---

---

SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-Q

|ý | Quarterly Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934.
|- | ----------------------------------------------------------------------------------------

For the quarterly period ended: June 30, 2002

Commission File Number: 333-57201

Advanstar Communications Inc.(Exact name of registrant as specified in its charter)

New York(State or other jurisdiction of
incorporation or organization)

59-2757389
(I.R.S. Employer
Identification No.)

545 Boylston Street, Boston, Massachusetts
(Address of principal executive offices)

02116
(Zip Code)

Registrant's Telephone Number, Including Area Code: (617) 267-6500

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

As
of August 14, 2002, 1,000,000 shares of the Registrant's common stock were outstanding.

---

---

---



|                                                                                             |  |                                                                                                               |  | Page in this
Quarterly
Report
|-------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------- |  | -----------------------------
|PART I    Financial Information                                                             
|Item 1.Financial Statements:                                                                
|                                                                                             |  | Condensed Consolidated Balance Sheets at June 30, 2002 and December 31, 2001 (unaudited)                      |  | 2                            
|                                                                                             |  | Condensed Consolidated Statements of Operations for the three months ended June 30, 2002 and 2001 (unaudited) |  | 3                            
|                                                                                             |  | Condensed Consolidated Statements of Operations for the six months ended June 30, 2002 and 2001 (unaudited)   |  | 4                            
|                                                                                             |  | Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2002 and 2001 (unaudited)   |  | 5                            
|                                                                                             |  | Notes to Condensed Consolidated Financial Statements (unaudited)                                              |  | 6                            
|Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations |  | 26                                                                                                           
|Item 3.Qualitative and Quantitative Disclosure about Market Risk                             |  | 39                                                                                                           
|PART II    Other Information                                                                
|Item 4.                                                                                      |  | Submissions of Matters to a Vote of Security Holders                                                          |  | 41                           
|Item 6(a).                                                                                   |  | Exhibits                                                                                                      |  | 41                           
|Item 6(b).                                                                                   |  | Reports on Form 8-K                                                                                           |  | 41                           
|                                                                                             |  | Signature                                                                                                     |  | 42                           

1

---



ADVANSTAR COMMUNICATIONS INC.        CONDENSED CONSOLIDATED BALANCE SHEETS        (In thousands, except share and per share dataUnaudited)

|                                          |                                                                                                                                             | June 30,
2002                              |         | December 31,
2001 |        
|----------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------- | ----------------- | -------
|
|
|Current Assets                            |                                                                                                                                             |                                            |         |                   |        
|                                          | Cash and cash equivalents                                                                                                                   |                                            | $       | 11,829            |        
|                                          | Accounts receivable, net                                                                                                                    |                                            |         | 27,434            |        
|                                          | Prepaid expenses                                                                                                                            |                                            |         | 8,018             |        
|                                          | Other                                                                                                                                       |                                            |         | 1,204             |        
|                                          |                                                                                                                                             |                                            |         |                   |        
|                                          |                                                                                                                                             | Total current assets                       |         |                   | 48,485 
|Property, plant and equipment, net        |                                                                                                                                             |                                            | 24,209  |                   |        
|Intangible and other assets               |                                                                                                                                             |                                            |         |                   |        
|                                          | Goodwill, net                                                                                                                               |                                            |         | 729,904           |        
|                                          | Intangibles and other, net                                                                                                                  |                                            |         | 180,215           |        
|                                          |                                                                                                                                             |                                            |         |                   |        
|                                          |                                                                                                                                             | Total intangible and other assets          |         |                   | 910,119
|                                          |                                                                                                                                             |                                            |         |                   |        
|                                          |                                                                                                                                             | Total assets                               |         | $                 | 982,813
|                                          |                                                                                                                                             |                                            |         |                   |        
|
|Current Liabilities                       |                                                                                                                                             |                                            |         |                   |        
|                                          | Current maturities of long-term debt                                                                                                        |                                            | $       | 17,000            |        
|                                          | Accounts payable                                                                                                                            |                                            |         | 22,500            |        
|                                          | Accrued liabilities                                                                                                                         |                                            |         | 22,545            |        
|                                          | Deferred revenue                                                                                                                            |                                            |         | 39,583            |        
|                                          |                                                                                                                                             |                                            |         |                   |        
|                                          |                                                                                                                                             | Total current liabilities                  |         |                   | 101,628
|Long-term debt, net of current maturities |                                                                                                                                             |                                            | 540,300 |                   |        
|Deferred income taxes                     |                                                                                                                                             |                                            | 14,171  |                   |        
|Other long-term liabilities               |                                                                                                                                             |                                            | 3,592   |                   |        
|Due to Parent                             |                                                                                                                                             |                                            | 2,848   |                   |        
|Minority interests                        |                                                                                                                                             |                                            | 15,688  |                   |        
|Commitments and contingencies             |                                                                                                                                             |                                            |         |                   |        
|Stockholder's equity                      |                                                                                                                                             |                                            |         |                   |        
|                                          | Common stock, $.01 par value; 40,000,000 shares authorized; 1,000,000 shares issued and outstanding at June 30, 2002 and December 31, 2001. |                                            |         | 10                |        
|                                          | Capital in excess of par                                                                                                                    |                                            |         | 387,367           |        
|                                          | Accumulated deficit                                                                                                                         |                                            |         | (76,232           | )      
|                                          | Accumulated other comprehensive loss                                                                                                        |                                            |         | (6,559            | )      
|                                          |                                                                                                                                             |                                            |         |                   |        
|                                          |                                                                                                                                             | Total stockholder's equity                 |         |                   | 304,586
|                                          |                                                                                                                                             |                                            |         |                   |        
|                                          |                                                                                                                                             | Total liabilities and stockholder's equity |         | $                 | 982,813
|                                          |                                                                                                                                             |                                            |         |                   |        

See
notes to condensed consolidated financial statements.

2

---



ADVANSTAR COMMUNICATIONS INC.        CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS        (In thousandsUnaudited)

|                                                |                                                               | Three Months
Ended
June 30,
2002 |         | Three Months
Ended
June 30,
2001 |       
|----------------------------------------------- | ------------------------------------------------------------- | -------------------------------- | ------- | -------------------------------- | ------
|
|Net revenue                                     |                                                               | $                                | 63,293  |                                  | $     
|                                                |                                                               |                                  |         |                                  |       
|Operating expenses:                             |                                                               |                                  |         |                                  |       
|                                                | Costs of production                                           |                                  |         | 12,700                           |       
|                                                | Selling, editorial and circulation                            |                                  |         | 27,837                           |       
|                                                | Funding of affiliated dot.com company operations (see Note 8) |                                  |         | 637                              |       
|                                                | General and administrative                                    |                                  |         | 10,739                           |       
|                                                | Depreciation and amortization                                 |                                  |         | 17,035                           |       
|                                                |                                                               |                                  |         |                                  |       
|                                                |                                                               | Total operating expenses         |         |                                  | 68,948
|                                                |                                                               |                                  |         |                                  |       
|Operating loss                                  |                                                               |                                  | (5,655  | )                                |       
|Other income (expense):                         |                                                               |                                  |         |                                  |       
|                                                | Interest expense, net                                         |                                  |         | (13,252                          | )     
|                                                | Other income (expense), net                                   |                                  |         | 1,216                            |       
|                                                |                                                               |                                  |         |                                  |       
|Loss before income taxes and minority interests |                                                               |                                  | (17,691 | )                                |       
|Provision (benefit) for income taxes            |                                                               |                                  | (8,030  | )                                |       
|Minority interests                              |                                                               |                                  | (589    | )                                |       
|                                                |                                                               |                                  |         |                                  |       
|Net loss                                        |                                                               | $                                | (10,250 | )                                | $     
|                                                |                                                               |                                  |         |                                  |       

See
notes to condensed consolidated financial statements.

3

---



ADVANSTAR COMMUNICATIONS INC.        CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS        (In thousandsUnaudited)

|                                                     |                                                               | Six Months
Ended
June 30,
2002 |         | Six Months
Ended
June 30,
2001 |        
|---------------------------------------------------- | ------------------------------------------------------------- | ------------------------------ | ------- | ------------------------------ | -------
|
|Net revenue                                          |                                                               | $                              | 172,720 |                                | $      
|                                                     |                                                               |                                |         |                                |        
|Operating expenses:                                  |                                                               |                                |         |                                |        
|                                                     | Costs of production                                           |                                |         | 35,890                         |        
|                                                     | Selling, editorial and circulation                            |                                |         | 62,525                         |        
|                                                     | Funding of affiliated dot.com company operations (see Note 8) |                                |         | 38,716                         |        
|                                                     | General and administrative                                    |                                |         | 22,085                         |        
|                                                     | Depreciation and amortization                                 |                                |         | 34,470                         |        
|                                                     |                                                               |                                |         |                                |        
|                                                     |                                                               | Total operating expenses       |         |                                | 193,686
|                                                     |                                                               |                                |         |                                |        
|Operating income (loss)                              |                                                               |                                | (20,966 | )                              |        
|Other income (expense):                              |                                                               |                                |         |                                |        
|                                                     | Interest expense, net                                         |                                |         | (25,926                        | )      
|                                                     | Other income (expense), net                                   |                                |         | 2,258                          |        
|                                                     |                                                               |                                |         |                                |        
|Loss before income taxes and minority interests      |                                                               |                                | (44,634 | )                              |        
|Provision (benefit) for income taxes                 |                                                               |                                | (18,624 | )                              |        
|Minority interests                                   |                                                               |                                | (677    | )                              |        
|                                                     |                                                               |                                |         |                                |        
|Loss before extraordinary item and accounting change |                                                               |                                | (26,687 | )                              |        
|Extraordinary item, net of tax                       |                                                               |                                |        |                                |        
|Cumulative effect of accounting change, net of tax   |                                                               |                                |        |                                |        
|                                                     |                                                               |                                |         |                                |        
|Net loss                                             |                                                               | $                              | (26,687 | )                              | $      
|                                                     |                                                               |                                |         |                                |        

See
notes to condensed consolidated financial statements.

4

---



ADVANSTAR COMMUNICATIONS INC.        CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS        (In thousandsUnaudited)

|                                                             |                                                                                                                    | Six Months
Ended
June 30,
2002                                                |                                                     | Six Months
Ended
June 30,
2001 |        
|------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------------ | ----------------------------------------------------------------------------- | --------------------------------------------------- | ------------------------------ | -------
|
|Operating Activities                                         |                                                                                                                    |                                                                               |                                                     |                                |        
|                                                             | Net loss                                                                                                           |                                                                               | $                                                   | (26,687                        | )      
|                                                             | Adjustments to reconcile net loss to net cash provided by operating activities, excluding effects of acquisitions: |                                                                               |                                                     |                                |        
|                                                             |                                                                                                                    | Provision for notes and advances from affiliated dot.com company (see Note 8) |                                                     |                                | 37,192 
|                                                             |                                                                                                                    | Deferred income taxes                                                         |                                                     |                                | (16,359
|                                                             |                                                                                                                    | Extraordinary itemearly extinguishment of debt, net of taxes                 |                                                     |                                |       
|                                                             |                                                                                                                    | Unrealized (gain) loss on derivative financial instruments                    |                                                     |                                | (827   
|                                                             |                                                                                                                    | Depreciation and amortization                                                 |                                                     |                                | 34,210 
|                                                             |                                                                                                                    | Non-cash interest                                                             |                                                     |                                | 1,325  
|                                                             |                                                                                                                    | Loss on sales of assets and other                                             |                                                     |                                | 932    
|                                                             |                                                                                                                    | Changes in operating assets and liabilities                                   |                                                     |                                | (29,964
|                                                             |                                                                                                                    |                                                                               |                                                     |                                |        
|                                                             |                                                                                                                    |                                                                               | Net cash provided by (used in) operating activities |                                |        
|                                                             |                                                                                                                    |                                                                               |                                                     |                                |        
|Investing Activities                                         |                                                                                                                    |                                                                               |                                                     |                                |        
|                                                             | Additions to property, plant and equipment                                                                         |                                                                               |                                                     | (3,190                         | )      
|                                                             | Acquisition of publications and trade shows, net of cash acquired                                                  |                                                                               |                                                     | (13,279                        | )      
|                                                             | Increase in advances and notes due from affiliates                                                                 |                                                                               |                                                     |                               |        
|                                                             | Proceeds from sale of assets and other                                                                             |                                                                               |                                                     | 11                             |        
|                                                             |                                                                                                                    |                                                                               |                                                     |                                |        
|                                                             |                                                                                                                    |                                                                               | Net cash used in investing activities               |                                |        
|                                                             |                                                                                                                    |                                                                               |                                                     |                                |        
|Financing Activities                                         |                                                                                                                    |                                                                               |                                                     |                                |        
|                                                             | Net proceeds from (payments on) revolving credit facility                                                          |                                                                               |                                                     | (5,000                         | )      
|                                                             | Borrowings of long-term debt                                                                                       |                                                                               |                                                     |                               |        
|                                                             | Payments of long-term debt                                                                                         |                                                                               |                                                     | (7,700                         | )      
|                                                             | Long-term debt financing costs                                                                                     |                                                                               |                                                     | (1,785                         | )      
|                                                             | Dividends paid to minority interest holders                                                                        |                                                                               |                                                     | (503                           | )      
|                                                             | Proceeds from capital contributions                                                                                |                                                                               |                                                     |                               |        
|                                                             |                                                                                                                    |                                                                               |                                                     |                                |        
|                                                             |                                                                                                                    |                                                                               | Net cash provided by (used in) financing activities |                                |        
|Effect of exchange rate changes on cash and cash equivalents |                                                                                                                    |                                                                               | (1,183                                              | )                              |        
|Net decrease in cash and cash equivalents                    |                                                                                                                    |                                                                               | (32,807                                             | )                              |        
|Cash and cash equivalents, beginning of period               |                                                                                                                    |                                                                               | 44,636                                              |                                |        
|                                                             |                                                                                                                    |                                                                               |                                                     |                                |        
|Cash and cash equivalents, end of period                     |                                                                                                                    | $                                                                             | 11,829                                              |                                | $      
|                                                             |                                                                                                                    |                                                                               |                                                     |                                |        

See
notes to condensed consolidated financial statements.

