##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549-1004
 
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2006
 OR
 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
 þ o
  o o þ
 o þ




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##### 



PENTON MEDIA, INC.
Form 10-Q
 INDEX
  
 PagePart I  FINANCIAL INFORMATIONItem 1. Financial StatementsConsolidated Balance Sheets (Unaudited) at March 31, 2006 and December 31, 2005
    
    
    3Consolidated Statements of Operations (Unaudited) for the Three Months
Ended March 31, 2006 and 2005
    
    
    4Condensed Consolidated Statements of Cash Flows (Unaudited) for the Three Months
Ended March 31, 2006 and 2005
    
    
    5Notes to Consolidated Financial Statements (Unaudited)
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results
of Operations
    
    
    25Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    33Item 4. Controls and Procedures
    
    
    33Part II  OTHER INFORMATIONItem 6. Exhibits
    
    
    33Signature
    
    
    34Exhibit Index
    
    
    35EX-31.1 CertificationEX-31.2 CertificationEX-32 Certification
  2




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##### Table of Contents



Part
I  FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 PENTON MEDIA, INC.
 
 CONSOLIDATED BALANCE SHEETS
 (Unaudited, Dollars in thousands)
 March 31,
    
    
    December 31,2006
    
    
    2005AssetsCurrent assets:Cash and cash equivalents
    
    $
    2,841
    
    
    $
    632Restricted cash
    
    
    239
    
    
    
    299Accounts receivable, net
    
    
    28,864
    
    
    
    27,471Inventories
    
    
    863
    
    
    
    1,098Deferred tax asset
    
    
    314
    
    
    
    314Prepayments, deposits and other
    
    
    4,657
    
    
    
    2,452Total current assets
    
    
    37,778
    
    
    
    32,266Property and equipment, net
    
    
    9,542
    
    
    
    10,401Goodwill
    
    
    173,619
    
    
    
    173,603Other intangible assets, net
    
    
    5,488
    
    
    
    5,962Other non-current assets
    
    
    4,425
    
    
    
    4,937$
    230,852
    
    
    $
    227,169Liabilities and stockholders deficitCurrent liabilities:Loan and security agreement revolver
    
    $
    4,500
    
    
    $
    10,200Accounts payable
    
    
    4,196
    
    
    
    4,557Accrued compensation and benefits
    
    
    3,322
    
    
    
    5,016Other accrued expenses
    
    
    20,162
    
    
    
    9,890Unearned income, principally trade show and conference deposits
    
    
    18,171
    
    
    
    22,702Total current liabilities
    
    
    50,351
    
    
    
    52,365Senior secured notes, net of discount
    
    
    157,235
    
    
    
    157,195Senior subordinated notes, net of discount
    
    
    153,023
    
    
    
    152,956Accrued pension liability
    
    
    12,318
    
    
    
    12,400Deferred tax liability
    
    
    23,338
    
    
    
    22,667Other non-current liabilities
    
    
    7,608
    
    
    
    8,061Total liabilities
    
    
    403,873
    
    
    
    405,644Commitments and contingencies (Note 10)Mandatorily redeemable convertible preferred stock, par value $0.01
per share; 50,000 shares authorized, issued and outstanding;
redeemable at $1,000 per share (Note 11)
    
    
    76,867
    
    
    
    74,849Series M preferred stock, par value $0.01 per share; 150,000 shares authorized,
71,500 and 69,000 shares issued and outstanding at March 31, 2006 and
December 31, 2005, respectively (Note 11)
    
    
    24
    
    
    
    18Stockholders 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; 34,488,719 and 34,487,872 shares issued and outstanding
at March 31, 2006 and December 31, 2005, respectively
    
    
    343
    
    
    
    343Capital in excess of par value
    
    
    205,437
    
    
    
    207,449Retained deficit
    
    
    (453,030
    )
    
    
    (458,489
    )Notes receivable from officers, less reserve of $5,848
    
    
    
    
    
    
    Accumulated other comprehensive loss
    
    
    (2,662
    )
    
    
    (2,645
    )(249,912
    )
    
    
    (253,342
    )$
    230,852
    
    
    $
    227,169
  3




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##### Table of Contents



PENTON MEDIA, INC.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (Unaudited, Dollars and shares in thousands, except per share amounts)
 Three Months EndedMarch 31,2006
    
    
    2005Revenues
    
    $
    54,317
    
    
    $
    53,331Operating expenses:Editorial, production and circulation
    
    
    19,741
    
    
    
    20,370Selling, general and administrative
    
    
    17,348
    
    
    
    17,465Restructuring and other charges (credits), net
    
    
    (10
    )
    
    
    66Depreciation and amortization
    
    
    1,455
    
    
    
    1,76738,534
    
    
    
    39,668Operating income
    
    
    15,783
    
    
    
    13,663Other income (expense):Interest expense
    
    
    (9,670
    )
    
    
    (9,883
    )Interest income
    
    
    20
    
    
    
    30Gain on extinguishment of debt
    
    
    
    
    
    
    1,589Other, net
    
    
    
    
    
    
    (8
    )(9,650
    )
    
    
    (8,272
    )Income from continuing operations before income taxes
    
    
    6,133
    
    
    
    5,391Provision for income taxes
    
    
    674
    
    
    
