
    
    
    Exit Costs
    
    
    TotalCharged to costs and expenses
    
    $
    6,774
    
    
    $
    8,669
    
    
    $
    4,364
    
    
    $
    19,807Adjustments
    
    
    (23
    )
    
    
    
    
    
    
    (994
    )
    
    
    (1,017
    )Cash payments
    
    
    (4,468
    )
    
    
    (267
    )
    
    
    (2,423
    )
    
    
    (7,158
    )Restructuring balance, December 31, 2001
    
    
    2,283
    
    
    
    8,402
    
    
    
    947
    
    
    
    11,632Adjustments
    
    
    (135
    )
    
    
    (459
    )
    
    
    (422
    )
    
    
    (1,016
    )Cash payments
    
    
    (2,129
    )
    
    
    (1,590
    )
    
    
    (250
    )
    
    
    (3,969
    )Restructuring balance, December 31, 2002
    
    
    19
    
    
    
    6,353
    
    
    
    275
    
    
    
    6,647Adjustments
    
    
    (8
    )
    
    
    598
    
    
    
    82
    
    
    
    672Cash payments
    
    
    (11
    )
    
    
    (1,304
    )
    
    
    (357
    )
    
    
    (1,672
    )Restructuring balance, December 31, 2003
    
    
    
    
    
    
    5,647
    
    
    
    
    
    
    
    5,647Adjustments
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    2Cash payments
    
    
    
    
    
    
    (360
    )
    
    
    
    
    
    
    (360
    )Restructuring balance, March 31, 2004
    
    $
    
    
    
    $
    5,289
    
    
    $
    
    
    
    $
    5,289
 The Company completed the workforce and other exit cost actions in 2003. The Company expects to
pay the obligations for the non-cancelable leases over their respective lease terms, which expire
at various dates through 2013. Estimated Future Payments At March 31, 2004, the
Company had an accrued restructuring balance of $10.6 million
(restated). We expect to
make cash payments during the remainder of 2004 of approximately
$3.6 million (restated), composed of $1.5
million (restated) for employee separation costs, $1.6 million for facility lease obligations and $0.5 million
for other contractual obligations. The balance of severance costs will be paid through 2007, and
the balance of facility costs and other exit costs, primarily long-term leases, are expected to be
paid through the end of the respective lease terms, which extend through 2013. Amounts due within one year
of approximately $3.6 million (restated) and $3.7 million at March 31, 2004 and
December 31, 2003, respectively, are classified in other accrued expenses on the consolidated
balance sheets. Amounts due after one year of approximately
$7.0 million and $7.6
million at March 31, 2004 and December 31, 2003, respectively, are included in other non-current
liabilities on the consolidated balance sheets. Restructuring charges, including adjustments, recorded as restructuring and other charges (credits)
on the consolidated statements of operations for the three months ended March 31, 2004 and 2003 are
as follows, by segment: Three Months EndedMarch 31,2004
    
    
    2003Industry Media
    
    $
    350
    
    
    $
    (48
    )Technology Media
    
    
    253
    
    
    
    45Lifestyle Media
    
    
    3
    
    
    
    Retail Media
    
    
    18
    
    
    
    Corporate
    
    
    166
    
    
    
    (70
    )Total
    
    $
    790
    
    
    $
    (73
    )
 Also included in restructuring and other charges (credits) at March 31, 2004 and 2003 are
approximately $0.1 million and an immaterial amount related to legal settlement costs and
discontinued operations, respectively. 22




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PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 15  SEGMENT INFORMATION We view and manage our business along four segments: Industry, Technology, Lifestyle and Retail,
and we group our industry portfolios within each segment. A senior manager is in charge of each
segment, and these senior managers report directly to the Chief Executive Officer. Our four
segments derive their revenues from publications, trade shows and conferences, and online media
products serving customers in 12 distinct industries. The executive management team evaluates performance of the segments based on revenues and adjusted
segment EBITDA. As such, in the analysis that follows, we have used adjusted segment EBITDA, which
we define as net income (loss) before interest, taxes, depreciation and amortization, non-cash
compensation, impairment of assets, restructuring charges, executive separation costs, provision
for loan impairment, discontinued operations, general and administrative costs, and other
non-operating items. General and administrative costs include functions such as finance,
accounting, human resources and information systems, which cannot reasonably be allocated to each
segment. Assets are not allocated to segments and as such have not been presented. Summary information by segment for the three months ended March 31, 2004 and 2003, is as follows
(in thousands): Industry
    
    
    Technology
    
    
    Lifestyle
    
    
    Retail
    
    
    Total2004Revenues
    
    $
    18,388
    
    
    $
    14,278
    
    
    $
    17,224
    
    
    $
    4,577
    
    
    $
    54,467Adjusted segment EBITDA
    
    $
    3,073
    
    
    $
    1,049
    
    
    $
    11,108
    
    
    $
    527
    
    
    $
    15,7572003Revenues
    
    $
    19,362
    
    
    $
    15,212
    
    
    $
    15,049
    
    
    $
    4,769
    
    
    $
    54,392Adjusted segment EBITDA
    
    $
    3,276
    
    
    $
    793
    
    
    $
    9,302
    
    
    $
    731
    
    
    $
    14,102
 Segment revenues, all of which are realized from external customers, equal Pentons consolidated
revenues. Following is a reconciliation of Pentons total adjusted segment EBITDA to consolidated
net loss (in thousands): RestatedThree Months EndedMarch 31,2004
    
    
    2003Total adjusted segment EBITDA
    
    $
    15,757
    
    
    $
    14,102Depreciation and amortization
    
    
    (3,021
    )
    
    
    (3,726
    )Restructuring and other charges
    
    
    (868
    )
    
    
    84Executive separation costs
    
    
    (2,354
    )
    
    
    Non cash compensation
    
    
    (122
    )
    
    
    (921
    )Interest expense
    
    
    (9,458
    )
    
    
    (10,338
    )Interest income
    
    
    102
    
    
    
    109Other, net
    
    
    (6
    )
    
    
    (374
    )General and administrative costs
    
    
    (4,689
    )
    
    
    (4,779
    )Loss from continuing operations before income
taxes
    
    
    (4,659
    )
    
    
    (5,843
    )Provision for income taxes
    
    
    (1,243
    )
    
    
    (4,889
    )Discontinued operations
    
    
    
    
    
    
    866Net loss
    
    $
    (5,902
    )
    
    $
    (9,866
    )
 23




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##### Table of Contents



PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 16 
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES Portions of the following transactions do not provide or use cash and, accordingly, are not
reflected in the condensed consolidated statements of cash flows. For the three months ended March 31, 2004, Penton issued 11,217 shares under the Management Stock
Purchase Plan, 400,056 deferred shares and 17,000 shares under the stock option plan. In addition,
in February 2004, 473,700 stock options, 595 RSUs and 445,000 deferred shares were granted.
Furthermore, for the three months ended March 31, 2004, Penton recorded amortization of deemed
dividend and accretion on preferred stock of $5.2 million. For the three months ended March 31, 2003, Penton issued 19,050 shares under the Management Stock
Purchase Plan and 30,516 performance shares to several officers and other key employees. In
addition, in February 2003, 618,850 stock options, 99,876 RSUs and 391,360 deferred shares were
granted. Furthermore, for the three months ended March 31, 2003, Penton recorded amortization of
deemed dividend and accretion on preferred stock of $0.7 million. NOTE 17  GUARANTOR AND NON-GUARANTOR SUBSIDIARIES The following schedules set forth condensed consolidating balance sheets as of March 31, 2004, and
December 31, 2003, and condensed consolidating statements of operations for the three months ended
March 31, 2004 and 2003, and condensed consolidating statements of cash flows for the three months
ended March 31, 2004 and 2003. In the following schedules, Parent refers to Penton Media, Inc.,
Guarantor Subsidiaries refers to Pentons wholly owned domestic subsidiaries, and Non-guarantor
Subsidiaries refers to Pentons foreign subsidiaries. Eliminations represent the adjustments
necessary to (a) eliminate intercompany transactions and (b) eliminate the investments in Pentons
subsidiaries. 24