5

---



ADVANSTAR COMMUNICATIONS INC.        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.    Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared by Advanstar Communications Inc. (Communications, or the Company)
in accordance with the instructions to Form 10-Q and, therefore, do not include all the information and footnotes required by generally accepted accounting principles for complete
financial statements. Management believes that all adjustments, consisting solely of normal recurring items, considered necessary for a fair presentation have been included, and that the disclosures
are adequate to make the information presented not misleading. These condensed consolidated financial statements, however, should be read in conjunction with the audited financial statements and the
related notes, included in the Company's annual report on Form 10-K filed with the Securities and Exchange Commission on March 29, 2002, which will be amended to reflect the
restatement of the Company's results of operations for 2001 and for the period from October 12, 2000 through December 31, 2000. The results of operations for the three and six month
periods ended June 30, 2002 are not necessarily indicative of the operating results that may be expected for the entire year ending December 31, 2002.

2.    Restatement of Financial Information Relating to Goodwill

In connection with the adoption of Statement of Financial Accounting Standards ("SFAS") No. 142, "Goodwill and Other Intangible Assets", the Company
determined that $71.7 million of goodwill arising from the acquisition of the Company's direct parent, Advanstar, Inc. in October 2000 and related to the operations of the reporting
units comprising the company should have been pushed down from the parent to the financial statements of the Company. As a result, the financial statements have been restated to reflect the push down
of this goodwill and related amortization expense from the acquisition
date to the adoption of SFAS No. 142 effective January 1, 2002. A summary of the restatement of previously issued financial information is as follows:

As Previously
Reported

As
RestatedBalance Sheet at December 31, 2001 (in thousands)Goodwill, net of accumulated amortization

$
653,758

$
721,157Capital in excess of par


278,425


350,175Accumulated deficit


(45,194
)

(49,545
)Total stockholder's equity


227,285


294,684Statement of Operations
Three Months Ended June 30, 2001Depreciation and amortization


14,658


15,393Loss before income taxes and minority interests


(15,597
)

(16,332
)Net loss


(12,037
)

(12,772
)Statement of Operations
Six Months Ended June 30, 2001Depreciation and amortization


30,446


32,492Loss before income taxes and minority interests


(1,914
)

(3,960
)Loss before extraordinary item and accounting change


(6,655
)

(8,701
)Net loss


(9,763
)

(11,809
)Statement of Operations
Year Ended December 31, 2001Depreciation and amortization


61,842


64,893Loss before income taxes and minority interests


(25,155
)

(28,206
)Loss before extraordinary item and accounting change


(25,341
)

(28,392
)


6

---

Net loss


(28,449
)

(31,500
)Statement of Operations
For the period from October 12, 2000 through December 31, 2000Depreciation and amortization


14,447


15,748Loss before income taxes and minority interests


(21,642
)

(22,943
)Net loss


(16,745
)

(18,046
)


The
adjustments to previously reported financial statements have no impact on net revenue or cash flows for any period, do not impact measurements of earnings before
taxes, depreciation, amortization and interest, have no impact on the Company's financial ratio covenants in its debt instruments and have no effect on the consolidated financial statements of the
Company's parent, Advanstar, Inc.

The
Company intends to amend its prior filings on Fom 10-Q for the quarter ended March 31, 2002 as well as its Form 10-K for the year ended December 31, 2001.

As
discussed in Note 3 related to the adoption of SFAS 142, the Company and its parent, Advanstar, Inc., completed an initial assessment of goodwill impairment. The
assessment has indicated that there is the potential for a goodwill impairment charge related to our trade show segment. When we have completed the final measurement of the goodwill impairment, a
charge will be recorded as the cumulative effect of an accounting change as of January 1, 2002. The Company expects to complete the impairment measurement process in the second half of 2002.

3.    Goodwill and Intangible Assets

Effective January 1, 2002, the Company adopted SFAS No. 142, "Goodwill and Other Intangible Assets." Under SFAS No. 142, goodwill and
intangible assets with indefinite lives are no longer amortized. However, the Company is required to perform an initial impairment review of goodwill in 2002 and an annual impairment review
thereafter, or more frequently if impairment indicators arise. Identified intangible assets that are not deemed to have indefinite lives will continue to be amortized over their useful lives, but with
no maximum life.

During
the second quarter 2002, the Company completed an initial assessment of goodwill impairment. The assessment indicated that there is the potential for a goodwill impairment charge
related to our trade show segment which has an aggregate net book value of goodwill of approximately $558.3 million. Preliminary valuations show that the carrying value of our trade show
segment is in excess of its fair value by approximately $41.0 million. Consequently, there is the possibility for a material, non-cash impairment charge in the second half of 2002.
Once final measurement of the goodwill impairment has been completed, the charge will be recorded as the cumulative effect of an accounting change as of January 1, 2002. The Company expects to
complete the impairment measurement process in the second half of 2002.

Upon
adoption of SFAS No. 142, the Company discontinued the amortization of goodwill. At the same time we accelerated amortization of trade exhibitor and advertiser lists to match
the related expected benefit of these assets. The Company recorded $7.1 million for the three month period and $13.4 million for the six month period ended June 30, 2002 of
additional amortization as a result of changing from straight line amortization to accelerated amortization on these assets. The following

7

---

table represents a reconciliation of income before extraordinary item and accounting change and net income adjusted for the exclusion of goodwill amortization, net of tax (in thousands):

Three Months
Ended
June 30,
2002

Three Months
Ended
June 30,
2001

Six Months
Ended
June 30,
2002

Six Months
Ended
June 30,
2001(As Restated)



(As Restated)Reported income (loss) before extraordinary item and accounting change

$
(10,250
)
$
(12,772
)
$
(26,687
)
$
(8,701
)Add: goodwill amortization, net of tax





5,304





11,184Adjusted income (loss) before extraordinary item and accounting change

$
(10,250
)
$
(7,468
)
$
(26,687
)
$
2,483Reported net (loss) income

$
(10,250
)
$
(12,772
)
$
(26,687
)
$
(11,809
)Add: goodwill amortization, net of tax





5,304





11,184Adjusted net income (loss)

$
(10,250
)
$
(7,468
)
$
(26,687
)
$
(625
)


The
changes in the carrying amount of goodwill for the six months ended June 30, 2002, by operating segment, are as follows (in thousands) (2001 amounts restatedSee
Note 2):

Trade Shows
and
Conferences

Trade
Publications

Marketing
Services

TotalsBalance as of December 31, 2001

$
558,272

$
132,433

$
30,452

$
721,157Goodwill acquired during the period


9,070


(65
)

(258
)

8,747Balance as of June 30, 2002

$
567,342

$
132,368

$
30,194

$
729,904


During
the first quarter of 2002 we completed the acquisitions of the AIIM International Exposition and Conference and the First Global Media Group with a cumulative purchase price
totaling approximately $12.4 million in cash and assumed liabilities. We have accounted for our acquisitions under the purchase method of accounting and our results of operations include the
effect of these acquisitions from the date of purchase. Certain of the liabilities assumed and the identified intangible assets in connection with the 2001 and 2002 acquisitions have been recorded
based on preliminary estimates as of the dates of acquisition and are subject to adjustment upon completion of the allocation of the purchase price. The pro forma operating results of the acquisitions
are not material to our operating results.

8

---

Trade
exhibitor and advertiser lists are amortized on an accelerated basis over eight years while subscriber lists and other intangible assets are amortized on a
straight-line basis over three to 10 years and consist of the following as of June 30, 2002 and December 31, 2001 (in thousands):

June 30,
2002

December 31,
2001Trade exhibitor lists

$
163,387

$
160,318Advertiser lists


34,890


33,302Subscriber lists


23,181


22,339Other intangible assets


2,769


1,758Other assets


22,367


20,582246,594


238,299Accumulated amortization


(66,379
)

(35,306
)Total intangible and other assets, net

$
180,215

$
202,993


Estimated
amortization expense of identified intangible assets for the next five years are as follows (in thousands):

2002

$
62,3582003


45,8732004


30,4532005


29,8572006


29,337


4.    Derivative Financial Instruments

Effective January 1, 2001, the Company adopted Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities" (FAS 133), which required derivative instruments be recorded on the balance sheet at fair value. Changes in the fair value of derivative financial instruments must be recognized
currently in earnings unless specific hedge accounting criteria are met. For those instruments which meet the hedging criteria, gains and losses will be recognized in other comprehensive income rather
than in earnings.

The
Company's adoption of FAS 133 on January 1, 2001 resulted in a reduction in income of approximately $0.6 million, net of tax, reported as a cumulative effect of
accounting change and a reduction to other comprehensive income of approximately $0.2 million, net of tax.

The
Company uses derivative instruments to manage exposure to interest rate and foreign currency risks. The Company's objectives for holding derivatives are to minimize the risks using
the most effective methods to eliminate or reduce the impact of these exposures.

Interest Rate Risk

Variable rate debt instruments are subject to interest rate risk. The Company has entered into interest rate collar agreements with remaining maturities of up to
twenty months to manage its exposure to interest rate movements on a portion of its variable rate debt obligations. The effective portion of the cumulative gain or loss on these derivative instruments
is reported as a component of accumulated other comprehensive income in stockholder's equity and is recognized in earnings as the

9

---

underlying interest expense is incurred. The ineffective portion of the interest rate collar and cap agreements is recognized in current earnings.

Foreign Currency Risk

Certain forecasted transactions are exposed to foreign currency risk. Foreign currencies hedged are the Euro, British Pound Sterling and the Brazilian Real.
Forward contracts are used to manage the exposure associated with forecasted international revenue transactions for up to twelve months in the future and are designated as cash flow hedging
instruments. Changes in fair value of these instruments are reported as a component of accumulated other comprehensive income in stockholder's equity and are recognized in earnings as the underlying
revenue is recognized. Forward contracts not designated as hedging instruments under SFAS No. 133 are also used to manage the impact of the variability in exchange rates. Changes in the fair
value of these foreign exchange contracts are recognized in current earnings.

At
June 30, 2002, the Company had foreign exchange derivative contracts to sell with a notional amount totalling $2.0 million and to buy totalling $0.9 million. The
estimated fair value of the foreign exchange contracts based upon market quotes was a net liability of $0.1 million at June 30, 2002.

Accumulated Other Comprehensive Income (Loss)

The following table summarizes the effects of FAS 133 on the Company's accumulated other comprehensive income as of June 30, 2002 (in thousands):

Interest Rate
Collar
Agreements

Foreign
Exchange
Contracts

TotalNet of taxes:Accumulated other comprehensive income (loss) balance at December 31, 2001

$
(4,189
)
$
5

$
(4,184
)Unwound from accumulated other comprehensive Income (loss) during the period


2,399


(5
)

2,394Mark to market of hedge contracts


(1,843
)




(1,843
)Accumulated other comprehensive income (loss) balance at June 30, 2002

$
(3,633
)
$


$
(3,633
)


The
fair value of the Company's derivatives was a net liability position of $5.8 million and $7.7 million at June 30, 2002 and December 31, 2001,
respectively, of which $4.7 million and $6.6 million is included in accrued liabilities at June 30, 2002 and December 31, 2001, respectively, and $1.1 million and
$1.1 million is included in other long-term liabilities at June 30, 2002 and December 31, 2001, respectively, in the accompanying condensed consolidated balance
sheets.

10

---

Statement of Operations

The following tables summarize the effects of FAS 133 on the Company's statement of operations for the three and six month periods ended June 30,
2002 and 2001 (in thousands):

Interest Rate
Collar
Agreements

Foreign
Exchange
Contracts

TotalThree months ended June 30, 2002Other income (expense)

$
172

$
(238
)
$
(66
)Total statement of operations impact before taxes

$
172

$
(238
)
$
(66
)Three months ended June 30, 2001Other income (expense)

$
1,846

$
147

$
1,993Total statement of operations impact before taxes

$
1,846

$
147

$
1,993Six months ended June 30, 2002Other income (expense)

$
288

$
538

$
826Total statement of operations impact before taxes

$
288

$
538

$
826Six months ended June 30, 2001
Other income (expense)

$
251

$
630

$
881Total statement of operations impact before taxes

$
251

$
630

$
881


5.    Debt

Credit Facility

The senior credit facility (the Credit Facility) consists of (i) $415 million of term loans payable in quarterly installments beginning
March 31, 2001 and continuing through October 11, 2008 and (ii) $80 million of revolving loan availability. As of June 30, 2002, the Company had approximately
$48.4 million of borrowings available under the Credit Facility, subject to customary conditions. The Credit Facility contains a number of covenants that, among other things, require the
Company to maintain certain financial ratios, including leverage and fixed charge coverage ratios, as defined. Failure of the Company to comply with any of these covenants may cause an event of
default under the Credit Facility.