    778Income from continuing operations
    
    
    5,459
    
    
    
    4,613Discontinued operations:Loss from discontinued operations, net of taxes (Note 2)
    
    
    
    
    
    
    (2,800
    )Net income
    
    
    5,459
    
    
    
    1,813Amortization of deemed dividend and accretion
of preferred stock
    
    
    (2,018
    )
    
    
    (1,823
    )Net income (loss) applicable to common stockholders
    
    $
    3,441
    
    
    $
    (10
    )Net income (loss) per common share  basic and diluted: (Note 13)Income from continuing operations applicable
to common stockholders
    
    $
    0.08
    
    
    $
    0.08Discontinued operations, net of taxes
    
    
    
    
    
    
    (0.08
    )Net income (loss) applicable to common stockholders
    
    $
    0.08
    
    
    $
    0.00Weighted-average number of shares outstanding:Basic
    
    
    34,489
    
    
    
    34,522Diluted
    
    
    34,578
    
    
    
    34,522
  4




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PENTON MEDIA, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Unaudited, Dollars in thousands)
 Three Months EndedMarch 31,2006
    
    
    2005Net cash provided by operating activities
    
    $
    8,097
    
    
    $
    1,578Cash flows from investing activities:Capital expenditures
    
    
    (122
    )
    
    
    (189
    )Decrease (increase) in restricted cash
    
    
    60
    
    
    
    (68
    )Net cash used for investing activities
    
    
    (62
    )
    
    
    (257
    )Cash flows from financing activities:Repurchase of senior subordinated notes
    
    
    
    
    
    
    (3,795
    )Repayment of loan and security agreement revolver, net
    
    
    (5,700
    )
    
    
    Decrease in cash overdraft balance
    
    
    (129
    )
    
    
    (348
    )Net cash used for financing activities
    
    
    (5,829
    )
    
    
    (4,143
    )Effect of exchange rate changes on cash
    
    
    3
    
    
    
    (7
    )Net increase (decrease) in cash and cash equivalents
    
    
    2,209
    
    
    
    (2,829
    )Cash and cash equivalents at beginning of year
    
    
    632
    
    
    
    7,661Cash and cash equivalents at end of period
    
    $
    2,841
    
    
    $
    4,832
  5




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PENTON MEDIA, INC.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 NOTE 1  ACCOUNTING POLICIES
 Basis of Presentation
    Use of Estimates
  Reclassifications
  Restricted Cash
   Recent Accounting Pronouncements
  6




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PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
    NOTE 2  DISPOSALS
   Three Months EndedMarch 31,2005Revenues
    
    $
    559Discontinued operations:Loss from operations of discontinued component
    
    $
    (2,800
    )Gain (loss) on disposal
    
    
    Income tax provision
    
    
    Loss on discontinued operations, net of taxes
    
    $
    (2,800
    )
 7




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PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 NOTE 3 ACCOUNTS RECEIVABLE
  March 31,
    
    
    December 31,2006
    
    
    2005Trade
    
    $
    31,487
    
    
    $
    28,747Employee
    
    
    32
    
    
    
    36Other
    
    
    4
    
    
    
    1,01031,523
    
    
    
    29,793Less: Allowance for doubtful accounts
    
    
    (2,659
    )
    
    
    (2,322
    )$
    28,864
    
    
    $
    27,471
 NOTE 4 PROPERTY AND EQUIPMENT
  March 31,
    
    
    December 31,2006
    
    
    2005Leasehold improvements
    
    $
    8,348
    
    
    $
    8,348Furniture and fixtures
    
    
    9,463
    
    
    
    9,480Computer hardware and software
    
    
    23,138
    
    
    
    23,151Web site development costs
    
    
    3,183
    
    
    
    3,106Other
    
    
    340
    
    
    
    30844,472
    
    
    
    44,393Less: Accumulated depreciation
    
    
    (34,930
    )
    
    
    (33,992
    )$
    9,542
    
    
    $
    10,401
  NOTE 5  GOODWILL AND OTHER INTANGIBLES
  Balance at
    
    
    
    
    
    
    Balance atDecember 31,
    
    
    
    
    
    
    March 31,2005
    
    
    Activity (1)
    
    
    2006Industry
    
    $
    23,519
    
    
    $
    
    
    
    $
    23,519Technology
    
    
    39,233
    
    
    
    16
    
    
    
    39,249Retail
    
    
    25,865
    
    
    
    
    
    
    
    25,865Lifestyle
    
    
    84,986
    
    
    
    
    
    
    
    84,986$
    173,603
    
    
    $
    16
    
    
    $
    173,619
 
 (1)
    
    Activity of $0.02 million represents adjustments related to MSD2D, which was acquired in
August 2005.  8




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PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
  NOTE 6  OTHER ACCRUED EXPENSES
  March 31,
    
    
    December 31,2006
    
    
    2005Accrued restructuring costs  short term
    
    $
    1,403
    
    
    $
    1,159Accrued interest
    
    
    14,138
    
    
    
    5,414Accrued taxes
    
    
    174
    
    
    
    329Accrued other
    
    
    4,447
    
    
    
    2,988$
    20,162
    
    
    $
    9,890
 NOTE 7  DEBT
  Loan and Security Agreement
   Senior Secured Notes
 
 9




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PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 Senior Subordinated Notes
 