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##### Table of Contents



PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 17  GUARANTOR AND NON-GUARANTOR SUBSIDIARIES (Continued) PENTON MEDIA, INC.
CONDENSED CONSOLIDATING BALANCE SHEETS (As Restated)
As of March 31, 2004 Guarantor
    
    
    Non-guarantor
    
    
    
    
    
    
    PentonParent
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(Dollars in thousands)AssetsCurrent assets:Cash and cash equivalents
    
    $
    28,361
    
    
    $
    60
    
    
    $
    2,029
    
    
    $
    
    
    
    $
    30,450Restricted cash
    
    
    193
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    193Accounts receivable, net
    
    
    17,294
    
    
    
    5,650
    
    
    
    7,725
    
    
    
    
    
    
    
    30,669Notes receivable
    
    
    
    
    
    
    
    
    
    
    473
    
    
    
    
    
    
    
    473Inventories
    
    
    561
    
    
    
    311
    
    
    
    6
    
    
    
    
    
    
    
    878Deferred tax asset
    
    
    372
    
    
    
    (119
    )
    
    
    
    
    
    
    
    
    
    
    253Prepayments, deposits and other
    
    
    2,935
    
    
    
    5,493
    
    
    
    2,522
    
    
    
    
    
    
    
    10,95049,716
    
    
    
    11,395
    
    
    
    12,755
    
    
    
    
    
    
    
    73,866Property, plant and equipment, net
    
    
    14,116
    
    
    
    2,409
    
    
    
    1,417
    
    
    
    
    
    
    
    17,942Goodwill
    
    
    122,289
    
    
    
    90,755
    
    
    
    1,367
    
    
    
    
    
    
    
    214,411Other intangibles, net
    
    
    4,856
    
    
    
    5,240
    
    
    
    250
    
    
    
    
    
    
    
    10,346Other non-current assets
    
    
    8,009
    
    
    
    142
    
    
    
    61
    
    
    
    
    
    
    
    8,212Investments in subsidiaries (1)
    
    
    (174,047
    )
    
    
    
    
    
    
    
    
    
    
    174,047
    
    
    
    (24,777
    )
    
    
    98,546
    
    
    
    3,095
    
    
    
    174,047
    
    
    
    250,911$
    24,939
    
    
    $
    109,941
    
    
    $
    15,850
    
    
    $
    174,047
    
    
    $
    324,777Liabilities and stockholders deficitCurrent liabilities:Accounts payable and accrued expenses
    
    $
    28,105
    
    
    $
    11,261
    
    
    $
    2,016
    
    
    $
    
    
    
    $
    41,382Accrued compensation and benefits
    
    
    8,632
    
    
    
    950
    
    
    
    508
    
    
    
    
    
    
    
    10,090Unearned income
    
    
    5,195
    
    
    
    4,247
    
    
    
    8,081
    
    
    
    
    
    
    
    17,52341,932
    
    
    
    16,458
    
    
    
    10,605
    
    
    
    
    
    
    
    68,995Long-term liabilities and deferred credits:Senior secured notes, net of discount
    
    
    80,042
    
    
    
    76,904
    
    
    
    
    
    
    
    
    
    
    
    156,946Senior subordinated notes, net of discount
    
    
    87,604
    
    
    
    84,169
    
    
    
    
    
    
    
    
    
    
    
    171,773Net deferred pension credits
    
    
    10,905
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,905Deferred tax liability
    
    
    17,107
    
    
    
    833
    
    
    
    
    
    
    
    
    
    
    
    17,940Intercompany advances
    
    
    (106,263
    )
    
    
    73,113
    
    
    
    33,150
    
    
    
    
    
    
    
    Other non-current liabilities
    
    
    4,414
    
    
    
    2,060
    
    
    
    2,123
    
    
    
    
    
    
    
    8,59793,809
    
    
    
    237,079
    
    
    
    35,273
    
    
    
    
    
    
    
    366,161Commitments and contingenciesMinority interest
    
    
    
    
    
    
    
    
    
    
    423
    
    
    
    
    
    
    
    423Mandatorily redeemable convertible
preferred stock
    
    
    60,164
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    60,164Stockholders deficit:Common stock and capital in excess
of par value
    
    
    221,765
    
    
    
    204,056
    
    
    
    16,614
    
    
    
    (220,670
    )
    
    
    221,765Retained deficit
    
    
    (388,777
    )
    
    
    (347,622
    )
    
    
    (45,067
    )
    
    
    392,689
    
    
    
    (388,777
    )Notes receivable from officers, less
reserve of $7,600
    
    
    (1,904
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,904
    )Accumulated other comprehensive
income (loss)
    
    
    (2,050
    )
    
    
    (30
    )
    
    
    (1,998
    )
    
    
    2,028
    
    
    
    (2,050
    )(170,966
    )
    
    
    (143,596
    )
    
    
    (30,451
    )
    
    
    174,047
    
    
    
    (170,966
    )$
    24,939
    
    
    $
    109,941
    
    
    $
    15,850
    
    
    $
    174,047
    
    
    $
    324,777
   (1)
    
    Reflects investments in subsidiaries utilizing the equity method. 25




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##### Table of Contents



PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 17  GUARANTOR AND NON-GUARANTOR SUBSIDIARIES (Continued) PENTON MEDIA, INC.
CONDENSED CONSOLIDATING BALANCE SHEETS (As Restated)
As of December 31, 2003 Guarantor
    
    
    Non-guarantor
    
    
    
    
    
    
    PentonParent
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(Dollars in thousands)AssetsCurrent assets:Cash and cash equivalents
    
    $
    27,249
    
    
    $
    23
    
    
    $
    2,354
    
    
    $
    
    
    
    $
    29,626Accounts receivable, net
    
    
    17,967
    
    
    
    3,894
    
    
    
    5,309
    
    
    
    
    
    
    
    27,170Notes receivable
    
    
    
    
    
    
    
    
    
    
    571
    
    
    
    
    
    
    
    571Inventories
    
    
    613
    
    
    
    256
    
    
    
    6
    
    
    
    
    
    
    
    875Deferred tax asset
    
    
    372
    
    
    
    (119
    )
    
    
    
    
    
    
    
    
    
    
    253Prepayments, deposits and other
    
    
    7,642
    
    
    
    309
    
    
    
    1,674
    
    
    
    
    
    
    
    9,62553,843
    
    
    
    4,363
    
    
    
    9,914
    
    
    
    
    
    
    
    68,120Property, plant and equipment, net
    
    
    14,948
    
    
    
    2,446
    
    
    
    1,534
    
    
    
    
    
    
    
    18,928Goodwill
    
    
    148,035
    
    
    
    65,009
    
    
    
    1,367
    
    
    
    
    
    
    
    214,411Other intangibles, net
    
    
    5,656
    
    
    
    5,036
    
    
    
    191
    
    
    
    
    
    
    
    10,883Other non-current assets
    
    
    8,443
    
    
    
    125
    
    
    
    534
    
    
    
    
    
    
    
    9,102Investment in subsidiaries
    
    
    (164,319
    )
    
    
    
    
    
    
    
    
    
    
    164,319
    
    
    
    12,763
    
    
    
    72,616
    
    
    
    3,626
    
    
    
    164,319
    
    
    
    253,324$
    66,606
    
    
    $
    76,979
    
    
    $
    13,540
    
    
    $
    164,319
    
    
    $
    321,444Liabilities and stockholders equity (deficit)Current liabilities:Accounts payable and accrued expenses
    
    $
    22,243
    
    
    $
    5,001
    
    
    $
    1,905
    
    
    $
    
    
    
    $
    29,149Accrued compensation and benefits
    
    
    7,683
    
    
    
    770
    
    
    
    5
    
    
    
    
    
    
    
    8,458Unearned income
    
    
    14,584
    
    
    
    3,305
    
    
    
    4,646
    
    
    