Borrowings
under the Credit Facility are secured by substantially all of the Company's assets. In addition, as of June 30, 2002, the Company has interest rate protection
agreements for a notional amount of $250 million that effectively guarantee that the Company's interest rate on $250 million of the Company's Credit Facility will not exceed
13.0 percent, nor be less than 9.0 percent. The net interest paid or received is included in interest expense. At June 30, 2002, the estimated fair value of the interest rate
protection agreements was a net liability position to the Company of approximately $5.8 million.

Senior Subordinated Notes

On January 9, 2001, in connection with the acquisition of the Company's parent, Advanstar, Inc. in October 2000, the 9.25 percent senior
subordinated notes due in 2008 (the Notes) were tendered at an offer price in cash equal to 101 percent of the aggregate principal amount, plus accrued interest. The

11

---

Company financed the repurchase of the Notes with bridge financing. The premium paid on the tender of the Notes of approximately $1.0 million, net of related tax benefits, is reflected as an
extraordinary item in the accompanying restated 2001 condensed consolidated statement of operations.

On
February 21, 2001, the Company issued $160.0 million of unsecured, 12 percent Series B senior subordinated notes due 2011 (the Replacement Notes). Interest
on the Replacement Notes is payable semiannually on February 15 and August 15 of each year commencing on August 15, 2001. The Replacement Notes are fully and unconditionally
guaranteed on a senior subordinated basis, jointly and severally, by the Company and its wholly owned domestic subsidiaries. As part of tendering of the Notes, the Company wrote-off the
remaining unamortized deferred financing costs of approximately $1.6 million, net of related tax benefits, which is reflected as an extraordinary item in the accompanying 2001 consolidated
statement of operations.

Concurrent
with the issuance of the Replacement Notes, Advanstar, Inc. issued units comprised of 15 percent senior discount notes (the Discount Notes), with an aggregate
principal amount at maturity of approximately $68.6 million and warrants to purchase shares of common stock of its parent, Advanstar Holdings Corp. (Holdings), for consideration of
approximately $34.8 million. Advanstar, Inc. contributed the proceeds from the issuance of the Discount Notes to the Company. The Company used the proceeds from issuance of the
Replacement Notes and the Discount Notes to repay and terminate the bridge financing and to repay approximately $45.0 million of term loan borrowings under the Credit Facility. The contribution
of the proceeds from the Discount Notes by Advanstar, Inc. to the Company was treated as a capital contribution.

Long-term
debt consists of the following (in thousands):

June 30,
2002

December 31,
2001Term loan A, interest at LIBOR plus 3.25%; 5.09% at June 30, 2002, due quarterly through April 11, 2007

$
82,500

$
89,200Term loan B, interest at LIBOR plus 4.00%; 5.84% June 30, 2002, due quarterly through October 11, 2008


280,800


280,800Revolving credit loan, interest at LIBOR plus 3.25%; 5.12% at June 30, 2002, due April 11, 2007


29,000


34,000Senior subordinated notes at 12.00%, due 2011


160,000


160,000Acquisition note payable, interest at 5.50%, due monthly through 2004


5,000


6,000557,300


570,000Less- Current maturities


(17,000
)

(16,200
)$
540,300

$
553,800


The
Company's credit facility contains certain financial covenants, including a minimum fixed charge coverage ratio and a maximum leverage ratio. Additionally, certain financial
covenants under the Replacement Notes include a maximum leverage ratio, limitations on certain asset dispositions, payments, debt incurrence, dividends and other restricted payments. In
March 2002, the Company obtained an amendment to the Credit Facility providing for certain revisions to the quarterly financial covenants applicable in 2002 and 2003. The Company was in
compliance with all covenants as of June 30, 2002.

12

---

6.    Comprehensive Income

The tables below present comprehensive loss, defined as changes in the equity of the Company excluding changes resulting from investments by and distributions to
shareholders (in thousands) (2001 amounts restatedSee Note 2):

|                                                                              |  | Three Months
Ended
June 30,
2002 |         | Three Months
Ended
June 30,
2001 |  
|----------------------------------------------------------------------------- |  | -------------------------------- | ------- | -------------------------------- | -
|
|Net income (loss)                                                             |  | $                                | (10,250 | )                                | $
|Change in cumulative translation adjustment                                   |  |                                  | (569    | )                                |  
|Change in unrealized losses on derivative financial Instruments, net of taxes |  |                                  | (838    | )                                |  
|                                                                              |  |                                  |         |                                  |  
|Comprehensive loss                                                            |  | $                                | (11,657 | )                                | $
|                                                                              |  |                                  |         |                                  |  

Six Months
Ended
June 30,
2002

Six Months
Ended
June 30,
2001(As Restated)Net income (loss)

$
(26,687
)
$
(11,809
)Change in cumulative translation adjustment


(1,154
)

(3,179
)Change in unrealized losses on derivative financial Instruments, net of taxes


551


(2,549
)Comprehensive loss

$
(27,290
)
$
(17,537
)


13

---

7.    Segment Information

Trade Shows
and
Conferences

Trade
Publications

Marketing
Services

Corporate
and
Other

Totals(In thousands)Three months ended June 30, 2002Revenues

$
21,934

$
37,049

$
4,095

$
215

$
63,293Operating income (loss)


8,042


12,694


1,979


(28,370
)

(5,655
)Segment assets


701,346


192,953


32,042


56,472


982,813Three months ended June 30, 2001 (RestatedSee Note 2)Revenues

$
30,110

$
40,733

$
4,476

$
162

$
75,481Operating income (loss)


7,104


12,116


2,525


(27,047
)

(5,302
)Segment assets


677,484


202,454


30,749


102,463


1,013,150


Trade Shows
and
Conferences

Trade
Publications

Marketing
Services

Corporate
and
Other

Totals(In thousands)Six months ended June 30, 2002Revenues

$
98,399

$
65,723

$
7,671

$
927

$
172,720Operating income (loss)


50,787


18,435


3,568


(93,756
)

(20,966
)Segment assets


701,346


192,953


32,042


56,472


982,813Six months ended June 30, 2001 (RestatedSee Note 2)Revenues

$
119,674

$
75,373

$
8,646

$
435

$
204,128Operating income (loss)


55,309


19,340


4,984


(56,951
)

22,682Segment assets


677,484


202,454


30,749


102,463


1,013,150


14

---

The
reconciliation of total segment gross profit to consolidated pre-tax income (loss) is as follows (in thousands) (2001 amounts restatedSee Note 2):

Three Months
Ended
June 30,
2002

Three Months
Ended
June 30,
2001Total segment operating income (loss)

$
(5,655
)
$
(5,302
)Interest expense


(13,252
)

(13,518
)Other income (expense), net


1,216


2,488Consolidated income (loss) before taxes and minority interests

$
(17,691
)
$
(16,332
)


Three Months
Ended
June 30,
2002

Three Months
Ended
June 30,
2001Total segment operating income (loss)

$
(20,966
)
$
22,682Interest expense


(25,926
)

(28,192
)Other income (expense), net


2,258


1,550Consolidated income (loss) before taxes and minority interests

$
(44,634
)
$
(3,960
)


8.    Related-Party Transactions

Relationship with Advanstar.com, Inc.

Advanstar.com, Inc. (Advanstar.com), an affiliate of the Company, operates the Company's event and publication-related web sites and develops certain
enhanced web opportunities to serve the Company's customers in selected industries. The Company provides Advanstar.com with certain administrative support services and charges for these services based
on a general overhead charge. In addition, selected sales, editorial, marketing and production staff of the Company are shared with Advanstar.com. The Company also provides Advanstar.com with
marketing and promotional support through advertising pages in its trade publications and exhibit space in its trade shows. In return, Advanstar.com provides support on its web sites for the Company's
trade publications and trade shows.

In
the third quarter of 2001, certain events, including the slowdown in the economy, the changing business environment and continuing operating losses of Advanstar.com, caused management
of Advanstar, Inc. to consider certain transactions between its two sister subsidiaries, the Company and Advanstar.com, to satisfy the outstanding advances and notes due to the Company from
Advanstar.com. Accordingly, through December 31, 2001 the Company accounted for these advances and notes to
Advanstar.com as a charge to capital in excess of par value in the accompanying consolidated balance sheet, pending final determination of the disposition of these advances and notes.

In
the first quarter of 2002, management of Advanstar, Inc. began to consider the further consolidation of the activities of Advanstar.com with the Company, or a merger of
Advanstar.com into the Company. Consequently, in response to the changing business environment and continuing operating losses of Advanstar.com, the Company recorded a first quarter
non-cash charge of $37.2 million related to a provision against the outstanding advances and notes due to the Company from Advanstar.com as of December 31, 2001.

15

---

In
2002 the Company began recording the advances and notes issued during the current year as an operating expense on the Company's condensed consolidated statement of operations, as a
reflection of the ongoing nature of the operations of Advanstar.com in support of the Company's operations as a result of the restructuring of the activities of Advanstar.com in 2001. Net advances and
notes during the three and six month period ended June 30, 2002 were approximately $0.6 million and $1.5 million, respectively.

Financial Advisory Fees and Agreements

Credit Suisse First Boston Corporation (CSFB), an affiliate of the DLJ Merchant Banking funds, acted as the Company's financial advisor in connection with the
issuance of, and was an initial purchaser of, the Replacement Notes and the Discount Notes. The Company paid customary fees to CSFB as compensation for those services. DLJ Capital Funding, an
affiliate of the DLJ Merchant Banking funds, received customary fees and reimbursement of expenses in connection with the bridge financing. The aggregate amount of all fees paid to the CSFB entities
in connection with these financings during 2001 was approximately $7.3 million, plus out-of-pocket expenses.

Advanstar
Holdings Corp. has agreed to pay CSFB an annual advisory fee of $0.5 million, until the earlier to occur of (1) an initial public offering of Holdings,
(2) the date when the DLJ Merchant Banking funds own less than 162/3% of the shares of Holdings' common stock held by them on the closing date of the acquisition and
(3) October 11, 2005. Payment of the advisory fee will be dependent upon the receipt of dividends from its subsidiaries, including the Company.

Parent Company Notes

As part of the financing for the Acquisition, our parent, Advanstar, Inc., issued the Discount Notes with a principal amount at maturity of
$103.2 million. Concurrently with the closing of the offering of the Replacement Notes, Advanstar, Inc. sold additional senior discount notes due October 2011 with an additional
aggregate principal amount at maturity of $68.6 million. These notes do not require cash interest payments until 2006. Neither we nor any of our subsidiaries guaranteed the senior discount
notes. Advanstar, Inc., however, is a holding company and its ability to pay interest on these senior discount notes will be dependent upon the receipt of dividends from its subsidiaries,
including the Company. The credit facility and the Replacement Notes impose substantial restrictions on our subsidiaries' ability to pay dividends.

9.    New Accounting Pronouncements

In August 2001, the Financial Accounting Standards Board (FASB) issued Financial Accounting Standards No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets" (SFAS No. 144). This statement addresses financial accounting and reporting for the impairment or disposal of long-lived assets.
FAS 144 retains and expands upon the fundamental provisions of existing guidance related to the recognition and measurement of the impairment of long-lived assets to be held and
used and the measurement of long-lived assets to be disposed of by sale. Generally, the provisions of SFAS No. 144 are effective for financial statements issued for fiscal years
beginning after December 15, 2001. The Company has adopted SFAS No. 144 on January 1, 2002. The adoption of SFAS No. 144 did not impact the results of operations or
financial position of the Company for the three or six month period ended June 30, 2002.

In
May 2002, the FASB issued Financial Accounting Standards No. 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and
Technical Corrections"

16

---

(SFAS No. 145). SFAS No. 145 rescinds FASB Statement No. 4, "Reporting Gains and Losses from Extinguishment of Debt",and an
amendment of that Statement, FASB Statement No. 64, "Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements". SFAS No. 145 also rescinds FASB Statement
No. 44, "Accounting for Intangible Assets of Motor Carriers". SFAS No. 145 amends FASB Statement No. 13, "Accounting for Leases", to eliminate an inconsistency between the
required accounting for sale-leaseback transactions and the required accounting for certain lease modifications that have economic effects that are similar to sale-leaseback
transactions. SFAS No. 145 also amends other existing authoritative pronouncements to make various technical corrections, clarify meanings, or describe their applicability under changed
conditions. SFAS No. 145 is generally effective for fiscal years beginning after May 15, 2002. The Company has not adopted SFAS No. 145. The adoption of SFAS No. 145 is not
expected to have a significant impact of the results of operations or financial position of the Company.

In
June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities." This statement addresses financial accounting and reporting
for costs associated with exit or disposal activities and requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred. The provisions
of SFAS No. 146 are effective for exit or disposal activities that are initiated after December 31, 2002. The adoption of SFAS 146 is not expected to have a significant impact of
the results of operations or financial position of the Company.

10.  Supplemental Guarantor Condensed Consolidating Financial Statements

Basis of Presentation

The Replacement Notes are fully and unconditionally guaranteed on a senior subordinated basis, jointly and severally, by the Company and its wholly-owned domestic
subsidiaries. The subsidiary guarantors are Mens Apparel Guild In California, Inc. (MAGIC) and Applied Business TeleCommunications, Inc. (ABC). The subsidiary guarantors and the
non-guarantor subsidiaries comprise all of the direct and indirect subsidiaries of the Company. The condensed consolidated financial statements of the guarantors are presented below and
should be read in connection with the consolidated financial statements of the Company. Separate financial statements of the guarantors are not presented because the guarantors are jointly, severally
and unconditionally liable under the guarantees and the Company believes the condensed consolidated financial statements presented are more meaningful in understanding the financial position of the
guarantors and management has determined that such information is not material to investors.

There
are no significant restrictions on the ability of the subsidiary guarantors to make distributions to the Company.