  NOTE 8  INCOME TAXES
   NOTE 9  EMPLOYEE BENEFIT PLANS
 Retirement and Savings Plan
  Defined Benefit Plan and Supplemental Executive Retirement Plan
   10




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PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
  Retirement Plan
    
    
    SERP PlanThree Months Ended
    
    
    Three Months EndedMarch 31,
    
    
    March 31,2006
    
    
    2005
    
    
    2006
    
    
    2005Interest cost
    
    $
    645
    
    
    $
    632
    
    
    $
    7
    
    
    $
    6Expected return on plan assets
    
    
    (727
    )
    
    
    (715
    )
    
    
    
    
    
    
    Net periodic benefit cost (benefit)
    
    $
    (82
    )
    
    $
    (83
    )
    
    $
    7
    
    
    $
    6
 NOTE 10  COMMITMENTS AND CONTINGENCIES
 Legal Proceedings
  Tax Matters
  NOTE 11  PREFERRED STOCK
 Series M Preferred Stock
   Series C Preferred Stock
  11




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PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
     NOTE 12  COMMON STOCK AND COMMON STOCK AWARD PROGRAMS
 Equity and Performance Incentive Plan
     12




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PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
  Three Months EndedMarch 31,2005Net loss applicable to common stockholders:As reported
    
    $
    (10
    )Add: Stock-based employee compensation expense included in net
loss applicable to common stockholders, net of related tax effects
    
    
    3Less: Total stock-based employee compensation expense determined under
fair value based methods for all awards, net of related tax effects
    
    
    (115
    )Pro forma net loss applicable to common stockholders
    
    $
    (122
    )Basic and diluted earnings per share:As reported
    
    $
    0.00Pro forma
    
    $
    0.00
  Number of Options
    
    
    Weighted-Average
    
    
    AggregateEmployees
    
    
    Directors
    
    
    Exercise Price
    
    
    Intrinsic ValueOutstanding and exercisable at December 31, 2005
    
    
    1,080
    
    
    
    163
    
    
    $
    6.08Granted
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    
    
    
    
    Canceled
    
    
    (13
    )
    
    
    
    
    
    $
    3.54Outstanding and exercisable at March 31, 2006
    
    
    1,067
    
    
    
    163
    
    
    $
    6.11
    
    
    $
    108
  Options Outstanding and ExercisableWeighted-average
    
    
    Weighted-Number
    
    
    remaining
    
    
    averageRange of
    
    
    of
    
    
    contractual
    
    
    exerciseexercise prices
    
    
    options
    
    
    life
    
    
    price$
    27.75 - 28.375
    
    
    
    36
    
    
    4.4 years
    
    $
    28.10$
    16.225 - 24.29
    
    
    
    194
    
    
    3.3 years
    
    $
    20.15$
    6.89 - 6.89
    
    
    
    318
    
    
    5.7 years
    
    $
    6.89$
    0.90 - 0.90
    
    
    
    265
    
    
    7.8 years
    
    $
    0.90$
    0.37 - 0.37
    
    
    
    417
    
    
    5.9 years
    
    $
    0.37Total
    
    
    1,230
    
    
    5.8 years
    
    $
    6.11
 13




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PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 Executive Loan Program
  Management Stock Purchase Plan
  NOTE
13  EARNINGS PER SHARE
  Three Months EndedMarch 31,2006
    
    
    2005Net income
    
    $
    5,459
    
    
    $
    1,813Amortization of deemed dividend and
accretion of preferred stock
    
    
    (2,018
    )
    
    
    (1,823
    )Amount allocated
to participating preferred stockholders
    
    
    (722
    )
    
    
    Net income (loss) available to common stockholders
    
    $
    2,719
    
    
    $
    (10
    )Number of shares:Basic  weighted average shares outstanding
    
    
    34,489
    
    
    
    34,522Effect of dilutive securities  stock options
    
    
    89
    
    
    
    Diluted  weighted average shares outstanding
    
    
    34,578
    
    
    
    34,522Per share amount:Net income (loss) applicable to common stockholders 
basic and diluted
    
    $
    0.08
    
    
    $
    0.00
    14




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PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 NOTE 14  COMPREHENSIVE INCOME (LOSS)
  Three Months EndedMarch 31,2006
    
    
    2005Net income
    
    $
    5,459
    
    
    $
    1,813Change in accumulated translation adjustment
    
    
    (17
    )
    
    
    (92
    )$
    5,442
    
    
    $
    1,721
 NOTE 15  RESTRUCTURING CHARGES
   EmployeeSeparation
    
    
    FacilityCosts
    
    
    Closing Costs
    
    
    TotalAccrual at December 31, 2005
    
    $
    25
    
    
    $
    5,998
    
    
    $
    6,023Adjustments
    
    
    
    
    
    
    (10
    )
    
    
    (10
    )Cash payments
    
    
    (4
    )
    
    
    (274
    )
    
    
    (278
    )Accrual at March 31, 2006
    
    $
    21
    
    
    $
    5,714
    
    
    $
    5,735
    Three Months EndedMarch 31,2006
    
    
    2005Industry
    
    $
    6
    
    
    $
    49Technology
    
    
    (8
    )
    
    
    (11
    )Corporate
    
    
    (8
    )
    
    
    28$
    (10
    )
    