    
    
    
    
    22,53544,510
    
    
    
    9,076
    
    
    
    6,556
    
    
    
    
    
    
    
    60,142Long-term liabilities and deferred credits:Senior secured notes, net of discount
    
    
    80,027
    
    
    
    76,888
    
    
    
    
    
    
    
    
    
    
    
    156,915Senior subordinated notes, net of discount
    
    
    87,566
    
    
    
    84,132
    
    
    
    
    
    
    
    
    
    
    
    171,698Net deferred pension credits
    
    
    11,040
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,040Deferred tax liability
    
    
    16,412
    
    
    
    833
    
    
    
    
    
    
    
    
    
    
    
    17,245Intercompany advances
    
    
    (72,440
    )
    
    
    39,704
    
    
    
    32,736
    
    
    
    
    
    
    
    Other non-current liabilities
    
    
    4,807
    
    
    
    2,251
    
    
    
    2,212
    
    
    
    
    
    
    
    9,270127,412
    
    
    
    203,808
    
    
    
    34,948
    
    
    
    
    
    
    
    366,168Minority interest
    
    
    
    
    
    
    
    
    
    
    450
    
    
    
    
    
    
    
    450Mandatorily redeemable convertible
preferred stock
    
    
    54,972
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    54,972Redeemable common stock
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2Stockholders equity (deficit):Common stock and capital in excess
of par value
    
    
    226,687
    
    
    
    204,210
    
    
    
    16,614
    
    
    
    (220,824
    )
    
    
    226,687Retained earnings (deficit)
    
    
    (382,876
    )
    
    
    (340,094
    )
    
    
    (42,867
    )
    
    
    382,961
    
    
    
    (382,876
    )Notes receivable from officers, less
reserve of $7,600
    
    
    (1,897
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,897
    )Accumulated other comprehensive loss
    
    
    (2,204
    )
    
    
    (21
    )
    
    
    (2,161
    )
    
    
    2,182
    
    
    
    (2,204
    )(160,290
    )
    
    
    (135,905
    )
    
    
    (28,414
    )
    
    
    164,319
    
    
    
    (160,290
    )$
    66,606
    
    
    $
    76,979
    
    
    $
    13,540
    
    
    $
    164,319
    
    
    $
    321,444
 26




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##### Table of Contents



PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 17  GUARANTOR AND NON-GUARANTOR SUBSIDIARIES (Continued) PENTON MEDIA, INC.
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS (As Restated)
For the Three Months Ended March 31, 2004 Guarantor
    
    
    Non-guarantor
    
    
    
    
    
    
    PentonParent
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(Dollars in thousands)Revenues
    
    $
    43,577
    
    
    $
    8,716
    
    
    $
    2,174
    
    
    $
    
    
    
    $
    54,467Operating expenses:Editorial, production and circulation
    
    
    15,815
    
    
    
    4,387
    
    
    
    1,179
    
    
    
    
    
    
    
    21,381Selling, general and administrative
    
    
    15,647
    
    
    
    6,432
    
    
    
    2,415
    
    
    
    
    
    
    
    24,494Restructuring and other charges
    
    
    613
    
    
    
    237
    
    
    
    18
    
    
    
    
    
    
    
    868Depreciation and amortization
    
    
    2,144
    
    
    
    669
    
    
    
    208
    
    
    
    
    
    
    
    3,02134,219
    
    
    
    11,725
    
    
    
    3,820
    
    
    
    
    
    
    
    49,764Operating income (loss)
    
    
    9,358
    
    
    
    (3,009
    )
    
    
    (1,646
    )
    
    
    
    
    
    
    4,703Other income (expense):Interest expense
    
    
    (4,858
    )
    
    
    (4,511
    )
    
    
    (89

    )
    
    
    
    
    
    
    (9,458
    )Interest income
    
    
    86
    
    
    
    
    
    
    
    16
    
    
    
    
    
    
    
    102Equity in losses of subsidiaries
    
    
    (9,728
    )
    
    
    
    
    
    
    
    
    
    
    9,728
    
    
    
    Other, net
    
    
    (3
    )
    
    
    
    
    
    
    (3
    )
    
    
    
    
    
    
    (6
    )(14,503
    )
    
    
    (4,511
    )
    
    
    (76
    )
    
    
    9,728
    
    
    
    (9,362
    )Loss from continuing operations before income taxes
    
    
    (5,145
    )
    
    
    (7,520
    )
    
    
    (1,722
    )
    
    
    9,728
    
    
    
    (4,659
    )Provision for income taxes
    
    
    (757
    )
    
    
    (8
    )
    
    
    (478
    )
    
    
    
    
    
    
    (1,243
    )Net loss
    
    $
    (5,902
    )
    
    $
    (7,528
    )
    
    $
    (2,200
    )
    
    $
    9,728
    
    
    $
    (5,902
    )
 27




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##### Table of Contents



PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 17  GUARANTOR AND NON-GUARANTOR SUBSIDIARIES (Continued) PENTON MEDIA, INC.
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS (As Restated)
For the Three Months Ended March 31, 2003 Guarantor
    
    
    Non-guarantor
    
    
    
    
    
    
    PentonParent
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(Dollars in thousands)Revenues
    
    $
    42,112
    
    
    $
    10,141
    
    
    $
    2,139
    
    
    $
    
    
    
    $
    54,392Operating expenses:Editorial, production and circulation
    
    
    15,995
    
    
    
    5,198
    
    
    
    1,160
    
    
    
    
    
    
    
    22,353Selling, general and administrative
    
    
    13,871
    
    
    
    7,172
    
    
    
    2,594
    
    
    
    
    
    
    
    23,637Restructuring and other charges (credits)
    
    
    (129
    )
    
    
    45
    
    
    
    
    
    
    
    
    
    
    
    (84
    )Depreciation and amortization
    
    
    2,365
    
    
    
    955
    
    
    
    406
    
    
    
    
    
    
    
    3,72632,102
    
    
    
    13,370
    
    
    
    4,160
    
    
    
    
    
    
    
    49,632Operating income (loss):
    
    
    10,010
    
    
    
    (3,229
    )
    
    
    (2,021
    )
    
    
    
    
    
    
    4,760Other income (expense):Interest expense
    
    
    (5,376
    )
    
    
    (4,888
    )
    
    
    (74
    )
    
    
    
    
    
    
    (10,338
    )Interest income
    
    
    109
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    109Equity in losses of subsidiaries
    
    
    (10,401
    )
    
    
    
    
    
    
    
    
    
    
    10,401
    
    
    
    Other, net
    
    
    (301
    )
    
    
    (2
    )
    
    
    (71
    )
    
    
    
    
    
    
    (374
    )(15,969
    )
    
    
    (4,890
    )
    
    
    (145
    )
    
    
    10,401
    
    
    
    (10,603
    )Loss from continuing operations before income taxes
    
    
    (5,959
    )
    
    
    (8,119
    )
    
    
    (2,166
    )
    
    
    10,401
    
    
    
    (5,843
    )Provision for income taxes
    
    
    (4,833
    )
    
    
    (5
    )
    
    
    (51
    )
    
    
    
    
    
    
    (4,889
    )Loss from continuing operations
    
    
    (10,792
    )
    
    
    (8,124
    )
    
    
    (2,217
    )
    
    
    10,401
    
    
    
    (10,732
    )Gain (loss) from discontinued operations
    
    
    926
    
    
    
    
    
    
    
    (60
    )
    
    
    
    
    
    
    866Net loss
    
    $
    (9,866
    )
    
    $
    (8,124
    )
    
    $
    (2,277
    )
    
    $
    10,401
    
    
    $
    (9,866
    )
 28




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##### Table of Contents



PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 17  GUARANTOR AND NON-GUARANTOR SUBSIDIARIES (Continued) PENTON MEDIA, INC.
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOW
For the Three Months Ended March 31, 2004 Guarantor
    
    
    Non-guarantor
    
    
    
    
    
    
    PentonParent
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(Dollars in thousands)Cash flows provided by (used for) operating activities
    