17

---



ADVANSTAR COMMUNICATIONS INC. AND SUBSIDIARIES  Condensed consolidating balance sheets  As of June 30, 2002  (in thousandsunaudited)

|                                                      |                                       | Communications             |         | Guarantor
Subsidiaries |          | Non-Guarantor
Subsidiaries |         | Elimination |         | Consolidated
Total |        
|----------------------------------------------------- | ------------------------------------- | -------------------------- | ------- | ---------------------- | -------- | -------------------------- | ------- | ----------- | ------- | ------------------ | -------
|ASSETS                                                |                                       |                            |         |                        |          |                            |         |             |         |                    |        
|Current assets:                                       |                                       |                            |         |                        |          |                            |         |             |         |                    |        
|                                                      | Cash and cash equivalents             |                            | $       | 3,231                  |          | $                          |        |             | $       | 8,598              |        
|                                                      | Accounts receivable, net              |                            |         | 24,056                 |          |                            | 54      |             |         | 3,324              |        
|                                                      | Prepaid expenses                      |                            |         | 3,597                  |          |                            | 2,529   |             |         | 1,892              |        
|                                                      | Intercompany receivable (payable)     |                            |         | (200,839               | )        |                            | 169,569 |             |         | 31,270             |        
|                                                      | Other                                 |                            |         | 1,146                  |          |                            | 10      |             |         | 48                 |        
|                                                      |                                       |                            |         |                        |          |                            |         |             |         |                    |        
|                                                      |                                       | Total current assets       |         |                        | (168,809 | )                          |         | 172,162     |         |                    | 45,132 
|Noncurrent assets:                                    |                                       |                            |         |                        |          |                            |         |             |         |                    |        
|                                                      | Property, plant and equipment, net    |                            |         | 22,166                 |          |                            | 897     |             |         | 1,146              |        
|                                                      | Intangible and other assets, net      |                            |         | 487,638                |          |                            | 342,875 |             |         | 79,606             |        
|                                                      | Investments in subsidiaries           |                            |         | 570,755                |          |                            |        |             |         |                   |        
|                                                      |                                       |                            |         |                        |          |                            |         |             |         |                    |        
|                                                      |                                       | $                          | 911,750 |                        | $        | 515,934                    |         | $           | 125,884 |                    | $      
|                                                      |                                       |                            |         |                        |          |                            |         |             |         |                    |        
|LIABILITIES AND
STOCKHOLDER'S EQUITY                  |                                      
|Current liabilities:                                  |                                       |                            |         |                        |          |                            |         |             |         |                    |        
|                                                      | Current maturities of long-term debt  |                            | $       | 17,000                 |          |                            |        |             |         |                   |        
|                                                      | Accounts payable                      |                            |         | 15,550                 |          |                            | 1,581   |             |         | 5,369              |        
|                                                      | Deferred revenue                      |                            |         | 15,594                 |          |                            | 19,578  |             |         | 4,411              |        
|                                                      | Accrued liabilities                   |                            |         | 18,662                 |          |                            | 3,097   |             |         | 786                |        
|                                                      |                                       |                            |         |                        |          |                            |         |             |         |                    |        
|                                                      |                                       | Total current liabilities  |         |                        | 66,806   |                            |         | 24,256      |         |                    | 10,566 
|Long term debt, net of current maturities             |                                       |                            | 540,300 |                        |          |                           |         |             |        |                    |        
|Deferred income taxes and other long-term liabilities |                                       |                            | (20,331 | )                      |          | 37,802                     |         |             | 292     |                    |        
|Due to parent                                         |                                       |                            | 2,848   |                        |          |                           |         |             |        |                    |        
|Minority interests                                    |                                       |                            | 14,615  |                        |          |                           |         |             | 1,073   |                    |        
|Stockholder's equity:                                 |                                       |                            |         |                        |          |                            |         |             |         |                    |        
|                                                      | Common stock                          |                            |         | 10                     |          |                            | 3       |             |         | 483                |        
|                                                      | Capital in excess of par value        |                            |         | 387,367                |          |                            | 438,117 |             |         | 123,434            |        
|                                                      | Accumulated deficit                   |                            |         | (76,232                | )        |                            | 15,756  |             |         | (7,038             | )      
|                                                      | Accumulted other comprehensive income |                            |         | (3,633                 | )        |                            |        |             |         | (2,926             | )      
|                                                      |                                       |                            |         |                        |          |                            |         |             |         |                    |        
|                                                      |                                       | Total stockholder's equity |         |                        | 307,512  |                            |         | 453,876     |         |                    | 113,953
|                                                      |                                       |                            |         |                        |          |                            |         |             |         |                    |        
|                                                      |                                       | $                          | 911,750 |                        | $        | 515,934                    |         | $           | 125,884 |                    | $      
|                                                      |                                       |                            |         |                        |          |                            |         |             |         |                    |        

18

---



ADVANSTAR COMMUNICATIONS INC. AND SUBSIDIARIES  Condensed consolidating statements of operations  Three months ended June 31, 2002  (in thousandsunaudited)

|                                                         |                                                           | Communications           |         | Guarantor
Subsidiaries |         | Non-Guarantor
Subsidiaries |       | Elimination |       | Consolidated
total |      
|-------------------------------------------------------- | --------------------------------------------------------- | ------------------------ | ------- | ---------------------- | ------- | -------------------------- | ----- | ----------- | ----- | ------------------ | -----
|Net revenue                                              |                                                           | $                        | 53,445  |                        | $       | 1,767                      |       | $           | 8,081 |                    | $    
|Operating expenses:                                      |                                                           |                          |         |                        |         |                            |       |             |       |                    |      
|                                                         | Cost of production and selling, editorial and circulation |                          |         | 32,931                 |         |                            | 1,890 |             |       | 5,716              |      
|                                                         | General and administrative                                |                          |         | 9,244                  |         |                            | 388   |             |       | 1,107              |      
|Funding of affiliated dot.com company operations         |                                                           |                          | 637     |                        |         |                           |       |             |      |                    |      
|                                                         | Depreciation and amortization                             |                          |         | 8,263                  |         |                            | 7,756 |             |       | 1,016              |      
|                                                         |                                                           |                          |         |                        |         |                            |       |             |       |                    |      
|                                                         |                                                           | Total operating expenses |         |                        | 51,075  |                            |       | 10,034      |       |                    | 7,839
|                                                         |                                                           |                          |         |                        |         |                            |       |             |       |                    |      
|Operating income (loss)                                  |                                                           |                          | 2,370   |                        |         | (8,267                     | )     |             | 242   |                    |      
|Other income (expense):                                  |                                                           |                          |         |                        |         |                            |       |             |       |                    |      
|                                                         | Interest expense, net                                     |                          |         | (12,878                | )       |                            |      |             |       | (374               | )    
|                                                         | Other income (expense), net                               |                          |         | (80                    | )       |                            |      |             |       | 1,296              |      
|                                                         |                                                           |                          |         |                        |         |                            |       |             |       |                    |      
|Income (loss) before income taxes and minority interests |                                                           |                          | (10,588 | )                      |         | (8,267                     | )     |             | 1,164 |                    |      
|Provision (benefit) for income taxes                     |                                                           |                          | (5,421  | )                      |         | (3,134                     | )     |             | 525   |                    |      
|Minority interests                                       |                                                           |                          | 79      |                        |         |                           |       |             | (668  | )                  |      
|Equity in earnings of subsidiaries                       |                                                           |                          | (5,162  | )                      |         |                           |       |             |      |                    |      
|                                                         |                                                           |                          |         |                        |         |                            |       |             |       |                    |      
|                                                         |                                                           | Net income (loss)        |         | $                      | (10,250 | )                          | $     | (5,133      | )     | $                  | (29  
|                                                         |                                                           |                          |         |                        |         |                            |       |             |       |                    |      

19

---



ADVANSTAR COMMUNICATIONS INC. AND SUBSIDIARIES  Condensed consolidating statements of operations  Three months ended June 31, 2002  (in thousandsunaudited)

|                                                         |                                                           | Communications           |         | Guarantor
Subsidiaries |         | Non-Guarantor
Subsidiaries |        | Elimination |        | Consolidated
Total |       
|-------------------------------------------------------- | --------------------------------------------------------- | ------------------------ | ------- | ---------------------- | ------- | -------------------------- | ------ | ----------- | ------ | ------------------ | ------
|Net revenue                                              |                                                           | $                        | 120,189 |                        | $       | 31,815                     |        | $           | 20,716 |                    | $     
|Operating expenses:                                      |                                                           |                          |         |                        |         |                            |        |             |        |                    |       
|                                                         | Cost of production and selling, editorial and circulation |                          |         | 74,206                 |         |                            | 10,410 |             |        | 13,799             |       
|                                                         | General and administrative                                |                          |         | 18,675                 |         |                            | 838    |             |        | 2,572              |       
|Funding of affiliated dot.com company operations         |                                                           |                          | 38,716  |                        |         |                           |        |             |       |                    |       
|                                                         | Depreciation and amortization                             |                          |         | 17,155                 |         |                            | 15,511 |             |        | 1,804              |       
|                                                         |                                                           |                          |         |                        |         |                            |        |             |        |                    |       
|                                                         |                                                           | Total operating expenses |         |                        | 148,752 |                            |        | 26,759      |        |                    | 18,175
|                                                         |                                                           |                          |         |                        |         |                            |        |             |        |                    |       
|Operating income (loss)                                  |                                                           |                          | (28,563 | )                      |         | 5,056                      |        |             | 2,541  |                    |       
|Other income (expense):                                  |                                                           |                          |         |                        |         |                            |        |             |        |                    |       
|                                                         | Interest expense, net                                     |                          |         | (25,415                | )       |                            |       |             |        | (511               | )     
|                                                         | Other income (expense), net                               |                          |         | 1,271                  |         |                            |       |             |        | 987                |       
|                                                         |                                                           |                          |         |                        |         |                            |        |             |        |                    |       
|Income (loss) before income taxes and minority interests |                                                           |                          | (52,707 | )                      |         | 5,056                      |        |             | 3,017  |                    |       
|Provision (benefit) for income taxes                     |                                                           |                          | (22,273 | )                      |         | 1,918                      |        |             | 1,731  |                    |       
|Minority interests                                       |                                                           |                          | 24      |                        |         |                           |        |             | (701   | )                  |       
|Equity in earnings of subsidiaries                       |                                                           |                          | 3,723   |                        |         |                           |        |             |       |                    |       
|                                                         |                                                           |                          |         |                        |         |                            |        |             |        |                    |       
|                                                         |                                                           | Net income (loss)        |         | $                      | (26,687 | )                          | $      | 3,138       |        | $                  | 585   
|                                                         |                                                           |                          |         |                        |         |                            |        |             |        |                    |       

20

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ADVANSTAR COMMUNICATIONS INC. AND SUBSIDIARIES    Condensed consolidating statements of cash flows    Six months ended June 30, 2002  (in thousandsunaudited)

|                                                     |                                                                                          | Communications                                                   |                                           | Guarantor
Subsidiaries |         | Non-Guarantor
Subsidiaries |       | Elimination |        | Consolidated
Total |       
|---------------------------------------------------- | ---------------------------------------------------------------------------------------- | ---------------------------------------------------------------- | ----------------------------------------- | ---------------------- | ------- | -------------------------- | ----- | ----------- | ------ | ------------------ | ------
|Operating activities:                                |                                                                                          |                                                                  |                                           |                        |         |                            |       |             |        |                    |       
|                                                     | Net income (loss)                                                                        |                                                                  | $                                         | (26,687                | )       | $                          | 3,138 |             | $      | 585                |       
|                                                     | Adjustments to reconcile net income (loss) to net cash provided by operating activities |                                                                  |                                           |                        |         |                            |       |             |        |                    |       
|                                                     |                                                                                          | Provision for notes and advances from affiliated dot.com company |                                           |                        | 37,192  |                            |       |            |        |                    |      
|                                                     |                                                                                          | Deferred income taxes                                            |                                           |                        | (16,359 | )                          |       |            |        |                    |      
|                                                     |                                                                                          | Equity in earnings of subsidiaries                               |                                           |                        | (3,723  | )                          |       |            |        |                    |      
|                                                     |                                                                                          | Unrealized (gain) loss on derivative financial instruments       |                                           |                        | (827    | )                          |       |            |        |                    |      
|                                                     |                                                                                          | Depreciation and amortization                                    |                                           |                        | 17,085  |                            |       | 15,511      |        |                    | 1,614 
|                                                     |                                                                                          | Non-cash Items                                                   |                                           |                        | 1,325   |                            |       |            |        |                    |      
|                                                     |                                                                                          | Loss on sales of assets and other                                |                                           |                        | 41      |                            |       |            |        |                    | 891   
|                                                     |                                                                                          | Change in working capital items                                  |                                           |                        | (9,660  | )                          |       | (18,544     | )      |                    | (1,760
|                                                     |                                                                                          |                                                                  |                                           |                        |         |                            |       |             |        |                    |       
|                                                     |                                                                                          |                                                                  | Net cash provided by operating activities |                        |         | (1,613                     | )     |             | 105    |                    |       
|                                                     |                                                                                          |                                                                  |                                           |                        |         |                            |       |             |        |                    |       
|Investing activities:                                |                                                                                          |                                                                  |                                           |                        |         |                            |       |             |        |                    |       
|                                                     | Additions to property, plant and equipment                                               |                                                                  |                                           | (2,764                 | )       |                            | (105  | )           |        | (321               | )     
|                                                     | Acquisitions of publications and trade shows, net of proceeds                            |                                                                  |                                           | (11,824                | )       |                            |      |             |        | (1,455             | )     
|                                                     | Proceeds from sale of assets and other                                                   |                                                                  |                                           | 11                     |         |                            |      |             |        |                   |       
|                                                     |                                                                                          |                                                                  |                                           |                        |         |                            |       |             |        |                    |       
|                                                     |                                                                                          | Net cash provided used in investing activities                   |                                           |                        | (14,577 | )                          |       | (105        | )      |                    | (1,776
|                                                     |                                                                                          |                                                                  |                                           |                        |         |                            |       |             |        |                    |       
|Financing activities:                                |                                                                                          |                                                                  |                                           |                        |         |                            |       |             |        |                    |       
|                                                     | Payments of long-term debt, net                                                          |                                                                  |                                           | (12,700                | )       |                            |      |             |        |                   |       
|                                                     | Deferred financing costs                                                                 |                                                                  |                                           | (1,785                 | )       |                            |      |             |        |                   |       
|                                                     | Dividends paid to minority interest holders                                              |                                                                  |                                           | (503                   | )       |                            |      |             |        |                   |       
|                                                     |                                                                                          |                                                                  |                                           |                        |         |                            |       |             |        |                    |       
|                                                     | Net cash provided by (used in) financing activities                                      |                                                                  |                                           | (14,988                | )       |                            |      |             |        |                   |       
|Effect of exchange rate changes on cash              |                                                                                          |                                                                  | 503                                       |                        |         |                           |       |             | (1,686 | )                  |       
|                                                     |                                                                                          |                                                                  |                                           |                        |         |                            |       |             |        |                    |       
|Net increase (derease) in cash and cash equivalaents |                                                                                          |                                                                  | (30,675                                   | )                      |         |                           |       |             | (2,132 | )                  |       
|Cash and cash equivalents, beginning of year         |                                                                                          |                                                                  | 33,906                                    |                        |         |                           |       |             | 10,730 |                    |       
|                                                     |                                                                                          |                                                                  |                                           |                        |         |                            |       |             |        |                    |       
|Cash and cash equivalents, end of year               |                                                                                          | $                                                                | 3,231                                     |                        | $       |                           |       | $           | 8,598  |                    | $     
|                                                     |                                                                                          |                                                                  |                                           |                        |         |                            |       |             |        |                    |       