    $
    66
 15




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PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 NOTE 16  SEGMENTS
   Industry
    
    TechnologyManufacturing
    
    Business TechnologyDesign/Engineering
    
    AviationMechanical Systems/Construction
    
    Enterprise Information TechnologyGovernment/Compliance
    
    Electronics
 Lifestyle
    
    RetailNatural Products
    
    Food/RetailHospitality
   Revenues
    
    
    Adjusted Segment EBITDAMarch 31,
    
    
    March 31,2006
    
    
    2005
    
    
    2006
    
    
    2005Industry
    
    $
    17,521
    
    
    $
    17,415
    
    
    $
    5,082
    
    
    $
    4,919Technology
    
    
    12,339
    
    
    
    13,326
    
    
    
    2,442
    
    
    
    2,231Lifestyle
    
    
    19,976
    
    
    
    17,918
    
    
    
    13,187
    
    
    
    11,795Retail
    
    
    4,481
    
    
    
    4,672
    
    
    
    1,079
    
    
    
    1,245$
    54,317
    
    
    $
    53,331
    
    
    $
    21,790
    
    
    $
    20,190
 16




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PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
  Three Months EndedMarch 31,2006
    
    
    2005Total adjusted segment EBITDA
    
    $
    21,790
    
    
    $
    20,190General and administrative costs
    
    
    (4,556
    )
    
    
    (4,680
    )Depreciation and amortization
    
    
    (1,455
    )
    
    
    (1,767
    )Restructuring and other charges (credits), net
    
    
    10
    
    
    
    (66
    )Interest expense
    
    
    (9,670
    )
    
    
    (9,883
    )Interest income
    
    
    20
    
    
    
    30Gain on extinguishment of debt
    
    
    
    
    
    
    1,589Other miscellaneous, net
    
    
    (6
    )
    
    
    (22
    )Income from continuing operations before income taxes
    
    $
    6,133
    
    
    $
    5,391
 NOTE
17  GUARANTOR AND NON-GUARANTOR SUBSIDIARIES
   17




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PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 NOTE 17  GUARANTOR AND NON-GUARANTOR SUBSIDIARIES (Continued)
 PENTON MEDIA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
As of March 31, 2006
 Guarantor
    
    
    Non-guarantor
    
    
    
    
    
    
    PentonParent
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(Dollars in thousands)AssetsCurrent assets:Cash and cash equivalents
    
    $
    1,843
    
    
    $
    527
    
    
    $
    471
    
    
    $
    
    
    
    $
    2,841Restricted cash
    
    
    239
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    239Accounts receivable, net
    
    
    24,486
    
    
    
    3,553
    
    
    
    825
    
    
    
    
    
    
    
    28,864Inventories
    
    
    654
    
    
    
    205
    
    
    
    4
    
    
    
    
    
    
    
    863Deferred tax assets
    
    
    402
    
    
    
    (88
    )
    
    
    
    
    
    
    
    
    
    
    314Prepayments, deposits and other
    
    
    4,258
    
    
    
    243
    
    
    
    156
    
    
    
    
    
    
    
    4,657Total current assets
    
    
    31,882
    
    
    
    4,440
    
    
    
    1,456
    
    
    
    
    
    
    
    37,778Property and equipment, net
    
    
    8,262
    
    
    
    1,196
    
    
    
    84
    
    
    
    
    
    
    
    9,542Goodwill
    
    
    136,689
    
    
    
    36,930
    
    
    
    
    
    
    
    
    
    
    
    173,619Other intangible assets, net
    
    
    3,974
    
    
    
    1,514
    
    
    
    
    
    
    
    
    
    
    
    5,488Other non-current assets
    
    
    4,287
    
    
    
    138
    
    
    
    
    
    
    
    
    
    
    
    4,425Investments in subsidiaries
    
    
    (245,214
    )
    
    
    
    
    
    
    
    
    
    
    245,214
    
    
    
    $
    (60,120
    )
    
    $
    44,218
    
    
    $
    1,540
    
    
    $
    245,214
    
    
    $
    230,852Liabilities and stockholders deficitCurrent liabilities:Loan and security agreement revolver
    
    $
    4,500
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    4,500Accounts payable and accrued expenses
    
    
    22,955
    
    
    
    1,040
    
    
    
    363
    
    
    
    
    
    
    
    24,358Accrued compensation and benefits
    
    
    2,874
    
    
    
    426
    
    
    
    22
    
    
    
    
    
    
    
    3,322Unearned income
    
    
    13,937
    
    
    
    2,766
    
    
    
    1,468
    
    
    
    
    
    
    
    18,171Total current liabilities
    
    
    44,266
    
    
    
    4,232
    
    
    
    1,853
    
    
    
    
    
    
    
    50,351Senior secured notes, net of discount
    
    
    80,190
    
    
    
    77,045
    
    
    
    
    
    
    
    
    
    
    
    157,235Senior subordinated notes, net of discount
    
    
    78,042
    
    
    
    74,981
    
    
    
    
    
    
    
    
    
    
    
    153,023Accrued pension liability
    
    
    12,318
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,318Deferred tax liability
    
    
    22,474
    
    
    
    864
    
    
    
    
    
    
    
    
    
    
    
    23,338Intercompany advances
    
    
    (130,375
    )
    