    $
    2,513
    
    
    $
    (76
    )
    
    $
    (397
    )
    
    $
    
    
    
    $
    2,040Cash flows from investing activities:Capital expenditures
    
    
    (838
    )
    
    
    (11
    )
    
    
    (26
    )
    
    
    
    
    
    
    (875
    )Decreases in notes receivable
    
    
    
    
    
    
    
    
    
    
    98
    
    
    
    
    
    
    
    98Net cash used for investing activities
    
    
    (838
    )
    
    
    (11
    )
    
    
    72
    
    
    
    
    
    
    
    (777
    )Cash flows from financing activities:Decrease in book overdrafts
    
    
    (220
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (220
    )Increase in restricted cash
    
    
    (193
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (193
    )Net cash provided by (used for) financing activities
    
    
    (413
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (413
    )Effect of exchange rate changes on cash
    
    
    (26
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (26
    )Net increase (decrease) in cash and cash equivalents
    
    
    1,236
    
    
    
    (87
    )
    
    
    (325
    )
    
    
    
    
    
    
    824Cash and cash equivalents at beginning of period
    
    
    27,125
    
    
    
    147
    
    
    
    2,354
    
    
    
    
    
    
    
    29,626Cash and cash equivalents at end of period
    
    $
    28,361
    
    
    $
    60
    
    
    $
    2,029
    
    
    $
    
    
    
    $
    30,450
 29




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##### Table of Contents



PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 17  GUARANTOR AND NON-GUARANTOR SUBSIDIARIES (Continued) PENTON MEDIA, INC
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOW
For the Three Months Ended March 31, 2003 Guarantor
    
    
    Non-guarantor
    
    
    
    
    
    
    PentonParent
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(Dollars in thousands)Cash flows provided by (used for) operating activities
    
    $
    47,911
    
    
    $
    221
    
    
    $
    (867
    )
    
    $
    
    
    
    $
    47,265Cash flows from investing activities:Capital expenditures
    
    
    (435
    )
    
    
    (79
    )
    
    
    (48
    )
    
    
    
    
    
    
    (562
    )Decreases in notes receivable
    
    
    
    
    
    
    
    
    
    
    1,758
    
    
    
    
    
    
    
    1,758Earnouts paid
    
    
    
    
    
    
    (7
    )
    
    
    
    
    
    
    
    
    
    
    (7
    )Proceeds from sale of discontinued components
    
    
    3,250
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,250Net cash provided by (used for) investing activities
    
    
    2,815
    
    
    
    (86
    )
    
    
    1,710
    
    
    
    
    
    
    
    4,439Cash flows from financing activities:Repayment of senior secured credit facility
    
    
    (4,500
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,500
    )Decrease in restricted cash
    
    
    13
    
    
    
    
    
    
    
    35
    
    
    
    
    
    
    
    48Employee stock purchase plan payments
    
    
    (26
    )
    
    
    
    
    
    
    (6
    )
    
    
    
    
    
    
    (32
    )Proceeds from repayment of officers loans
    
    
    250
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    250Decrease in book overdrafts
    
    
    (494
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (494
    )Payment of financing costs
    
    
    (97
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (97
    )Net cash provided by (used for) financing activities
    
    
    (4,854
    )
    
    
    
    
    
    
    29
    
    
    
    
    
    
    
    (4,825
    )Effect of exchange rate
    
    
    (17
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17
    )Net increase in cash and cash equivalents
    
    
    45,855
    
    
    
    135
    
    
    
    872
    
    
    
    
    
    
    
    46,862Cash and cash equivalents at beginning of period
    
    
    5,165
    
    
    
    460
    
    
    
    1,146
    
    
    
    
    
    
    
    6,771Cash and cash equivalents at end of period
    
    $
    51,020
    
    
    $
    595
    
    
    $
    2,018
    
    
    $
    
    
    
    $
    53,633
 30




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##### Table of Contents



PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 18  Subsequent Events In April 2004, the Board of Directors of the Company agreed to reduce the number of board members
at the next annual meeting of shareholders from eleven members to eight members. With this
reduction, the holders of the preferred stock will have designated a majority of our Board of
Directors. Upon the preferred holders obtaining a majority, the conversion price of the preferred
stock adjusts back to $7.61. 31




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##### Table of Contents



ITEM 2.
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with the consolidated financial statements
and the notes thereto. Historical results and percentage relationships set forth in the
consolidated financial statements, including trends that might appear, should not be taken as
indicative of future results. Penton considers portions of this information to be forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934, both as amended, with respect to expectations for future periods.
Although Penton believes that the expectations reflected in such forward-looking statements are
based upon reasonable assumptions, it can give no assurance that its expectations will be achieved.
For this purpose, any statements contained herein that are not statements of historical fact may
be deemed to be forward-looking statements. Without limiting the foregoing, the words believes,
anticipates, plans, expects, seeks, estimates and similar expressions are intended to
identify forward-looking statements. A number of important factors could cause Pentons results to
differ materially from those indicated by such forward-looking statements, including, among other
factors, the outcome of a search for a new chief executive officer and the related transition;
fluctuations in advertising revenue with general economic cycles; economic uncertainty exacerbated
by potential terrorist attacks on the United States or the impact of the war with Iraq, and related
geopolitical events; the performance of our natural products industry trade shows; the seasonality
of revenues from trade shows and conferences; our ability to launch new products that fit
strategically with and add value to our business; our ability to penetrate new markets
internationally; increases in paper and postage costs; the effectiveness of our cost-saving
efforts; the infringement or invalidation of Pentons intellectual property rights; pending
litigation; government regulation; competition; technological change; and international operations. Except as expressly required by the federal securities laws, Penton does not undertake any
obligation to publicly update or revise any forward-looking statements, whether as a result of new
information, future events, changed circumstances, or any other reason. Overview We are a diversified business-to-business media company. We provide media products that deliver
proprietary business information to owners, operators, managers and professionals in the industries
we serve. Through these products, we offer industry suppliers multiple ways to reach their
customers and prospects as part of their sales and marketing efforts. We publish specialized trade
magazines, produce trade shows and conferences, and provide a range of online media, including web
sites, electronic newsletters and electronic conferences. Our products serve 12 industries, which
we group into four segments: Industry
    
    TechnologyManufacturing
    
    Internet TechnologiesDesign/Engineering
    
    Enterprise Information TechnologyMechanical Systems/Construction
    
    ElectronicsSupply ChainGovernment/Compliance
    
    RetailAviation
    
    Food/RetailLeisure/HospitalityLifestyleNatural Products
 We believe we have leading media products in most of the industries we serve. We are structured
along segment and industry lines rather than by product lines. This enables us to promote our
related group of products, including publications, trade shows and conferences, and online media
products to our customers. Our business is beginning to stabilize as we move into 2004 and there seems to be a stream of
increasingly positive news about the U.S. economy. However, the business-to-business print
advertising market continues to suffer late-cycle weakness in the early part of 2004. Based on
industry information that is available, it is clear that the trade magazine industry has not yet
demonstrated any real recovery in advertising pages in spite of improving economic conditions in
most sectors. Some of the sectors which are core to Pentons business continue to record
meaningful declines in print advertising pages so far this year, including software, computers, and
manufacturing. 32