21

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ADVANSTAR COMMUNICATIONS INC. AND SUBSIDIARIES    Condensed consolidating balance sheets    As of December 31, 2001  (in thousandsunaudited)  As Restated

|                                                      |                                      | Communications             |         | Guarantor
Subsidiaries |         | Non-Guarantor
Subsidiaries |         | Elimination |        | Consolidated
Total |       
|----------------------------------------------------- | ------------------------------------ | -------------------------- | ------- | ---------------------- | ------- | -------------------------- | ------- | ----------- | ------ | ------------------ | ------
|ASSETS                                                |                                      |                            |         |                        |         |                            |         |             |        |                    |       
|Current assets:                                       |                                      |                            |         |                        |         |                            |         |             |        |                    |       
|                                                      | Cash and cash equivalents            |                            | $       | 33,906                 |         | $                          |        |             | $      | 10,730             |       
|                                                      | Accounts receivable, net             |                            |         | 20,049                 |         |                            | 63      |             |        | 2,779              |       
|                                                      | Prepaid expenses                     |                            |         | 6,202                  |         |                            | 2,511   |             |        | 2,689              |       
|                                                      | Intercompany receivable (payable)    |                            |         | (148,162               | )       |                            | 153,827 |             |        | (5,665             | )     
|                                                      | Other                                |                            |         | (2,483                 | )       |                            |        |             |        | 3,960              |       
|                                                      |                                      |                            |         |                        |         |                            |         |             |        |                    |       
|                                                      |                                      | Total current assets       |         |                        | (90,488 | )                          |         | 156,401     |        |                    | 14,493
|Noncurent assets:                                     |                                      |                            |         |                        |         |                            |         |             |        |                    |       
|                                                      | Property, plant and equipment, net   |                            |         | 23,299                 |         |                            | 1,042   |             |        | 1,115              |       
|                                                      | Intangible and other assets, net     |                            |         | 487,440                |         |                            | 358,135 |             |        | 78,575             |       
|                                                      | Investments in subsidiaries          |                            |         | 531,816                |         |                            |        |             |        |                   |       
|                                                      |                                      |                            |         |                        |         |                            |         |             |        |                    |       
|                                                      |                                      | $                          | 952,067 |                        | $       | 515,578                    |         | $           | 94,183 |                    | $     
|                                                      |                                      |                            |         |                        |         |                            |         |             |        |                    |       
|LIABILITIES AND STOCKHOLDER'S EQUITY                  |                                      |                            |         |                        |         |                            |         |             |        |                    |       
|Current liabilities                                   |                                      |                            |         |                        |         |                            |         |             |        |                    |       
|                                                      | Current maturities of long-term debt |                            | $       | 16,200                 |         |                            |        |             |        |                   |       
|                                                      | Accounts payable                     |                            |         | 20,883                 |         |                            | 2,609   |             |        | 6,302              |       
|                                                      | Deferred revenue                     |                            |         | 25,750                 |         |                            | 21,657  |             |        | 6,642              |       
|                                                      | Accrued liabilities                  |                            |         | 24,147                 |         |                            | 2,772   |             |        | 1,288              |       
|                                                      |                                      |                            |         |                        |         |                            |         |             |        |                    |       
|                                                      |                                      | Total current liabilities  |         |                        | 86,980  |                            |         | 27,038      |        |                    | 14,232
|Long term debt, net of current maturities             |                                      |                            | 553,800 |                        |         |                           |         |             |       |                    |       
|Deferred income taxes and other Long-term liabilities |                                      |                            | (3,184  | )                      |         | 37,802                     |         |             | 358    |                    |       
|Due to parent                                         |                                      |                            | 3,662   |                        |         |                           |         |             |       |                    |       
|Minority interest                                     |                                      |                            | 14,352  |                        |         |                           |         |             | 288    |                    |       
|Shareholder's equity:                                 |                                      |                            |         |                        |         |                            |         |             |        |                    |       
|                                                      | Common stock                         |                            |         | 10                     |         |                            | 3       |             |        | 475                |       
|                                                      | Capital in excess of par value       |                            |         | 350,175                |         |                            | 438,117 |             |        | 88,226             |       
|                                                      | Accumulated deficit                  |                            |         | (49,545                | )       |                            | 12,618  |             |        | (7,623             | )     
|                                                      | Accum other comprehensive income     |                            |         | (4,183                 | )       |                            |        |             |        | (1,773             | )     
|                                                      |                                      |                            |         |                        |         |                            |         |             |        |                    |       
|                                                      |                                      | Total shareholder's equity |         |                        | 296,457 |                            |         | 450,738     |        |                    | 79,305
|                                                      |                                      |                            |         |                        |         |                            |         |             |        |                    |       
|                                                      |                                      | $                          | 952,067 |                        | $       | 515,578                    |         | $           | 94,183 |                    | $     
|                                                      |                                      |                            |         |                        |         |                            |         |             |        |                    |       

22

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ADVANSTAR COMMUNICATIONS INC. AND SUBSIDIARIES  Condensed consolidating statements of operations  Three months ended June 30, 2001  (in thousandsunaudited)  As Restated

|                                                         |                                                           | Communications           |         | Guarantor
Subsidiaries |         | Non-Guarantor
Subsidiaries |       | Elimination |        | Consolidated
Total |       
|-------------------------------------------------------- | --------------------------------------------------------- | ------------------------ | ------- | ---------------------- | ------- | -------------------------- | ----- | ----------- | ------ | ------------------ | ------
|Net revenue                                              |                                                           | $                        | 65,104  |                        | $       | 1,795                      |       | $           | 8,582  |                    | $     
|Operating expenses:                                      |                                                           |                          |         |                        |         |                            |       |             |        |                    |       
|                                                         | Cost of production and selling, editorial and circulation |                          |         | 43,532                 |         |                            | 2,634 |             |        | 7,962              |       
|                                                         | General and administrative                                |                          |         | 9,363                  |         |                            | 289   |             |        | 1,610              |       
|                                                         | Depreciation and amortization                             |                          |         | 6,801                  |         |                            | 6,764 |             |        | 1,828              |       
|                                                         |                                                           |                          |         |                        |         |                            |       |             |        |                    |       
|                                                         |                                                           | Total operating expenses |         |                        | 59,696  |                            |       | 9,687       |        |                    | 11,400
|Operating income (loss)                                  |                                                           |                          | 5,408   |                        |         | (7,892                     | )     |             | (2,818 | )                  |       
|Other income (expense):                                  |                                                           |                          |         |                        |         |                            |       |             |        |                    |       
|                                                         | Interest expense, net                                     |                          |         | (13,118                | )       |                            |      |             |        | (400               | )     
|                                                         | Other income (expense), net                               |                          |         | 1,560                  |         |                            |      |             |        | 928                |       
|                                                         |                                                           |                          |         |                        |         |                            |       |             |        |                    |       
|Income (loss) before income taxes and minority interests |                                                           |                          | (6,150  | )                      |         | (7,892                     | )     |             | (2,290 | )                  |       
|Provision (benefit) for income taxes                     |                                                           |                          | (4,105  | )                      |         | (484                       | )     |             | 397    |                    |       
|Minority interests                                       |                                                           |                          | 180     |                        |         |                           |       |             | (812   | )                  |       
|Equity in (loss) of subsidiaries                         |                                                           |                          | (10,907 | )                      |         |                           |       |             |       |                    |       
|                                                         |                                                           |                          |         |                        |         |                            |       |             |        |                    |       
|                                                         |                                                           | Net income (loss)        |         | $                      | (12,772 | )                          | $     | (7,408      | )      | $                  | (3,499
|                                                         |                                                           |                          |         |                        |         |                            |       |             |        |                    |       

23

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ADVANSTAR COMMUNICATIONS INC. AND SUBSIDIARIES  Condensed consolidating statements of operations  Six months ended June 30, 2001  (in thousandsunaudited)  As Restated

|                                                              |                                                           | Communications           |         | Guarantor
Subsidiaries |         | Non-Guarantor
Subsidiaries |        | Elimination |        | Consolidated
Total |       
|------------------------------------------------------------- | --------------------------------------------------------- | ------------------------ | ------- | ---------------------- | ------- | -------------------------- | ------ | ----------- | ------ | ------------------ | ------
|Net revenue                                                   |                                                           | $                        | 142,346 |                        | $       | 35,800                     |        | $           | 25,982 |                    | $     
|Operating expenses:                                           |                                                           |                          |         |                        |         |                            |        |             |        |                    |       
|                                                              | Cost of production and selling, editorial and circulation |                          |         | 91,848                 |         |                            | 11,883 |             |        | 20,764             |       
|                                                              | General and administrative                                |                          |         | 20,564                 |         |                            | 563    |             |        | 3,332              |       
|                                                              | Depreciation and amortization                             |                          |         | 21,652                 |         |                            | 7,700  |             |        | 3,140              |       
|                                                              |                                                           |                          |         |                        |         |                            |        |             |        |                    |       
|                                                              |                                                           | Total operating expenses |         |                        | 134,064 |                            |        | 20,146      |        |                    | 27,236
|Operating income (loss)                                       |                                                           |                          | 8,282   |                        |         | 15,654                     |        |             | (1,254 | )                  |       
|Other income (expense):                                       |                                                           |                          |         |                        |         |                            |        |             |        |                    |       
|                                                              | Interest expense, net                                     |                          |         | (27,506                | )       |                            |       |             |        | (686               | )     
|                                                              | Other income (expense), net                               |                          |         | 575                    |         |                            |       |             |        | 975                |       
|                                                              |                                                           |                          |         |                        |         |                            |        |             |        |                    |       
|Income (loss) before income taxes and minority interests      |                                                           |                          | (18,649 | )                      |         | 15,654                     |        |             | (965   | )                  |       
|Provision (benefit) for income taxes                          |                                                           |                          | (6,389  | )                      |         | 8,434                      |        |             | 1,930  |                    |       
|Minority interests                                            |                                                           |                          | 46      |                        |         |                           |        |             | (812   | )                  |       
|Equity in (loss) of subsidiaries                              |                                                           |                          | 3,513   |                        |         |                           |        |             |       |                    |       
|                                                              |                                                           |                          |         |                        |         |                            |        |             |        |                    |       
|Income (loss) before extraordinary item and accounting change |                                                           |                          | (8,701  | )                      |         | 7,220                      |        |             | (3,707 | )                  |       
|Extraordinary item                                            |                                                           |                          | (2,556  | )                      |         |                           |        |             |       |                    |       
|Cumulative effect of accounting change                        |                                                           |                          | (552    | )                      |         |                           |        |             |       |                    |       
|                                                              |                                                           |                          |         |                        |         |                            |        |             |        |                    |       
|                                                              |                                                           | Net income (loss)        |         | $                      | (11,809 | )                          | $      | 7,220       |        | $                  | (3,707
|                                                              |                                                           |                          |         |                        |         |                            |        |             |        |                    |       