    
    93,795
    
    
    
    36,580
    
    
    
    
    
    
    
    Other non-current liabilities
    
    
    5,986
    
    
    
    1,622
    
    
    
    
    
    
    
    
    
    
    
    7,608Total liabilities
    
    
    112,901
    
    
    
    252,539
    
    
    
    38,433
    
    
    
    
    
    
    
    403,873Mandatorily redeemable convertible
preferred stock (Note 11)
    
    
    76,867
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    76,867Series M preferred stock (Note 11)
    
    
    24
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24Stockholders deficit:Common stock and capital in excess
of par value
    
    
    205,780
    
    
    
    202,423
    
    
    
    16,566
    
    
    
    (218,989
    )
    
    
    205,780Retained deficit
    
    
    (453,030
    )
    
    
    (410,699
    )
    
    
    (53,156
    )
    
    
    463,855
    
    
    
    (453,030
    )Notes receivable from officers
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accumulated other comprehensive loss
    
    
    (2,662
    )
    
    
    (45
    )
    
    
    (303
    )
    
    
    348
    
    
    
    (2,662
    )(249,912
    )
    
    
    (208,321
    )
    
    
    (36,893
    )
    
    
    245,214
    
    
    
    (249,912
    )$
    (60,120
    )
    
    $
    44,218
    
    
    $
    1,540
    
    
    $
    245,214
    
    
    $
    230,852
 18




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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 CONSOLIDATED BALANCE SHEETS
As of December 31, 2005
 Guarantor
    
    
    Non-guarantor
    
    
    
    
    
    
    PentonParent
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(Dollars in thousands)AssetsCurrent assets:Cash and cash equivalents
    
    $
    286
    
    
    $
    58
    
    
    $
    288
    
    
    $
    
    
    
    $
    632Restricted cash
    
    
    299
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    299Accounts receivable, net
    
    
    22,853
    
    
    
    3,558
    
    
    
    1,060
    
    
    
    
    
    
    
    27,471Inventories
    
    
    904
    
    
    
    190
    
    
    
    4
    
    
    
    
    
    
    
    1,098Deferred tax asset
    
    
    402
    
    
    
    (88
    )
    
    
    
    
    
    
    
    
    
    
    314Prepayments, deposits and other
    
    
    2,179
    
    
    
    227
    
    
    
    46
    
    
    
    
    
    
    
    2,452Total current assets
    
    
    26,923
    
    
    
    3,945
    
    
    
    1,398
    
    
    
    
    
    
    
    32,266Property and equipment, net
    
    
    9,003
    
    
    
    1,304
    
    
    
    94
    
    
    
    
    
    
    
    10,401Goodwill
    
    
    136,689
    
    
    
    36,914
    
    
    
    
    
    
    
    
    
    
    
    173,603Other intangible assets, net
    
    
    4,219
    
    
    
    1,743
    
    
    
    
    
    
    
    
    
    
    
    5,962Other non-current assets
    
    
    4,791
    
    
    
    138
    
    
    
    8
    
    
    
    
    
    
    
    4,937Investment in subsidiaries
    
    
    (240,510
    )
    
    
    
    
    
    
    
    
    
    
    240,510
    
    
    
    $
    (58,885
    )
    
    $
    44,044
    
    
    $
    1,500
    
    
    $
    240,510
    
    
    $
    227,169Liabilities and stockholders deficitCurrent liabilities:Loan and security agreement revolver
    
    $
    10,200
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    10,200Accounts payable and accrued expenses
    
    
    12,676
    
    
    
    1,512
    
    
    
    259
    
    
    
    
    
    
    
    14,447Accrued compensation and benefits
    
    
    4,218
    
    
    
    736
    
    
    
    62
    
    
    
    
    
    
    
    5,016Unearned income
    
    
    18,774
    
    
    
    2,464
    
    
    
    1,464
    
    
    
    
    
    
    
    22,702Total current liabilities
    
    
    45,868
    
    
    
    4,712
    
    
    
    1,785
    
    
    
    
    
    
    
    52,365Senior secured notes, net of discount
    
    
    80,169
    
    
    
    77,026
    
    
    
    
    
    
    
    
    
    
    
    157,195Senior subordinated notes, net of discount
    
    
    78,008
    
    
    
    74,948
    
    
    
    
    
    
    
    
    
    
    
    152,956Accrued pension liability
    
    
    12,400
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,400Deferred tax liability
    
    
    21,803
    
    
    
    864
    
    
    
    
    
    
    
    
    
    
    
    22,667Intercompany advances
    
    
    (125,039
    )
    
    
    88,547
    
    
    
    36,492
    
    
    
    
    
    
    
    Other non-current liabilities
    
    
    6,381
    
    
    
    1,680
    
    
    
    
    
    
    
    
    
    
    
    8,061Total liabilities
    
    
    119,590
    
    
    
    247,777
    
    
    
    38,277
    
    
    
    
    
    
    
    405,644Mandatorily redeemable convertible
preferred stock (Note 11)
    
    
    74,849
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    74,849Series M preferred stock (Note 11)
    
    
    18
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18Stockholders deficit:Common stock and capital in excess
of par value
    
    
    207,792
    
    
    
    202,405
    
    
    
    16,566
    
    
    
    (218,971
    )
    