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The continuing decline in print advertising pages across a broad range of business-to-business
markets appears to be tied to the combination of the historical lag of advertising recovery and
the secular changes that are occurring in our industry. While it is historically consistent for
advertising recovery to lag the recovery of underlying end-markets, we are likely experiencing a
structural change in how our customers are allocating their marketing budgets even as their
business conditions improve. While the secular changes vary by market and are not consistently applied across all sectors, we
are witnessing increasing adoption of electronic marketing programs that include search engine
advertising, as well as custom marketing programs including events and print products. The
changing marketing strategies of our customers continue to impact print advertising budgets in
several sectors. The adoption of non-traditional media channels seems to be driven by a combination of sales lead
generation goals and marketing accountability in several markets. Brand building and new product
introductions, long the strength of print advertising programs, are not the primary marketing
strategies for many of our customers at this point in the economic cycle. In sectors where brands continue to be the primary focus of marketing plans, such as foodservice
and retail, print advertising continues to be the foundation of marketing programs. As customers
in other sectors return to brand building and introduction of new products, it is likely that print
advertising will recover. However, it is also likely that print advertising recovery will lag the
overall growth in our customers total marketing budgets. The secular changes taking place in the business-to-business media industry drive the Companys
strategy of providing a wide range of marketing solutions to our customers, including e-Media
properties, custom marketing programs and integrated marketing services, in addition to traditional
print advertising and trade show exhibitions. While e-Media is still a relatively small part of the performance of the Company, we expect to see
accelerated growth of this product line as we introduce new digital media offerings across all of
the Companys markets. RECENT DEVELOPMENTS Restatement The consolidated financial statements have been restated in order to reflect certain adjustments to
Pentons financial statements for 2004 as previously reported in Pentons Quarterly Report on Form
10-Q for the quarterly period ended March 31, 2004 filed on May 17, 2004. The restatement also
affects the three month period ended March 31, 2003. See Note 2  Restatement for additional
details. Chairman and Chief Executive Officer to Leave Company On March 24, 2004, the Company announced that its Chairman and Chief Executive Officer (CEO),
Thomas L. Kemp, will be leaving the Company later this year. To serve the Companys best interest
and ensure an orderly transition, Mr. Kemp will remain CEO until his replacement has been named. A
national search, led by a committee of non-management directors, is currently underway. The Company recorded $2.4 million of severance and other related costs as part of the separation.
Actual amounts may differ based on final negotiations of a separation agreement; accordingly, the
Company may record future adjustments. Pension and SERP freeze effective January 1, 2004 In November 2003, the Companys retirement plan was amended to freeze benefit accruals effective
January 1, 2004. Beginning in 2004, the Company began providing benefits to a new retirement
account in the 401(k) Plan, which has been renamed the Penton Media, Inc. Retirement and Savings
Plan (RSP). The RSP will include the new retirement account and the old 401(k) savings
account. Under the new plan, the Company will make monthly contributions to each employees
retirement account equal to between 3% and 6% of the employees annual salary, based on age and
years of service. The Companys contributions become fully vested once the employee completes five
years of service. The Company expects to make contributions to the RSP of approximately $1.8
million in 2004. In November 2003, Pentons supplemental executive retirement plan (SERP) was amended to freeze
benefits effective on January 1, 2004. In place of the SERP, the Company will accrue an amount
equal to between 3% and 6% of each participants 33




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eligible salary plus an investment return equal to the Moodys Aa Corporate Bond note. The accrued
percentage is based on each executives age and years of service. Preferred Stock Leverage Ratio Event of Non-Compliance An event of non-compliance continues to exist under our Series B Convertible Preferred Stock
because the Companys leverage ratio of 13.2 at March 31, 2004 (defined as debt less cash balances
in excess of $5.0 million plus the liquidation value of the preferred stock and unpaid dividends
divided by adjusted EBITDA) exceeds 7.5. Upon the occurrence of this event of non-compliance, the
5% dividend rate on the preferred stock increased by one percentage point as of April 1, June 30,
September 28 and December 27, 2003 and March 26, 2004 up to the current maximum rate of 10%. The
conversion price on the preferred stock decreased by $0.76 as of April 1, June 30, September 28 and
December 27, 2003 and March 26, 2004 to the maximum reduction related to this event of
non-compliance of $3.80. The conversion price is currently $3.81. The conversion price will
adjust to what it would have been absent such event, to the extent of any preferred shares still
outstanding, once the leverage ratio is less than 7.5. Furthermore, the dividend rate will adjust
back to 5% as of the date on which the leverage ratio is less than 7.5. Under the preferred stock
agreement, since the leverage ratio has exceeded 7.5 for four consecutive quarters, the preferred
stockholders have the right to cause the Company to seek a buyer for all of the assets or issued
and outstanding capital stock of the Company. If the Company had been sold on March 31, 2004, the
bondholders would have been entitled to receive $335.8 million and the preferred stockholders would
have been entitled to receive $226.6 million before the common stockholders would have received any
amounts for their common shares. The leverage ratio event of non-compliance does not represent an
event of default or violation under any of the Companys outstanding notes or the loan agreement.
As such, there will not be an acceleration of any outstanding indebtedness as a result of this
event. In addition, this event of non-compliance and the resulting consequences do not result in
any cash outflow from the Company. Under the conversion terms of the preferred stock, each holder has a right to convert dividends
into additional shares of common stock. At March 31, 2004, no dividends had been declared.
However, in light of each holders conversion right and considering the increase in the dividend
rate and the concurrent reduction of the conversion price as noted above, the Company has
recognized a deemed dividend for the beneficial conversion feature inherent in the accumulated
dividend based on the original commitment date(s). All such accruals have been reported as an
increase in the carrying value of the preferred stock and a charge to capital in excess of par
value since the Company has a stockholders deficit. In April 2004, the Board of Directors of the Company agreed to reduce the number of board members
at the next annual meeting of stockholders from eleven members to eight members. With this
reduction, the holders of the preferred stock will have designated a majority of our Board of
Directors. Upon the preferred holders obtaining a majority, the conversion price of the preferred
stock adjusts back to $7.61. RESULTS OF OPERATIONS Revenues Our magazines generate revenues primarily from the sale of advertising space. Our magazines are
primarily controlled circulation and are distributed free of charge to qualified subscribers in our
target industries. Subscribers to controlled-circulation publications qualify to receive our trade
magazines by verifying their responsibility for specific job functions, including purchasing
authority. We survey our magazine subscribers annually to verify their continuing qualification.
Trade show exhibitors pay a fixed price per square foot of booth space. In addition, we receive
revenues from attendee fees at trade shows and from exhibitor sponsorships of promotional media.
Our conferences are supported by either attendee registration fees or marketer sponsorship fees, or
a combination of both. The following table summarizes our revenues for the three months ended March 31, 2004 and 2003 (in
millions): YTD March2004
    
    
    2003
    
    
    ChangeRevenues
    
    $
    54.5
    
    
    $
    54.4
    
    
    
    0.1
    %
 Total revenues increased $0.1 million, or 0.1%, from $54.4 million for the three months ended March
31, 2003 to $54.5 million for the same period in 2004. The increase was due primarily to an
increase in trade show revenues of $1.5 million, or 10.6%, 34




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from $14.6 million for the three months ended March 31, 2003 to $16.1 million for the same 2004
period and an increase in online media revenues of $0.8 million, or 24.7%, from $3.0 million for
the three months ended March 31, 2003 to $3.8 million for the same 2004 period. These increases
were partially offset by publishing revenue declines of $2.3 million, or 6.1%, from $36.8 million
for the three months ended March 31, 2003 to $34.5 million for the same 2004 period. Included in
revenues for 2003 were conference revenues of $0.5 million related to our spring National
Convenience Store Advisory Group Convention (NCSAG) event, which was not held until April 2004. The $2.2 million, or 6.1%, decrease in publishing revenues was due primarily to a decrease in our
Industry and Technology segments. Our manufacturing and design/engineering portfolios accounted
for $1.0 million of the decrease, while our Internet technology and enterprise information
technology portfolios accounted for an additional $1.8 million of the decrease. The remaining
sectors either improved or were flat when compared with the prior year. The absence of revenues
from our Internet Worldmagazine, which was shut-down in the second quarter of 2003, represented
20% of the total publishing decline. Of the $2.2 million decrease in publishing revenues, nearly
$1.8 million related to advertising. Subscription revenues and list rental revenues also declined
in 2004 compared with the first quarter of 2003. The $1.5 million, or 10.6%, increase in our trade show and conference revenues was due primarily to
the increase of $1.9 million in our Lifestyle segment, partially offset by a decrease of $0.2
million in our Retail segment. The improvement in our Lifestyle segment was the result of a highly
successful Natural Products Expo West show held in March 2004 while the decline in our Retail
segment was due to the shift in timing of our NCSAG event which was held in the first quarter of
2003 but moved to the second quarter of 2004. Exhibitor revenues, which represent about 77.0% of
the first quarter 2004 trade show and conference revenues, increased approximately $1.1 million, or
10%, due primarily to increased booth rentals. Sponsorship revenues also improved compared with
the first quarter of 2003, increasing by approximately 35%. The $0.8 million, or 24.7%, increase in online media revenues was due primarily to an increase in
our Technology segment of $0.7 million and an increase in our Industry segment of $0.1 million.
Most of the increase in online revenues was due to increases in sponsorship revenues for electronic
newsletters and online events. Editorial, Production and Circulation YTD March2004
    