24

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ADVANSTAR COMMUNICATIONS INC. AMD SUBSIDIARIES    Condensed condolidating statements of cash flows    Six months ended June 30, 2001  (in thousandsunaudited)  As Restated

|                                                     |                                                                                          | Communications                                      |        | Guarantor
Subsidiaries |         | Non-Guarantor
Subsidiaries |       | Elimination |       | Consolidated
Total |      
|---------------------------------------------------- | ---------------------------------------------------------------------------------------- | --------------------------------------------------- | ------ | ---------------------- | ------- | -------------------------- | ----- | ----------- | ----- | ------------------ | -----
|Operating activities:                                |                                                                                          |                                                     |        |                        |         |                            |       |             |       |                    |      
|                                                     | Net income (loss)                                                                        |                                                     |        | (11,809                | )       | $                          | 7,220 |             | $     | (3,707             | )    
|                                                     | Adjustments to reconcile net income (loss) to net cash provided by operating activities |                                                     |        |                        |         |                            |       |             |       |                    |      
|                                                     |                                                                                          | Equity in earnings of subsidiaries                  |        |                        | (3,513  | )                          |       |            |       |                    |     
|                                                     |                                                                                          | Extraordinary item-early extinguishment of debt     |        |                        | 2,538   |                            |       |            |       |                    |     
|                                                     |                                                                                          | Unrealized (gain) loss on derivative financial      |        |                        | (881    | )                          |       |            |       |                    |     
|                                                     |                                                                                          | Depreciation and amortization                       |        |                        | 21,652  |                            |       | 7,700       |       |                    | 3,140
|                                                     |                                                                                          | Non-cash Items                                      |        |                        | 1,110   |                            |       |            |       |                    |     
|                                                     |                                                                                          | Loss on sales of assets and other                   |        |                        | (42     | )                          |       |            |       |                    | 812  
|                                                     |                                                                                          | Change in working capital items                     |        |                        | (1,712  | )                          |       | (14,355     | )     |                    | 2,330
|                                                     |                                                                                          |                                                     |        |                        |         |                            |       |             |       |                    |      
|                                                     |                                                                                          | Net cash provided by operating activities           |        |                        | 7,343   |                            |       | 565         |       |                    | 2,575
|                                                     |                                                                                          |                                                     |        |                        |         |                            |       |             |       |                    |      
|Investing activities:                                |                                                                                          |                                                     |        |                        |         |                            |       |             |       |                    |      
|                                                     | Additions to property, plant and equipment                                               |                                                     |        | (4,215                 | )       |                            | (566  | )           |       | (169               | )    
|                                                     | Acquisitions of publications and trade shows, net of proceeds                            |                                                     |        | (8,388                 | )       |                            |      |             |       | (826               | )    
|                                                     | Increase in advances and notes due from affiliate                                        |                                                     |        | (12,535                | )       |                            |      |             |       |                   |      
|                                                     | Proceeds from sale of assets and other                                                   |                                                     |        | 18                     |         |                            |      |             |       |                   |      
|                                                     |                                                                                          |                                                     |        |                        |         |                            |       |             |       |                    |      
|                                                     |                                                                                          | Net cash used in investing activities               |        |                        | (25,120 | )                          |       | (566        | )     |                    | (995 
|                                                     |                                                                                          |                                                     |        |                        |         |                            |       |             |       |                    |      
|Financing activities:                                |                                                                                          |                                                     |        |                        |         |                            |       |             |       |                    |      
|                                                     | Payments of long-term debt, net                                                          |                                                     |        | (13,000                | )       |                            |      |             |       |                   |      
|                                                     | Proceed from capital contributions and other                                             |                                                     |        | 34,775                 |         |                            |      |             |       |                   |      
|                                                     | Deferred financing costs                                                                 |                                                     |        | (9,001                 | )       |                            |      |             |       |                   |      
|                                                     |                                                                                          |                                                     |        |                        |         |                            |       |             |       |                    |      
|                                                     |                                                                                          | Net cash provided by (used in) financing activities |        |                        | 12,774  |                            |       |            |       |                    |     
|Effect of exchange rate changes on cash              |                                                                                          |                                                     |       |                        |         |                           |       |             | 210   |                    |      
|                                                     |                                                                                          |                                                     |        |                        |         |                            |       |             |       |                    |      
|Net increase (decrease) in cash and cash equivalents |                                                                                          |                                                     | (5,003 | )                      |         | (1                         | )     |             | 1,790 |                    |      
|Cash and cash equivalents, beginning of year         |                                                                                          |                                                     | 10,736 |                        |         | 1                          |       |             | 6,938 |                    |      
|                                                     |                                                                                          |                                                     |        |                        |         |                            |       |             |       |                    |      
|Cash and cash equivalents, end of year               |                                                                                          | $                                                   | 5,733  |                        | $       |                           |       | $           | 8,728 |                    | $    
|                                                     |                                                                                          |                                                     |        |                        |         |                            |       |             |       |                    |      

25

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Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations:

This
quarterly report on Form 10-Q contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. Investors are cautioned not to place undue reliance on these forward-looking statements, including statements about plans and objectives of management and market growth and opportunity. These
forward-looking statements are neither promises or guarantees and involve risks and uncertainties that could cause actual results to differ materially from those indicated by such forward-looking
statements. You should not expect that these forward-looking statements will be updated or supplemented as a result of changing circumstances or otherwise, and we disavow and disclaim any obligation
to do so. Important cautionary statements and risk factors that would affect actual results are discussed in the Company's periodic reports and registration statements filed with the Securities and
Exchange Commission, including those under the caption entitled "Certain Factors Which May Affect Future Results" in the Company's annual report on Form 10-K filed with the
Securities and Exchange Commission on March 29, 2002.

General

We are a worldwide provider of integrated, business-to-business marketing communications products and services for targeted industry
sectors, principally through trade shows and conferences and through controlled circulation trade, business and professional magazines. We also provide a broad range of other marketing services
products, including classified advertising, direct mail services, reprints, database marketing, guides and reference books.

We
report our business in three segments:



Trade
shows and conferences accounted for approximately 57% and 59% of total revenue in each of the six month periods ended June 30, 2002 and 2001, respectively. Trade
publications accounted for approximately 38% and 37% of total revenue in each of the six month periods ended June 30, 2002 and 2001, respectively, while marketing services accounted for
approximately 5% and 4% of total revenue in each of the six month periods ended June 30, 2002 and 2001, respectively. Our revenue reaches its highest levels during the first and third quarters
of the year due to the timing of the MAGIC trade shows and our other large trade shows and conferences. In comparing results between years, we may experience fluctuations in quarterly revenue based on
the movement of trade show dates from one quarter to another because trade show and conference revenue is recognized when a particular event is held.



Our business and results of operations in 2002 have been significantly impacted by the recession in the U.S. economy, particularly in our Information
Technology & Communications cluster and Travel & Hospitality cluster. The events of September 11th also impacted our results, including cancellations and reductions in ad pages,
particularly in our travel industry publications. However, we are seeing early indications of stabilization in advertising in many of our markets, except for continuing downward pressure in our
technology and travel markets. For the second quarter, advertising pages increased 3.8% over the same period last year across all our sectors other than our travel and technology

26

---

markets. Despite these early indications, the economic outlook in the publishing sector continues to be challenging, and forward visibility on our advertising revenue and pages is limited, due to the
concerns of our customers related to the overall business environment. Our trade show segment continues to be impacted by the economic recession, particularly in our technology sectors, with
reductions in booth space and attendance compared to the same period last year. We expect any improvement in the performance of our trade show segment to lag behind any general economic recovery as it
lagged the downturn in the economy going into recession beginning in 2000.

In
response to the decline in revenues throughout 2001 and into 2002, we implemented early and aggressive cost management actions, including the layoff of staff, reductions in travel and
other operating costs, and reorganization of certain support functions and processes. Through these cost initiatives, we were able to minimize the effect on Adjusted EBITDA for the quarter and
year-to-date periods.

The
persistence of the general economic slowdown in the U.S. will likely result in continued weakness in overall marketing and advertising expenditures by our customers throughout most
of 2002. As a result, we expect our revenues and EBITDA to reflect this overall weakness. However, we believe that our balanced portfolio between trade shows and publications and our diversification
across many industry sectors may mitigate the overall impact from continued weakness in general economic conditions and reduce potential volatility of any one sector.



We provide our affiliate Advanstar.com with administrative support services in accounting, finance, legal, human resource management, information technology and
business development. We also provide Advanstar.com with marketing and promotional support through advertising pages in our trade publications and exhibit space in our trade shows. In return,
Advanstar.com provides promotional support on its web sites for our trade publications and trade shows.

In
2001, our parent, Advanstar, Inc., more tightly focused the activities of Advanstar.com. These plans will have the effect of more closely integrating many of the sales,
marketing, technology and operating functions of Advanstar.com with our core activities in publishing, trade shows, and marketing services. As a result of the reorganization and redirection of the
activities of Advanstar.com during 2001, management anticipates that there will be a significant reduction in the levels of funding by the Company to Advanstar.com during 2002 and subsequent periods.

In
the third quarter of 2001, certain events, including the slowdown in the economy, the changing business environment and continuing operating losses of Advanstar.com, caused management
of Advanstar, Inc. to consider certain transactions between its two sister subsidiaries, the Company and Advanstar.com, to satisfy the outstanding advances and notes due to the Company from
Advanstar.com. Accordingly, through December 31, 2001 the Company accounted for these advances and notes to Advanstar.com as a charge to capital in excess of par value in the accompanying
consolidated balance sheet, pending final determination of the disposition of these advances and notes.

In
the first quarter of 2002, management of Advanstar, Inc. began to consider the further consolidation of the activities of Advanstar.com with the Company, or a merger of
Advanstar.com into the Company. Consequently, in response to the changing business environment and continuing operating losses of Advanstar.com, the Company recorded a first quarter
non-cash charge of $37.2 million related to a provision against the outstanding advances and notes due to the Company from Advanstar.com as of December 31, 2001.

In
the first quarter of 2002 the Company began recording the advances and notes issued during the quarter as an operating expense on the Company's condensed consolidated statement of
operations, as a reflection of the ongoing nature of the operations of Advanstar.com in support of the Company's

27

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operations as a result of the restructuring of the activities of Advanstar.com in 2001. Net advances and notes during the three and six month periods ended June 30, 2002 were approximately
$0.6 million and $1.5 million, respectively.



Acquisitions



We
account for our acquisitions under the purchase method of accounting and our results of operations include the effect of these acquisitions from the date of purchase. The pro forma
operating results of the acquisitions are not material to our operating results.

The Acquisition

During the first quarter of 2001, we recorded an extraordinary charge of approximately $2.6 million, net of a deferred tax benefit of approximately
$1.5 million, in connection with the refinancing of the 9.25% senior subordinated notes with the 12.00% senior subordinated notes and the concurrent offering of additional senior discount
notes. See Note 5 in the Notes to our Condensed Consolidated Financial Statements included within this report for further details.



Trade Shows and Conferences

The trade shows and conferences segment derives revenue principally from the sale of exhibit space and conference attendance fees generated at its events. For the
six months ended June 30, 2002, approximately 83% of our trade shows and conferences revenue was from the sale of exhibit space. Events are generally held on an annual basis in major
metropolitan or convention areas such as New York City or Las Vegas. At many of our trade shows, a portion of exhibit space is reserved and partial payment is received as much as a year in advance.
The sale of exhibit space is affected by the on-going quality and quantity of attendance, venue selection and availability, industry life cycle and general market conditions. Revenue and
related direct event expenses are recognized in the month in which the event is held. Cash is collected in advance of an event and is recorded on our balance sheet as deferred revenue.

Trade Publications

The trade publications segment derives revenue principally from the sale of advertising in its business-to-business magazines.
Additionally, certain publications derive revenue from paid subscriptions and custom publishing. Paid subscriptions comprise less than 5% of total publishing revenue. Most publications are produced
monthly with advertising sold both on an annual schedule and single insertion basis. The sale of advertising is affected by new product releases, circulation quality,

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readership and general market conditions. Advertising revenue is recognized on the publication issue date, and subscription revenue, if any, is recognized over the subscription period, typically one
year.

Marketing Services

The marketing services segment derives its revenue from the sale of value-added marketing products such as classified advertising, both print and internet-based,
direct mail services, reprints, database marketing, directories, guides and reference books. These products complement and, in many cases, utilize the content or databases generated by our trade
shows, conferences and publications. The sale of these products is affected by the success of the event or publication from which these products are derived, the quality of the sales team and general
market conditions. Revenue is generally recognized when the applicable product is shipped.

Our
trade show and publishing properties operate in many different markets and industries which are subject to economic conditions prevalent in those industries. Accordingly, net
revenues may fluctuate in connection with the markets in which we operate.



Trade Shows and Conferences

Costs incurred by the trade shows and conferences segment include facility rent, outsourced services such as registration, security, decorator, and attendee and
exhibitor promotion. Exhibitors generally contract directly with third parties for on-site services such as electrical, booth set-up and drayage. Staff salaries and related
payroll expenses are treated as monthly period expenses. All other direct costs are expensed in the month the event occurs.

Trade Publications

Costs incurred by the trade publications segment include printing, paper and postage; selling and promotion; editorial and prepress; and circulation acquisition
and fulfillment. Additionally, publisher and sales staff costs, and production, editorial and circulation staff costs, with related payroll taxes and benefits, are charged to the publications. We
outsource the actual printing of our publications.

Marketing Services

Costs of the marketing services segment include printing and distribution costs, database administration fees and selling and product development salaries and
related payroll taxes and benefits.