    
    207,792Retained deficit
    
    
    (458,489
    )
    
    
    (406,093
    )
    
    
    (53,058
    )
    
    
    459,151
    
    
    
    (458,489
    )Notes receivable from officers
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accumulated other comprehensive loss
    
    
    (2,645
    )
    
    
    (45
    )
    
    
    (285
    )
    
    
    330
    
    
    
    (2,645
    )(253,342
    )
    
    
    (203,733
    )
    
    
    (36,777
    )
    
    
    240,510
    
    
    
    (253,342
    )$
    (58,885
    )
    
    $
    44,044
    
    
    $
    1,500
    
    
    $
    240,510
    
    
    $
    227,169
 19




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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 CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 2006
 Guarantor
    
    
    Non-guarantor
    
    
    
    
    
    
    PentonParent
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(Dollars in thousands)Revenues
    
    $
    47,351
    
    
    $
    6,537
    
    
    $
    429
    
    
    $
    
    
    
    $
    54,317Operating expenses:Editorial, production and circulation
    
    
    16,379
    
    
    
    3,155
    
    
    
    207
    
    
    
    
    
    
    
    19,741Selling, general and administrative
    
    
    13,533
    
    
    
    3,522
    
    
    
    293
    
    
    
    
    
    
    
    17,348Restructuring and other charges (credits), net
    
    
    (2
    )
    
    
    (8
    )
    
    
    
    
    
    
    
    
    
    
    (10
    )Depreciation and amortization
    
    
    1,096
    
    
    
    345
    
    
    
    14
    
    
    
    
    
    
    
    1,45531,006
    
    
    
    7,014
    
    
    
    514
    
    
    
    
    
    
    
    38,534Operating income (loss)
    
    
    16,345
    
    
    
    (477
    )
    
    
    (85
    )
    
    
    
    
    
    
    15,783Other income (expense):Interest expense
    
    
    (5,515
    )
    
    
    (4,129
    )
    
    
    (26
    )
    
    
    
    
    
    
    (9,670
    )Interest income
    
    
    20
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20Equity in losses of subsidiaries
    
    
    (4,704
    )
    
    
    
    
    
    
    
    
    
    
    4,704
    
    
    
    (10,199
    )
    
    
    (4,129
    )
    
    
    (26
    )
    
    
    4,704
    
    
    
    (9,650
    )Income (loss) before income taxes
    
    
    6,146
    
    
    
    (4,606
    )
    
    
    (111
    )
    
    
    4,704
    
    
    
    6,133Provision (benefit) for income taxes
    
    
    687
    
    
    
    
    
    
    
    (13
    )
    
    
    
    
    
    
    674Net income (loss)
    
    $
    5,459
    
    
    $
    (4,606
    )
    
    $
    (98
    )
    
    $
    4,704
    
    
    $
    5,459
 20




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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 CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 2005
 Guarantor
    
    
    Non-guarantor
    
    
    
    
    
    
    PentonParent
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(Dollars in thousands)Revenues
    
    $
    47,029
    
    
    $
    6,103
    
    
    $
    199
    
    
    $
    
    
    
    $
    53,331Operating expenses:Editorial, production and circulation
    
    
    16,991
    
    
    
    3,345
    
    
    
    34
    
    
    
    
    
    
    
    20,370Selling, general and administrative
    
    
    15,445
    
    
    
    1,815
    
    
    
    205
    
    
    
    
    
    
    
    17,465Restructuring and other charges (credits), net
    
    
    77
    
    
    
    (11
    )
    
    
    
    
    
    
    
    
    
    
    66Depreciation and amortization
    
    
    1,390
    
    
    
    357
    
    
    
    20
    
    
    
    
    
    
    
    1,76733,903
    
    
    
    5,506
    
    
    
    259
    
    
    
    
    
    
    
    39,668Operating income (loss)
    
    
    13,126
    
    
    
    597
    
    
    
    (60
    )
    
    
    
    
    
    
    13,663Other income (expense):Interest expense
    
    
    (5,255
    )
    
    
    (4,570
    )
    
    
    (58
    )
    
    
    
    
    
    
    (9,883
    )Interest income
    
    
    30
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30Equity in losses of subsidiaries
    
    
    (6,893
    )
    
    
    
    
    
    
    
    
    
    
    6,893
    
    
    
    Gain on extinguishment of debt
    
    
    1,589
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,589Other, net
    
    
    (8
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8
    )(10,537
    )
    
    
    (4,570
    )
    
    
    (58
    )
    
    
    6,893
    
    
    
    (8,272
    )Income (loss) from continuing operations before
income taxes
    
    
    2,589
    
    
    
    (3,973
    )
    
    
    (118
    )
    
    
    6,893
    
    
    
    5,391Provision for income taxes
    
    
    776
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    778Income (loss) from continuing operations
    
    
    1,813
    
    
    
    (3,975
    )
    
    
    (118
    )
    
    
    6,893
    
    
    
    4,613Loss from discontinued operations, net of taxes
    
    
    
    
    
    
    
    
    
    
    (2,800
    )
    
    
    
    
    
    
    (2,800
    )Net income (loss)
    
    $
    1,813
    
    
    $
    (3,975
    )
    
    $
    (2,918
    )
    