    
    2003
    
    
    Change(In millions)Editorial, production and circulation
    
    $
    21.4
    
    
    $
    22.4
    
    
    
    (4.3
    )%Percent of revenues
    
    
    39.3
    %
    
    
    41.1
    %
 Our editorial, production and circulation expenses include personnel costs, purchased editorial
costs, hall rental costs, postage charges, circulation qualification costs and paper costs. The
decrease in editorial, production and circulation expenses for the first quarter of 2004 compared
with the first quarter of 2003 primarily reflects lower headcount and personnel-related costs,
lower postage costs, and lower paper and printing costs. These decreases were partially offset by
slightly higher online media costs; particularly Web site development costs, and slightly higher
exhibit hall expenses. The decrease also reflects the elimination of some unprofitable properties
in 2003, particularly Internet Worldmagazine. Selling, General and Administrative RestatedYTD March2004
    
    
    2003
    
    
    Change(In millions)Selling, general and administrative
    
    $
    24.5
    
    
    $
    23.6
    
    
    
    3.6
    %Percent of revenues
    
    
    45.0
    %
    
    
    43.5
    %
 Our selling, general and administrative (SG&A) expenses include personnel costs, independent
sales representative commissions, product marketing, and facility costs. Our SG&A expenses also
include costs of corporate functions, including accounting, finance, legal, human resources,
information systems, and communications. The increase in SG&A expenses for the first quarter of
2004 compared with the first quarter of 2003 was due primarily to a charge of $2.4 million related
to executive separation costs. As previously noted, Penton announced on March 24, 2004 that Mr.
Thomas L. Kemp, chairman 35




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and chief executive officer, will be leaving the company. This increase was partially offset by
lower staff costs, lower facility costs and lower division and corporate overhead costs as a result
of past restructuring efforts. Restructuring Charges Commencing in 2001 and continuing through the first quarter of 2004, we implemented a number of
cost reduction initiatives to improve our operating cost structure. For a discussion of activity
under our restructuring plans, see Note 14  Business Restructuring Charges of the notes to
consolidated financial statements. 2004 Restructuring Plan Due to the slow recovery in several markets that we serve, the Company recorded restructuring
charges of $0.7 million related primarily to personnel costs in the first quarter of 2004. These
costs are associated with the elimination of 21 positions, primarily in the United States. As of
March 31, 2004, the elimination of 16 positions and payments of $0.1 million had been completed. Summary of Restructuring Activities The following table summarizes all of the Companys restructuring activity through March 31, 2004
(in thousands): Severanceand Other
    
    
    Facility
    
    
    OtherPersonnel Costs
    
    
    Closing Costs
    
    
    Exit Costs
    
    
    TotalCharges
    
    $
    6,774
    
    
    $
    8,669
    
    
    $
    4,364
    
    
    $
    19,807Adjustments
    
    
    (23
    )
    
    
    
    
    
    
    (994
    )
    
    
    (1,017
    )Cash payments
    
    
    (4,468
    )
    
    
    (267
    )
    
    
    (2,423
    )
    
    
    (7,158
    )Accrual at December 31, 2001
    
    
    2,283
    
    
    
    8,402
    
    
    
    947
    
    
    
    11,632Charges
    
    
    10,344
    
    
    
    3,421
    
    
    
    1,648
    
    
    
    15,413Adjustments
    
    
    65
    
    
    
    1,246
    
    
    
    (363
    )
    
    
    948Cash payments
    
    
    (7,569
    )
    
    
    (2,283
    )
    
    
    (1,217
    )
    
    
    (11,069
    )Accrual at December 31, 2002
    
    
    5,123
    
    
    
    10,786
    
    
    
    1,015
    
    
    
    16,924Charges
    
    
    2,736
    
    
    
    1,505
    
    
    
    661
    
    
    
    4,902Adjustments
    
    
    (18
    )
    
    
    (17
    )
    
    
    (10
    )
    
    
    (45
    )Cash payments
    
    
    (6,044
    )
    
    
    (3,273
    )
    
    
    (965
    )
    
    
    (10,282
    )Accrual at December 31, 2003 (restated)
    
    
    1,797
    
    
    
    9,001
    
    
    
    701
    
    
    
    11,499Charges
    
    
    695
    
    
    
    
    
    
    
    37
    
    
    
    732Adjustments
    
    
    56
    
    
    
    2
    
    
    
    
    
    
    
    58Cash payments
    
    
    (889
    )
    
    
    (635
    )
    
    
    (130
    )
    
    
    (1,654
    )Accrual at March 31, 2004 (restated)
    
    $
    1,659
    
    
    $
    8,368
    
    
    $
    608
    
    
    $
    10,635
 At March 31, 2004, the Company had an accrued restructuring balance of $10.6 million (restated).
We expect to make cash payments through the remainder of 2004 of
approximately $3.6 million (restated),
comprised of $1.5 million (restated) for employee separation costs, $1.6 million for lease obligations and
$0.5 million for other contractual obligations. The balance of severance and other exit costs will
be paid through 2007, and the balance of facility costs, primarily long-term leases, is expected to
be paid through the end of the respective lease terms, which extend through 2013. Amounts due
within one year of approximately $3.6 million (restated) and $3.7 million at March 31, 2004 and December 31,
2003, respectively, are classified in other accrued expenses on the consolidated balance sheets.
Amounts due after one year of approximately $7.0 million and $7.6 million at March 31,
2004 and December 31, 2003, respectively, are included in other non-current liabilities on the
consolidated balance sheets. The Company expects to realize sufficient savings from its 2004 restructuring efforts to recover
the employee termination costs by December 31, 2004. Savings from terminations of contracts and
lease costs will be realized over the estimated lives of the contracts or leases. 36




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Other Income (Expense) Other income (expense) consists of the following: YTD March2004
    
    
    2003
    
    
    Change(In millions)Interest expense
    
    $
    (9.5
    )
    
    $
    (10.3
    )
    
    
    (8.5
    )%Interest income
    
    $
    0.1
    
    
    $
    0.1
    
    
    
    6.4
    %Other, net
    
    $
    
    
    
    $
    (0.4
    )
    
    
    n/a
 Included in interest expense in the first quarter of 2003 is approximately $0.9 million related to
the write-off of unamortized financing fees associated with the commitment reduction of our credit
facility revolver in January 2003 from $40.0 million to $20.1 million. Effective Tax Rates The effective tax rates for the three months ended March 31, 2004 (as restated) and 2003 (as
restated) were (26.7)% and (83.7)%, respectively. The higher effective tax rate for 2003 is due to
valuation allowance adjustments created by the change in deferred taxes related to indefinite-lived
assets. The tax provision for 2004 and 2003 in the consolidated statements of operations relates
to taxable temporary differences related to indefinite-lived assets and state and foreign taxes. Discontinued Operations Discontinued operations in 2003 include the results of PM Australia, which was sold in December
2002, and the results of PTS, which was sold in January 2003. PM Australia was part of our
Technology segment, and PTS was part of our Industry segment. The $0.9 million of income recognized in 2003 was primarily due to a gain of approximately $1.4
million associated with the sale of PTS, offset by one month of operations for PTS, and settlement
costs for certain pending lawsuits related to PM Australia. Segments We manage our business based on four operating segments: Industry, Technology, Lifestyle and
Retail. The segments derive their revenues from publications, trade shows and conferences, and
online media products. The executive management team evaluates performance of the segments based on revenues and adjusted
segment EBITDA. As such, in the analysis that follows, we have used adjusted segment EBITDA, which
we define as net income (loss) before interest, taxes, depreciation and amortization, non-cash
compensation, executive separation costs, impairment of assets, restructuring charges, provision
for loan impairment, discontinued operations, general and administrative costs, and other
non-operating items. General and administrative costs include functions such as finance,
accounting, human resources and information systems, which cannot reasonably be allocated to each
segment. See Note 15  Segment Information, for a reconciliation of total adjusted segment EBITDA
to consolidated net loss. 37