Significant Accounting Policies and Estimates

The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and judgments that affect the
reported amounts of assets, liabilities, revenues and expenses. On an on-going basis, we evaluate these estimates, including those related to bad debts, intangible assets and income taxes.
We base these estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments
about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

29

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We
apply the following critical accounting policies in the preparation of our consolidated financial statements:



Restatement of Financial Information Relating to Goodwill

In connection with the Company's initial assessment of goodwill impairment for purposes of FAS 142, the Company determined that $71.7 million of
goodwill should have been pushed down to, and reflected in, the financial statements of the Company. This goodwill arose from the October 2000 acquisition of Advanstar, Inc. and related
to the operations of the reporting units comprising the Company. As a result, the Company's financial statements have been restated to reflect the push down of this goodwill and the related
amortization expense from the acquisition date to the adoption of FAS 142 effective January 1, 2002. While the adjustments to previously reported financial statements

30

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increase the Company's net loss for the period from October 12, 2000 through December 31, 2000 and for the year ended December 31, 2001, these adjustments have no impact on net
revenue or cash flows for any period, do not impact measurements of EBITDA (defined below), have no impact on the financial ratio covenants in the Company's debt instruments and have no effect on the
consolidated financial statements of the Company's parent, Advanstar, Inc. The Company intends to amend its prior filings on Form 10-Q for the quarter ended March 31,
2002 as well as its Form 10-K for the year ended December 31, 2001 to reflect the restatement of the Company's results of operations for 2001 and for the period from
October 12, 2000 through December 31, 2000. See Note 2 in the Notes to our
Condensed Consolidated Financial Statements for a summary of the restatement of certain previously issued financial information relating to goodwill.

Selected Financial Data

The following table sets forth selected statements of operations and other financial data.

We
define "EBITDA" as operating income plus amortization and depreciation less amounts attributable to minority interest. EBITDA does not represent, and should not be considered to be,
an alternative to net income or cash flow from operations as determined in accordance with GAAP, and our calculation thereof may not be comparable to that reported by other companies. We believe that
EBITDA provides useful information regarding our ability to service and/or incur indebtedness and is used by many other companies. Our key financial covenants under our existing credit facility, which
impact the amount of indebtedness we are permitted to incur, are based, in part, on our EBITDA. EBITDA does not take into account our working capital requirements, debt service requirements and other
commitments. Accordingly, EBITDA is not necessarily indicative of amounts that may be available to us for discretionary uses.

"Adjusted
EBITDA" is defined as EBITDA plus the provision for notes and advances due from Advanstar.com. We believe that "Adjusted EBITDA" is a useful supplement to net income in
understanding cash flows generated from operations that are available for taxes, debt service and capital expenditures, as it excludes the one-time non-cash provision in the
first quarter of 2002 for notes and advances due from Advanstar.com.

To
calculate EBITDA for the three months ended June 30, 2002 and 2001, we adjusted operating income by $(0.8) million and $(0.8) million, respectively, to reflect minority
interest. To calculate

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EBITDA for the six months ended June 30, 2002 and 2001, we adjusted operating income by $(0.9) million and $(1.1) million, respectively, to reflect minority interest.

|                                                                 |                              | Three Months
Ended
June 30,          |         | Six Months
Ended
June 30, |       
|---------------------------------------------------------------- | ---------------------------- | ------------------------------------ | ------- | ------------------------- | ------
|
|
|Net revenue:                                                     |                              |                                      |         |                           |       
|                                                                 | Trade shows and conferences  |                                      | $       | 21,934                    |       
|                                                                 | Publications                 |                                      |         | 37,049                    |       
|                                                                 | Marketing services and other |                                      |         | 4,310                     |       
|                                                                 |                              |                                      |         |                           |       
|                                                                 |                              | Total net revenues                   |         |                           | 63,293
|Cost of production and selling:                                  |                              |                                      |         |                           |       
|                                                                 | Trade shows and conferences  |                                      |         | 13,892                    |       
|                                                                 | Publications                 |                                      |         | 24,355                    |       
|                                                                 | Marketing services and other |                                      |         | 2,290                     |       
|                                                                 |                              |                                      |         |                           |       
|                                                                 |                              | Total cost of production and selling |         |                           | 40,537
|Funding of affiliated dot.com company operations                 |                              |                                      | 637     |                           |       
|General and administrative expenses                              |                              |                                      | 10,739  |                           |       
|Depreciation and amortization                                    |                              |                                      | 17,035  |                           |       
|                                                                 |                              |                                      |         |                           |       
|                                                                 |                              | Operating income (loss)              |         |                           | (5,655
|Other income (expense):                                          |                              |                                      |         |                           |       
|                                                                 | Interest expense, net        |                                      |         | (13,252                   | )     
|                                                                 | Other income (expense)       |                                      |         | 1,216                     |       
|Provision (benefit) for income taxes                             |                              |                                      | (8,030  | )                         |       
|Minority interests                                               |                              |                                      | (589    | )                         |       
|                                                                 |                              |                                      |         |                           |       
|Income (loss) before extraordinary item and accounting change    |                              | $                                    | (10,250 | )                         | $     
|                                                                 |                              |                                      |         |                           |       
|EBITDA                                                           |                              | $                                    | 10,563  |                           | $     
|Provision for notes and advances from affiliated dot.com company |                              |                                      |        |                           |       
|                                                                 |                              |                                      |         |                           |       
|Adjusted EBITDA                                                  |                              | $                                    | 10,563  |                           | $     
|                                                                 |                              |                                      |         |                           |       

Results of Operations

Three Months Ended June 30, 2002 Compared to the Three Months Ended June 30, 2001

Net Revenue

Total net revenue decreased $12.2 million, or 16.2%, to $63.3 million in the second quarter of 2002 from $75.5 million for the second quarter
of 2001.

Net
revenue from trade shows and conferences declined $8.2 million, or 27.2%, to $21.9 million for the second quarter of 2002 from $30.1 million in the second
quarter of 2001. This decrease was primarily attributable to the discontinuation of our iEB internet trade show in our technology market as well as the lag effect of the economic downturn in 2001 on
our 2002 events, partially offset by a shift in the timing of when events take place. The downturn in the U.S. economy continued to impact revenue in our trade shows due to our customers' concern over
its ongoing impact on their marketing efforts. Revenue for the quarter was also impacted by a net shift in the timing of three trade shows.

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Two were held in the first quarter of 2001, but moved to the second quarter of 2002 and another event was held in the second quarter of 2001, but moved to the first quarter of 2002. Adjusting second
quarter 2001 results for these movements, second quarter 2002 trade show revenue declined by $12.4 million, or 36.0%.

Net
revenue from publications and marketing services declined $4.0 million, or 8.8%, to $41.4 million for the second quarter of 2002 from $45.4 million in 2001.
Advertising pages decreased approximately 4.3% across our portfolio but the decline was concentrated heavily in our technology and travel sectors, which continue to slump due to the condition of the
technology markets and the reduced levels of non-business travel since September 11. Advertising pages increased 3.8% in aggregate across all of our other industry sectors other
than travel and technology. We also discontinued several small publications and directories which were published in the second quarter of 2001 offset by revenue from several
product launches in the pharmaceutical and health care sectors. Despite early indications of stability in the publishing sector, the economic outlook continues to be challenging, and forward
visibility on our advertising revenue and pages is limited, due to the concerns of our customers related to the overall business environment.

Cost of Production and Selling

Cost of production and selling expenses declined $13.6 million, or 25.1%, to $40.5 million for the second quarter of 2002 from $54.1 million
for the comparable period of 2001.

Expenses
of trade shows and conferences declined $9.1 million, or 39.6%, to $13.9 million for the second quarter of 2002 from $23.0 million in 2001. This decrease
was primarily due to the discontinuation of our iEB internet trade show, a reduction in variable trade show costs in line with the reduction in trade show revenue and aggressive cost management on
staff and discretionary direct trade show costs. Adjusting first quarter 2001 results for movements of events between quarters, trade show and conference expenses in 2002 declined
$10.4 million, or 42.7%.

Expenses
of publication and marketing services declined $4.5 million, or 14.4%, to $26.6 million in the second quarter of 2002 from $31.1 million in the second
quarter of 2001. This decrease was due primarily to savings attributable to our ongoing cost reduction programs, a 15% reduction in paper costs and cost savings associated with discontinued
publications.

Funding of Affiliated Company Operations

In the first quarter of 2002, management of Advanstar, Inc. began to consider the further consolidation of the activities of Advanstar.com with the
Company, or a merger of Advanstar.com into the Company. Consequently, in response to the changing business environment and continuing operating losses of Advanstar.com, the Company recorded in the
first quarter of 2002, a non-cash charge of $37.2 million related to recording a provision against the outstanding advances and notes due to the Company from Advanstar.com as of
December 31, 2001.

The
Company began recording the advances and notes issued during 2002 as an operating expense on our condensed consolidated statement of operations, as a reflection of the ongoing nature
of the operations of Advanstar.com in support of our operations resulting from the restructuring of the activities of Advanstar.com in 2001. We funded approximately $0.6 million in support of
those operations in the second quarter of 2002 compared to $5.0 million in the second quarter of 2001. This level of support represents a significant reduction in the operating costs of
Advanstar.com from 2001 levels.

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General and Administrative Expenses

General and administrative expenses decreased $0.6 million, or 4.6%, to $10.7 million in the second quarter of 2002 from $11.3 million in the
second quarter of 2001. This decrease is primarily attributable to our ongoing cost and headcount reduction programs. In response to the decline in revenues throughout 2001 and into 2002, we
implemented early and aggressive cost management actions, including staff reductions of approximately 8.4%, reductions in travel and other operating costs, and reorganization of certain support
functions and processes.

Depreciation and Amortization

Depreciation and amortization expense increased $1.6 million to $17.0 million in the second quarter of 2002 from $15.4 million in the second
quarter of 2001 primarily due to the adoption in January 2002 of SFAS No. 142, "Goodwill and Other Intangible Assets." Upon adoption we discontinued the amortization of goodwill but
accelerated amortization of certain of our trade exhibitor and advertiser lists. Excluding goodwill amortization recorded in the second quarter of 2001 and adjusting the second quarter 2002 for the
effect of accelerated amortization of certain identified intangible assets, depreciation and amortization expense increased $1.5 million due to amortization of intangible assets related to
acquisitions completed in the third quarter of 2001.

Interest Expense, Net

Net interest expense declined $0.2 million, or 2.0%, in the second quarter of 2002 to $13.3 million from $13.5 million in the second quarter
of 2001 due to a decrease in our weighted average interest rate.

Approximately
$165.0 million of our total debt is at a fixed rate through coupon rates on our senior subordinated notes with an additional $250.0 million covered by our
interest rate protection agreements. While we do not anticipate a significant change in interest rates in the near term, a 100 basis point increase in interest rates on variable rate debt would have
resulted in an increase in interest expense for the quarter of $0.4 million.

Other Income (Expense)

Other income declined $1.3 million in the second quarter of 2002 to $1.2 million from $2.5 million in the second quarter of 2001. We reported
a non-cash loss of approximately $0.1 million in the second quarter of 2002 related to our foreign currency and interest rate hedging activities, compared to a non-cash
gain of approximately $2.0 million in the comparable period of 2001. During the second quarter of 2002 we also recorded a non-cash foreign exchange gain of $1.2 million,
compared to $0.4 million in the second quarter of 2001.

Provision (Benefit) for Income Taxes

The income tax benefit increased $3.8 million to $8.0 million in the second quarter of 2002 from $4.2 million in the second quarter of 2001.
Our expected annual effective rate for 2002 decreased primarily as a result of not recording goodwill amortization expense pursuant to our adoption of SFAS No. 142, "Goodwill and Other
Intangible Assets" effective January 1, 2002.

Adjusted EBITDA

Adjusted EBITDA increased $1.3 million, or 13.3%, to $10.6 million in the second quarter of 2002 from $9.3 million in the second quarter of
2001. The increase was due primarily to an increase in contribution and reduced general and administrative expenses attributable to our on-going cost reduction programs, partially offset
by a $0.6 million charge related to current funding of our affiliated dot.com company's operations. Adjusting second quarter results for the net shift in the timing of trade shows, 2002
Adjusted EBITDA declined by $1.6 million.

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Six Months Ended June 30, 2002 Compared to the Six Months Ended June 30, 2001

Net Revenue

Total net revenue declined $31.4 million, or 15.4%, to $172.7 million in the first half of 2002 from $204.1 million for the first half of
2001.

Net
revenue from trade shows and conferences declined $21.3 million, or 17.8%, to $98.4 million for the first half of 2002 from $119.7 million in the same period of
2001. This decrease was attributable to declines in our
technology sector which continues to suffer from the overall technology market slump; the discontinuance of three events in our iEB internet group in the U.S., Europe and Brazil along with several
smaller events across our other sectors; and our fashion sector, which was impacted by a difficult apparel retail business environment and by our market repositioning of our east coast fashion events.
Revenue for the first half was also impacted by a shift in the timing of trade shows held in the first half of 2001 but not scheduled in the first half of 2002. Adjusting first half results for this
movement, first half 2002 trade show revenue declined by $18.5 million, or 15.8%.

Net
revenue from publications and marketing services declined $10.2 million, or 12.0%, to $74.3 million for the first half of 2002 from $84.5 million in 2001.
Advertising pages decreased approximately 7.8% across our portfolio. The page decline was heavily concentrated in our technology and travel sectors. Advertising pages remained flat across all of our
industry sectors other than travel and technology. We also discontinued several small publications and directories which were published in the first half of 2001 offset by revenue from several product
launches in the pharmaceutical and health care sectors.

Cost of Production and Selling

Cost of production and selling expenses declined $26.1 million, or 21.0%, to $98.4 million for the first half of 2002 from $124.5 million for
the comparable period of 2001.