    $
    6,893
    
    
    $
    1,813
 21




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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 CONSOLIDATED STATEMENTS OF CASH FLOW
For the Three Months Ended March 31, 2006
 Guarantor
    
    
    Non-guarantor
    
    
    
    
    
    
    PentonParent
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(Dollars in thousands)Net cash provided by operating activities
    
    $
    7,432
    
    
    $
    478
    
    
    $
    187
    
    
    $
    
    
    
    $
    8,097Cash flows from investing activities:Capital expenditures
    
    
    (110
    )
    
    
    (9
    )
    
    
    (3
    )
    
    
    
    
    
    
    (122
    )Decrease in restricted cash
    
    
    60
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    60Net cash used for investing activities
    
    
    (50
    )
    
    
    (9
    )
    
    
    (3
    )
    
    
    
    
    
    
    (62
    )Cash flows from financing activities:Repayment of loan and security agreement revolver, net
    
    
    (5,700
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,700
    )Decrease in cash overdraft balance
    
    
    (128
    )
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    (129
    )Net cash used for financing activities
    
    
    (5,828
    )
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    (5,829
    )Effect of exchange rate changes on cash
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3Net increase in cash and cash equivalents
    
    
    1,557
    
    
    
    469
    
    
    
    183
    
    
    
    
    
    
    
    2,209Cash and cash equivalents at beginning of year
    
    
    286
    
    
    
    58
    
    
    
    288
    
    
    
    
    
    
    
    632Cash and cash equivalents at end of period
    
    $
    1,843
    
    
    $
    527
    
    
    $
    471
    
    
    $
    
    
    
    $
    2,841
 22




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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 CONSOLIDATED STATEMENTS OF CASH FLOW
For the Three Months Ended March 31, 2005
 Guarantor
    
    
    Non-guarantor
    
    
    
    
    
    
    PentonParent
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(Dollars in thousands)Net cash provided by (used for)
operating activities
    
    $
    2,557
    
    
    $
    139
    
    
    $
    (1,118
    )
    
    $
    
    
    
    $
    1,578Cash flows from investing activities:Capital expenditures
    
    
    (149
    )
    
    
    (27
    )
    
    
    (13
    )
    
    
    
    
    
    
    (189
    )Increase in restricted cash
    
    
    (68
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (68
    )Net cash used for investing activities
    
    
    (217
    )
    
    
    (27
    )
    
    
    (13
    )
    
    
    
    
    
    
    (257
    )Cash flows from financing activities:Repurchase of senior subordinated notes
    
    
    (3,795
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,795
    )Increase (decrease) in cash overdraft balance
    
    
    (475
    )
    
    
    
    
    
    
    127
    
    
    
    
    
    
    
    (348
    )Net cash provided by (used for) financing activities
    
    
    (4,270
    )
    
    
    
    
    
    
    127
    
    
    
    
    
    
    
    (4,143
    )Effect of exchange rate changes on cash
    
    
    (7
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7
    )Net increase (decrease) in cash and cash equivalents
    
    
    (1,937
    )
    
    
    112
    
    
    
    (1,004
    )
    
    
    
    
    
    
    (2,829
    )Cash and cash equivalents at beginning of year
    
    
    5,991
    
    
    
    73
    
    
    
    1,597
    
    
    
    
    
    
    
    7,661Cash and cash equivalents at end of period
    
    $
    4,054
    
    
    $
    185
    
    
    $
    593
    
    
    $
    
    
    
    $
    4,832
 23




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##### Table of Contents



NOTE 18
 SUBSEQUENT EVENTS
  24




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##### Table of Contents



ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  
    
    fluctuations in advertising revenue with general economic cycles;
    
    economic uncertainty exacerbated by potential terrorist attacks on the United States
and other geopolitical events;
    
    the performance of our natural products industry trade shows;
    
    our ability to launch new products that fit strategically with and add value to our business;
    
    increases in paper and postage costs;
    
    the effectiveness of our cost-saving efforts;
    
    the infringement or invalidation of Pentons intellectual property rights;
    
    government regulation;
    
    competition; and
    
    technological changes.
  OVERVIEW
     
    
    In February 2006, the Company acquired the assets of WeldingWeb.com. WeldingWeb.com is a
web site with more than 7,000 registered members and generates more than 220,000 page views
monthly. We intend to incorporate the site with our Metalworking group, which is part of
our Industry segment.
 25




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##### Table of Contents




    
    In April 2006, the Company acquired the assets of HVAC-Talk.com, a website with more
than 43,000 registered members and generates over 104,000 unique visitors and 2.7 million
page views per month. HVAC-Talk.com will be integrated with Pentons Contracting Business
web site, which adds a key interactive component to the group.
  RESULTS OF OPERATIONS
 Revenues
  Three Months EndedMarch 31,2006
    
    
    2005
    
    

$ Change
    
    
    % ChangePublishing
    
    $
    31,810
    
    
    $
    32,688
    
    
    $
    (878
    )
    
    
    (2.7
    )%Trade shows & conferences
    
    
    17,402
    
    
    
    16,530
    
    
    
    872
    
    
    
    5.3
    %Online media
    
    
    5,105
    
    
    
    4,113
    
    
    
    992
    
    
    
    24.1
    %$
    54,317
    
    
    $
    53,331
    
    
    $
    986
    
    
    