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Financial information by segment for the three months ended March 31, 2004 and 2003, is summarized
as follows (in thousands): Adjusted
    
    
    Adjusted SegmentRevenues
    
    
    Segment EBITDA
    
    
    EBITDA Margin2004
    
    
    2003
    
    
    2004
    
    
    2003
    
    
    2004
    
    
    2003Industry
    
    $
    18,388
    
    
    $
    19,362
    
    
    $
    3,073
    
    
    $
    3,276
    
    
    
    16.7
    %
    
    
    16.9
    %Technology
    
    
    14,278
    
    
    
    15,212
    
    
    
    1,049
    
    
    
    793
    
    
    
    7.3
    %
    
    
    5.2
    %Lifestyle
    
    
    17,224
    
    
    
    15,049
    
    
    
    11,108
    
    
    
    9,302
    
    
    
    64.5
    %
    
    
    61.8
    %Retail
    
    
    4,577
    
    
    
    4,769
    
    
    
    527
    
    
    
    731
    
    
    
    11.5
    %
    
    
    15.3
    %Total
    
    $
    54,467
    
    
    $
    54,392
    
    
    $
    15,757
    
    
    $
    14,102
 Industry Our Industry segment, which represented 33.8% and 35.6% of total Company revenues for the three
months ended March 31, 2004 and 2003, respectively, serves customers in the manufacturing,
design/engineering, mechanical systems/construction, supply chain, government/compliance and
aviation industries. For the three months ended March 31, 2004, and 2003, 95.7% and 95.9%,
respectively, of this segments revenues were generated from publishing operations, 0.9% and 1.4%
from trade shows and conferences, and 3.4% and 2.7% from online media products. Revenues for this segment decreased $1.0 million, or 5.0%, from $19.4 million for the three months
ended March 31, 2003 to $18.4 million for the same period in 2004. The decrease was due primarily
to lower revenues from publishing. Print advertising in our design/engineering and manufacturing
portfolio markets accounted for nearly all of this decline as these markets continue to be
challenging. Adjusted segment EBITDA for our Industry portfolio decreased $0.2 million, or 6.2%, from $3.3
million for the three months ended March 31, 2003 to $3.1 million for the same period in 2004.
Industry publications decreased $0.5 million, while trade shows and conferences improved $0.1
million and online media remained flat. Segment general and administrative costs were lower by
approximately $0.2 million, mainly from staff reductions. The decline in adjusted segment EBITDA
margins was due primarily to lower revenues. Technology Our Technology segment, which represented 26.2% and 27.9% of total Company revenues for the three
months ended March 31, 2004 and 2003, respectively, serves customers in the Internet technologies,
enterprise information technology and electronics markets. For the three months ended March 31,
2004 and 2003, respectively, 65.4% and 71.9% of this segments revenues were generated from
publishing, 13.1% and 12.2% from trade shows and conferences, and 21.5% and 15.9% from online media
products. Revenues for this segment decreased $0.9 million, or 6.1%, from $15.2 million for the three months
ended March 31, 2003 to $14.3 million for the same period in 2004. The decrease was due primarily
to lower revenues from publishing of $1.6 million, partially the result of discontinuing Internet
Worldmagazine in the second quarter of 2003. This decrease was offset in part by improved
revenues from online media operations of nearly $0.7 million. Online revenues continue to improve
as customers are increasingly seeking new ways to reach their target markets and generate sales
leads. Trade show and conference revenues remained flat when compared with the same prior year
period. Adjusted segment EBITDA for our Technology portfolio increased $0.3 million, or 32.3%, from $0.8
million for the three months ended March 31, 2003 to $1.1 million for the same period in 2004.
Online media accounted for all of the improvement as publishing and trade shows and conferences
were flat with the prior year. Prior-year publishing included the results of our Internet World
magazine, which was discontinued in June 2003. Lifestyle Our Lifestyle segment, which represented 31.6% and 27.7% of total Company revenues for the three
months ended March 31, 2004 and 2003, respectively, serves customers in the natural products
industry. For the three months ended March 31, 38




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2004 and 2003, respectively, 20.2% and 21.3% of this segments revenues were generated from
publishing and 79.8% and 78.7% from trade shows and conferences. Revenues for this segment increased $2.2 million, or 14.5%, from $15.0 million for the three months
ended March 31, 2003 to $17.2 million for the same period in 2004. Trade shows and conferences
accounted for $1.9 million of the increases while publishing accounted for the remainder.
First-quarter results were positively impacted by a highly successful 2004 Natural Products Expo
(NPE) West show, which experienced growth over last years event in attendance, number of
exhibitors, and number of floored booths. The success of the 2004 NPE West show is not only a
positive indicator for the 2005 show but also should create a positive impact on the NPE East event
which will take place in October in Washington, D.C. Adjusted segment EBITDA for the Lifestyle segment increased $1.8 million, or 19.4%, from $9.3
million for the three months ended March 31, 2003 to $11.1 million for the same period in 2004.
Trade shows and conferences accounted for $1.6 million of the increase while publishing accounted
for the remainder. Adjusted segment EBITDA margins improved from 61.8% for the first quarter of
2003 to 64.5% for the same period in 2004. The improvement was primarily due to increased revenues
and the effect of cost reduction measures taken in 2003. Retail Our Retail segment, which represented 8.4% and 8.8% of total Company revenues for the three months
ended March 31, 2004 and 2003, respectively, serves customers in the food/retail and
leisure/hospitality sectors. For the three months ended March 31, 2004 and 2003, respectively,
91.7% and 86.6% of this segments revenues were generated from publishing, 7.7% and 12.3% from trade
shows and conferences, and 0.6% and 1.1% from online media products. Revenues for this segment decreased $0.2 million, or 4.0%, from $4.8 million for the three months
ended March 31, 2003, to $4.6 million for the same period in 2004. This decrease was due primarily
to a shift in timing of our spring NCSAG event, which took place in January of 2003 and in April of
2004. Adjusted segment EBITDA for the Retail segment decreased $0.2 million, or 27.9%, from $0.7 million
for the three months ended March 31, 2003 to $0.5 million for the same period in 2004. As
indicated above, the decrease was due primarily to the shift in timing of the NCSAG event. Liquidity and Capital Resources Current Liquidity At March 31, 2004, our principal sources of liquidity are our existing cash reserves of $30.5
million and available borrowing capacity under our credit facility of $39.7 million. Our primary 2004 cash needs will be for working capital, debt service, capital expenditures,
business restructuring charges, and severance and other related costs expected to be paid upon the
departure of our chief executive officer in 2004. Our largest annual cash requirements are for our
debt service costs, which are expected to be approximately $36.9 million in 2004. Capital
expenditures in 2004 are expected to be approximately $3.0 million to $3.5 million, while cash
payments in 2004 related to our business restructuring initiatives are expected to be approximately
$3.6 million (restated). Other cash payments expected to be made in 2004 include contributions of
approximately $1.5 million to our defined benefit pension plan and approximately $1.8 million to
the new Retirement and Savings Plan. Cash expenditures related to the departure of Mr. Thomas L.
Kemp are expected to be approximately $2.4 million in 2004. We have no principal repayment requirements until maturity of our Secured Notes in October 2007.
In addition, we have no bank debt and no maintenance covenants on our existing bond debt. We believe that our existing sources of liquidity, along with revenues expected to be generated
from operations, will be sufficient to fund our operations, anticipated capital expenditures,
working capital, and other financing requirements through at least March 31, 2005. However, we
cannot assure you that this will be the case, and if we continue to incur operating losses and
negative cash flows in the future, we may need to reduce further our operating costs or obtain
alternate sources of financing, or both, to remain in business. Our ability to meet cash operating
requirements depends upon our future performance, which is subject to general economic conditions
and to financial, competitive, business, and other factors. The Companys ability to 39




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return to sustained profitability at acceptable levels will depend on a number of risk factors,
many of which are largely beyond the Companys control. If we are unable to meet our debt
obligations or fund our other liquidity needs, particularly if the revenue environment continues to
deteriorate, we may be required to raise additional capital through additional financing
arrangements or the issuance of private or public debt or equity securities. We cannot assure you
that such additional financing will be available at acceptable terms. In addition, the terms of
our convertible preferred stock and warrants issued, including the conversion price, dividend, and
liquidation adjustment provisions, could result in substantial dilution to common stockholders.
The redemption price premiums and board representation rights could negatively impact our ability
to access the equity markets in the future. The Company has implemented, and continues to implement, various cost-cutting programs and cash
conservation plans, which involve the limitation of capital expenditures and the control of working
capital. Analysis of Cash Flows Pentons total cash and cash equivalents was $30.5 million at March 31, 2004, compared with $29.6
million at December 31, 2003. Cash provided by operating activities was $2.0 million for the three
months ended March 31, 2004, compared with $47.3 million for the same period in 2003. Operating
cash flows for the three months ended March 31, 2004, reflected a net loss of $5.9 million
(restated), offset by a net increase in working capital items of approximately $2.5 million and
non-cash charges (primarily depreciation and amortization) of
approximately $5.5 million (restated).
Operating cash flows for the three months ended March 31, 2003, reflected a net loss of $9.9
million (restated), which was offset by a net working capital increase of approximately $46.6
million and non-cash charges (primarily depreciation and
amortization) of approximately $10.5
million (restated). The decrease in operating cash flows for the three months ended March 31, 2004, compared with the
same 2003 period was due primarily to the tax refund received in January 2003 of approximately
$52.7 million. Investing activities used
$0.8 million (restated) of cash for the three months ended March 31, 2004 for
capital expenditures. This use was partially offset by proceeds received from notes receivable.
Investing activities provided $4.4 million (restated) of cash for the three months ended March 31, 2003,
primarily from proceeds of $3.3 million from the sale of PTS in January 2003 and net proceeds of
$1.8 million received on notes receivable. These proceeds were partially offset by capital
expenditures of $0.6 million. Financing activities used
$0.4 million (restated) of cash for the three months ended March 31, 2004 primarily
for cash overdrafts and restricted cash. Financing activities used
$4.8 million (restated) of cash for the
three months ended March 31, 2003, due primarily to the repayment of $4.5 million of our senior
secured credit facility and cash overdrafts. These uses in 2003 were partially offset by proceeds
of approximately $0.3 million from the partial repayment of an officers loan. Risk Factors Managements concerns remain consistent with and should be read in conjunction with the Risk
Factors section of the Companys Annual Report on Form 10-K for the year ended December 31, 2003. New Accounting Pronouncements See Note 1  Basis of Presentation of the notes to the consolidated financial statements. Critical Accounting Policies and Estimates During the three months ended March 31, 2004, there were no significant new critical accounting
policies or estimates. Foreign Currency The functional currency of our foreign operations is their local currency. Accordingly, assets and
liabilities of foreign operations are translated to U.S. dollars at the rates of exchange on the
balance sheet date; income and expense are translated at the average rates of exchange prevailing
during the period. There were no significant foreign currency transaction gains or losses for the
periods presented. 40




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Seasonality We may experience seasonal fluctuations as trade shows and conferences held in one period in the
current year may be held in a different period in future years. 
 ITEM 4. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures We maintain disclosure and controls and procedures (as defined in Exchange Act Rules 13a  15(e)
and 15d  15(e)) that are designed to ensure that information required to be disclosed in reports
that we file or submit under the Securities Exchange Act of 1934 is recorded, processed,
summarized, and reported within the time periods specified in the Securities and Exchange
Commissions rules and forms, and that such information is accumulated and communicated to our
management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to
allow timely decisions regarding the required disclosure. Management had previously concluded the Companys disclosure controls and procedures were effective
as of March 31, 2004. However, in connection with the preparation of this Amendment, an evaluation
was performed under the supervision and with the participation of the Companys management,
including the CEO and CFO, of the effectiveness of the design and operation of the Companys
disclosure controls and procedures as of March 31, 2004. Based on that evaluation, the Companys
management, including the CEO and CFO, concluded that the Companys disclosure controls and
procedures were not effective as of March 31, 2004 because of the material weakness described
below. A material weakness is a condition in which the design or operation of one or more of the internal
control components does not reduce to a relatively low level the risk that misstatements caused by
error or fraud in amounts that would be material in relation to the financial statements being
audited may occur and not be detected within a timely period by employees in the normal course of
performing their assigned functions. On March 24, 2005 following a comprehensive review of the Companys deferred tax assets and
deferred tax liabilities management concluded that the Companys previously issued consolidated
financial statements should be restated to correct the computation of our valuation allowance for
deferred tax assets, which resulted in an increase to income tax expense. Management determined
that certain deferred tax liabilities had been incorrectly offset against its deferred tax assets.
Under Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes, taxable
temporary differences related to indefinite-lived intangible assets or tax-deductible goodwill (for
which reversal cannot be anticipated) should not be offset against deductible temporary differences
for other indefinite-lived intangible assets or tax-deductible goodwill when scheduling reversals
of temporary differences. Management determined that this control deficiency constitutes a material
weakness in the Companys disclosure controls and procedures and internal control over financial
reporting. Management evaluated the materiality of the correction on its consolidated financial statements
using the guidelines of Staff Accounting Bulletin No. 99, Materiality and concluded that the
cumulative effects of the corrections were material to its annual consolidated financial statements
for 2004, 2003 and 2002 and the related quarterly condensed consolidated financial statements for
such periods. As a result, the Company concluded that it would restate its previously issued
annual consolidated financial statements for the year ended December 31, 2004 and interim financial
statements for each of the quarters ended March 31, 2004, June 30, 2004, and September 30, 2004, to
recognize the impact of the correction. As of March 31, 2004, no steps had been taken by management to remediate this material weakness;
however, as of the date of this Amendment, the Company had implemented steps to remediate this
material weakness by adding additional levels of tax review and requiring all personnel who have
responsibilities for the Companys income taxes to attend an annual SFAS 109 review course. Changes in Internal Control Over Financial Reporting During the period covered by
this report on Form 10-Q, there have been no changes in the
Companys internal control over financial reporting that have
materially affected or are likely to materially affect the
Companys internal control over financial reporting. 41




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Part II - OTHER INFORMATION 
 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits Exhibit No.
    
    Description of Document31.1
    
    Principal executive officers certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Principal financial officers certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
 (b) Reports on Form 8-K The Registrant has filed or furnished the following Current Reports on Form 8-K during the period covered
by this report: Date of Report
    
    Items ReportedFebruary 26, 2004
    
    Item 7. Financial Statements, Pro Forma Financial
Information and ExhibitsItem 12. Results of Operations and Financial ConditionMarch 24, 2004
    
    Item 5. Other EventsMarch 30, 2004
    
    Item 12. Results of Operations and Financial Condition
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SIGNATURE 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. Penton Media, Inc.
(Registrant)By:
    
    /s/PRESTON L. VICEPreston L. ViceChief Financial Officer
 Date: May 20, 2005 43




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EXHIBIT INDEX Exhibit No.
    
    Description of Document31.1
    
    Principal executive officers certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Principal financial officers certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
 44