    1.8
    %
 Wireless Systems Design
     Editorial, Production and Circulation
 Three Months EndedMarch 31,2006
    
    
    2005
    
    
    Change(Dollars in millions)Editorial, production and circulation
    
    $
    19.7
    
    
    $
    20.4
    
    
    
    (3.1
    )%Percent of revenues
    
    
    36.3
    %
    
    
    38.2
    %
  26




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##### Table of Contents



Selling, General and Administrative
 Three Months EndedMarch 31,2006
    
    2005
    
    Change(Dollars in millions)Selling, general and administrative
    
    $
    17.3
    
    
    $
    17.5
    
    
    
    (0.7
    )%Percent of revenues
    
    
    31.9
    %
    
    
    32.7
    %
  Restructuring and Other Charges (Credits), net
  EmployeeSeparation
    
    
    FacilityCosts
    
    
    Closing Costs
    
    
    TotalAccrual at December 31, 2005
    
    $
    25
    
    
    $
    5,998
    
    
    $
    6,023Adjustments
    
    
    
    
    
    
    (10
    )
    
    
    (10
    )Cash payments
    
    
    (4
    )
    
    
    (274
    )
    
    
    (278
    )Accrual at March 31, 2006
    
    $
    21
    
    
    $
    5,714
    
    
    $
    5,735
   Wireless Systems
Design
 27




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##### Table of Contents



Other Income (Expense)
  Three Months EndedMarch 31,2006
    
    2005
    
    Change(Dollars in millions)Interest expense
    
    $
    (9.7
    )
    
    $
    (9.9
    )
    
    
    (2.2
    )%Gain on extinguishment of debt
    
    $
    
    
    
    $
    1.6
    
    
    
    n/a
   Effective Tax Rates
   Discontinued Operations
  SEGMENTS
  28




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##### Table of Contents



Adjusted
    
    
    Adjusted SegmentRevenues
    
    
    Segment EBITDA
    
    
    EBITDA Margin2006
    
    
    2005
    
    
    2006
    
    
    2005
    
    
    2006
    
    
    2005Industry
    
    $
    17,521
    
    
    $
    17,415
    
    
    $
    5,082
    
    
    $
    4,919
    
    
    
    29.0
    %
    
    
    28.2
    %Technology
    
    
    12,339
    
    
    
    13,326
    
    
    
    2,442
    
    
    
    2,231
    
    
    
    19.8
    %
    
    
    16.7
    %Lifestyle
    
    
    19,976
    
    
    
    17,918
    
    
    
    13,187
    
    
    
    11,795
    
    
    
    66.0
    %
    
    
    65.8
    %Retail
    
    
    4,481
    
    
    
    4,672
    
    
    
    1,079
    
    
    
    1,245
    
    
    
    24.1
    %
    
    
    26.6
    %$
    54,317
    
    
    $
    53,331
    
    
    $
    21,790
    
    
    $
    20,190
 Industry
    Technology
   29




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##### Table of Contents



Lifestyle
    Retail
    30




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##### Table of Contents



Liquidity and Capital Resources
 Current Liquidity
   
    
    debt service charges of $17.8 million;
    
    capital expenditures of approximately $0.7 million;
    
    payments related to our business restructuring initiatives of approximately $0.3 million; and
    
    a contribution of $0.4 million to our Retirement and Savings Plan.
     Analysis of Cash Flows
    31




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##### Table of Contents



Consolidated Adjusted EBITDA
   Three Months EndedMarch 31,2006
    
    
    2005Net income
    
    $
    5,459
    
    
    $
    1,813Interest expense
    
    
    9,670
    
    
    
    9,883Provision for income taxes
    
    
    674
    
    
    
    778Depreciation and amortization
    
    
    1,455
    
    
    
    1,767EBITDA
    
    
    17,258
    
    
    
    14,241Loan and Security Agreement adjustments:Restructuring and other charges (credits), net
    
    
    (10
    )
    
    
    66Interest income
    
    
    (20
    )
    
    
    (30
    )Discontinued operations, net of taxes
    
    
    
    
    
    
    2,800Gain on extinguishment of debt
    
    
    
    
    
    
    (1,589
    )Other miscellaneous, net
    
    
    6
    
    
    
    22Consolidated Adjusted EBITDA
    
    $
    17,234
    
    
    $
    15,510
 New Accounting Pronouncements
  Critical Accounting Policies and Estimates
  32




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##### Table of Contents



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 ITEM 4. CONTROLS AND PROCEDURES
  
 Part II  OTHER INFORMATION
 
 ITEM 6. EXHIBITS
 Exhibit No.
    
    Description of Document10.1
    
    Form of Series M Preferred Stock Agreement. (filed as Exhibit
10.1 to the Companys Form 8-k on March 10, 2006, and incorporated herein by
reference).31.1
    
    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.
 33




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##### Table of Contents



SIGNATURE
  Penton Media, Inc.
(Registrant)By:
    
    /s/ PRESTON L. VICEPreston L. ViceChief Financial Officer
  34




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##### Table of Contents



EXHIBIT INDEX
 Exhibit No.
    
    Description of Document10.1
    
    Form of Series M Preferred Stock Agreement. (filed as Exhibit 10.1 to the Companys Form 8-k
on March 10, 2006, and incorporated herein by reference).31.1
    
    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.
 35