Expenses
of trade shows and conferences declined $16.8 million, or 26.0%, to $47.6 million for the first half of 2002 from $64.4 million in 2001. This decrease was
primarily due to the discontinuance of three events in our iEB internet group, aggressive cost management activities affecting direct trade show related costs and staffing. Adjusting first half 2001
results for movements of events between quarters, trade show and conference expenses in 2002 declined $14.9 million, or 23.9%.

Expenses
of publication and marketing services declined $9.3 million, or 15.5%, to $50.8 million in the first half of 2002 from $60.1 million in the first half of
2001. This decrease was due primarily to savings attributable to our ongoing cost reduction programs, a reduction in paper costs and cost savings associated with discontinued publications. Printing
and postage pricing remained stable during the period. Paper costs have declined 15.0% since January 2002 due to excess industry capacity and low demand. We expect paper prices to experience
upward pressure over the next 12 months as economic recovery increases global demand.

Funding of Affiliated Company Operations

In the first quarter of 2002, management of Advanstar, Inc. began to consider the further consolidation of the activities of Advanstar.com with the
Company, or a merger of Advanstar.com into the Company. Consequently, in response to the changing business environment and continuing operating losses of Advanstar.com, the Company recorded a first
quarter non-cash charge of $37.2 million related to a provision against the outstanding advances and notes due to the Company from Advanstar.com as of December 31, 2001.

The
Company also began recording the advances and notes issued during 2002 as an operating expense on our condensed consolidated statement of operations, as a reflection of the ongoing
nature of the operations
of Advanstar.com in support of our operations resulting from the restructuring of the activities of Advanstar.com in 2001. We funded approximately $1.5 million in support of those operations in
the first half of 2002 compared to approximately $12.5 million in the first half of 2001. This level of support represents a significant reduction in the operating costs of Advanstar.com from
those in 2001.

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General and Administrative Expenses

General and administrative expenses declined $2.4 million, or 9.7%, to $22.1 million in the first half of 2002 from $24.5 million in the
comparable period of 2001. This decrease is primarily attributable to our ongoing cost and headcount reduction programs. In response to the decline in revenues throughout 2001 and into 2002, we
implemented early and aggressive cost management actions, including staff reductions of approximately 9.7%, reductions in travel and other operating costs, and reorganization of certain support
functions and processes.

Depreciation and Amortization

Depreciation and amortization expense increased $2.0 million to $34.5 million in the first half of 2002 from $32.5 million in the first half
of 2001 primarily due to the adoption in January 2002 of SFAS No. 142, "Goodwill and Other Intangible Assets." Upon adoption we discontinued the amortization of goodwill but accelerated
amortization of certain of our trade exhibitor and advertiser lists. Excluding goodwill amortization recorded in the first half of 2001 and adjusting the first half 2002 for the effect of accelerated
amortization of certain identified intangible assets, depreciation and amortization expense increased $3.1 million due to amortization of intangible assets related to acquisitions completed in
during 2001.

Interest Expense, Net

Net interest expense declined $2.3 million, or 8.0%, to $25.9 million in the first half of 2002 from $28.2 million in the first half of 2001
due to a decrease in our weighted average interest rate, partially offset by the additional indebtedness necessary to fund the Acquisition. In February 2001, we replaced our then outstanding
$150.0 million 9.25% senior subordinated notes with $160.0 million 12.00% senior subordinated notes.

Approximately
$165.0 million of our total debt is at a fixed rate through coupon rates on our senior subordinated notes with an additional $250.0 million covered by our
interest rate protection agreements. While we do not anticipate a significant change in interest rates in the near term, a 100 basis point increase in interest rates on variable rate debt would have
resulted in an increase in interest expense for the first half of 2002 of $0.7 million.

Other Income (Expense)

Other income increased $0.7 million to $2.3 million in the first half of 2002 from $1.6 million in the first half of 2001. We reported a
non-cash gain of approximately $2.0 million in the first half of 2002 related to our foreign currency and interest rate hedging activities, compared to a non-cash gain
of approximately $1.4 million in the comparable period of 2001.

Provision (Benefit) for Income Taxes

The income tax benefit increased $22.6 million to $(18.6) million in the first half of 2002 from $4.0 million in the first half of 2001. This
increase was primarily due to the provision we recorded for our notes and advances due to us from our affiliate, Advanstar.com. Our expected annual effective rate for 2002 decreased primarily as a
result of not recording goodwill amortization expense pursuant to our adoption of SFAS No. 142, "Goodwill and Other Intangible Assets" effective January 1, 2002.

Adjusted EBITDA

Adjusted EBITDA declined $4.3 million, or 8.0%, to $49.8 million in the first half of 2002 from $54.1 million in the first half of 2001. The
decrease was due primarily to a reduction in revenue and a $1.5 million charge related to current funding of our affiliated dot.com company's operations, partially offset by savings in our
corporate overhead structure as part of an on-going cost reduction program. We continue to aggressively manage and reduce costs in response to declines in revenue and sustain our Adjusted
EBITDA margins which are 28.8% for the first half of 2002 compared to 26.5% for the same period last year. Adjusting first half 2001 results for the shift in the timing of trade shows, 2002 Adjusted
EBITDA declined by $3.4 million, or 6.4%.

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Liquidity and Capital Resources

Since the Acquisition, our principal sources of liquidity have been cash flow from operations and borrowings under our credit facility and our principal uses of
cash have been the debt service requirements of our indebtedness described below, capital expenditures and strategic acquisitions. As of June 30, 2002, we had total indebtedness of
$557.3 million and approximately $48.4 million of borrowings available under our revolving credit facility. We repaid $5.0 million on the revolving credit facility during the
second quarter of 2002.

Credit facility.The term loan facility under the credit facility consists of a $100.0 million amortizing term loan A
maturing April 11, 2007 and a $315.0 million amortizing term loan B maturing October 11, 2008. The credit facility also includes an $80.0 million revolving credit facility.
The revolving credit facility will terminate in April 2007. The credit facility may be increased by up to $50.0 million at our request, with the formal prior consent of the lenders or
other financial institutions providing the increase. However, there can be no
assurance that this consent will be obtained. In February 2001, we repaid $10.8 million of term loan A and $34.2 million of term loan B at the closing of the issuance of our
12.00% Series B senior subordinated notes due 2011 (the Replacement Notes).

Borrowings
under the credit facility generally bear interest based on a margin over, at our option, the base rate or the reserve-adjusted London-interbank offered rate (LIBOR). The
applicable margin for revolving credit loans and term loan A will vary based upon our ratio of consolidated debt to EBITDA, as defined in the credit facility, and the applicable margin for term loan B
is 4.00% over LIBOR and 2.75% over the base rate. Our obligations under the credit facility are guaranteed by Advanstar Holdings Corp., our ultimate parent company, and all our existing and future
domestic subsidiaries and are secured by substantially all of the assets of our company and the subsidiary guarantors, including a pledge of the capital stock of all our existing and future domestic
subsidiaries, a pledge of no more than 65% of the voting stock of any foreign subsidiary directly owned by our company or any domestic subsidiary, a pledge of all intercompany indebtedness in favor of
Advanstar, Inc., our company and our domestic subsidiaries, a pledge of our company's and Advanstar IH, Inc.'s capital stock by our parent company, and a pledge of our parent company's
capital stock by Advanstar Holdings Corp. The credit facility contains covenants and events of default that, among other things, limit our ability to incur debt, pay dividends and make investments.

As
a result of the decline in our operating results through 2001 and the anticipated decline in our operating results through much of 2002, we believe that we would have failed to
satisfy certain of the financial covenants contained in our Credit Facility as of March 31, 2002. Accordingly, we sought and obtained an amendment to the Credit Facility in March 2002
which provided for certain revisions to our quarterly financial covenants in 2002 and 2003. As of June 30, 2002 we were in compliance with these financial covenants.

Replacement Notes.The Replacement Notes mature in 2011 and are guaranteed by each of our existing and future domestic
restricted subsidiaries. Interest on the Replacement Notes is payable semi-annually in cash. The Replacement Notes contain covenants and events of default that, among other things, limit
our ability to incur debt, pay dividends and make investments. As of June 30, 2002, we were in compliance with these covenants.

Parent company notes.As part of the financing for the Acquisition, our parent, Advanstar, Inc., issued senior
discount notes due October 2011 (the Discount Notes) with a principal amount at maturity of $103.2 million. Concurrently with the closing of the offering of the Replacement Notes,
Advanstar, Inc. sold additional Discount Notes due October 2011 with an additional aggregate principal amount at maturity of $68.6 million. These notes do not require cash
interest payments until 2006 and contain covenants and events of default that, among other things, limit the ability of Advanstar, Inc. and its subsidiaries (including the Company) to incur
debt, pay dividends and make investments. Neither we nor any of our subsidiaries guaranteed the Discount Notes. Advanstar, Inc., however, is a holding company and its ability to pay interest on
these Discount Notes will be dependent upon the receipt of dividends from its subsidiaries, including the Company.

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Contractual and contingent obligations.Our contractual obligations are set forth below (in millions):

Payment due by PeriodContractual Obligation

Less Than 1 Year

1 to 3 Years

Over 3 YearsIndebtedness (excluding interest)

$
17.0

$
53.3

$
487.0Operating leases


5.9


13.0


13.5Total

$
22.9

$
66.3

$
500.5


Our
contingent obligations are primarily composed of $2.6 million of letters of credit and our interest rate and foreign currency derivatives discussed more fully below in Item
3Qualitative and Quantitative Disclosure About Market Risk

Capital expenditures.Capital expenditures in the first half of 2002 were approximately $3.2 million. We anticipate
that we will spend between $7.0 and $8.0 million on capital expenditures in 2002, primarily for expenditures related to our desktop computers and management information systems. Based on
current estimates, management believes that the amount of capital expenditures permitted to be made under the credit facility will be adequate to grow our business according to our business strategy
and to maintain the properties and business of our continuing operations.

Acquisitions and investments.We have provided funding to Advanstar.com, our affiliate and a subsidiary of
Advanstar, Inc., to support its operations. We provided funding of approximately $1.5 million in the first half of 2002 and anticipate that we will provide approximately
$1.0 million to $1.5 million of additional funding in 2002. Our debt instruments limit the total amount we can invest in Advanstar.com. Based on current estimates, we anticipate that we
will be able to make these investments within those limitations.

Our
business strategy includes the consummation of strategic acquisitions. In connection with any future acquisitions, we may require additional funding, which may be provided in the
form of additional debt or equity financing or a combination thereof. There can be no assurance that any additional financing will be available to us on acceptable terms or in a manner that complies
with the restrictive covenants in our debt instruments. Consistent with our longstanding strategy, we continue to pursue potential acquisitions of complementary businesses.



We generally operate with negative working capital, excluding cash and current maturities of long-term debt, due to the impact of deferred revenue
from trade shows, which is billed and collected as deposits up to one year in advance of the respective trade show. Consequently, our existing operations are expected to maintain very low or negative
working capital balances, excluding cash and current maturities of long-term debt.

On
a relative basis, our revenue reaches its highest levels during the first and third quarters of the year largely due to the timing of the MAGIC trade shows and our other large trade
shows and conferences. This seasonality, when combined with the shift in the timing of when events take place from year to year, may have a significant effect on our quarterly working capital.

We
anticipate that our operating cash flow, together with borrowings under the credit facility, will be sufficient to meet our anticipated future operating expenses, capital expenditures
and debt service and other obligations as they become due. However, our ability to make scheduled payments of principal, to pay interest on or to refinance our indebtedness and to satisfy our other
debt obligations will depend upon our future operating performance, which will be affected by general economic, financial, competitive, legislative, regulatory, business and other factors beyond our
control.

Historically,
our financing requirements have been funded primarily through cash generated by operating activities and borrowings under our revolving credit facility. From time to time,
we have also raised additional funds through sales of common stock, high yield offerings and term borrowings under our credit facility for purposes of completing strategic acquisitions.

Cash flows from operating activities.Net cash provided by operations decreased $10.7 million to a use of cash of
$0.2 million in 2002 from a source of cash of $10.5 million in 2001. The decrease was primarily due to an increase in cash interest expense of $10.5 million due to the timing of
interest payments on our

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Replacement Notes compared to our old 9.25% senior subordinated notes and an increase in working capital.

Cash flows used in investing activities.Net cash used in investing activities declined $10.2 million to
$16.5 million in 2002, from $26.7 million in 2001. This decline was principally due to decreased funding of Advanstar.com and reduced capital expenditures, partially offset by increased
investments in acquisitions during the period.

Cash flows from financing activities.Net cash used by financing activities increased $27.8 million to
$15.0 million in 2002, from a source of cash of $12.8 million in 2001. This increase was principally due to increased payments on long-term debt and financing costs related
to the amendment to our senior credit agreement during the quarter. In 2001 we refinanced the Replacement Notes (as more fully discussed above) and made additional borrowings under our operating line
of credit during the first half of 2001.

New Accounting Pronouncements

In August 2001, the Financial Accounting Standards Board (FASB) issued Financial Accounting Standards No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets" (SFAS No. 144). This statement addresses financial accounting and reporting for the impairment or disposal of long-lived assets.
FAS 144 retains and expands upon the fundamental provisions of existing guidance related to the recognition and measurement of the impairment of long-lived assets to be held and
used and the measurement of long-lived assets to be disposed of by sale. Generally, the provisions of SFAS No. 144 are effective for financial statements issued for fiscal years
beginning after December 15, 2001. The Company has adopted SFAS No. 144 on January 1, 2002. The adoption of SFAS No. 144 did not impact the results of operations or
financial position of the Company for the three or six month period ended June 30, 2002.

In
May 2002, the FASB issued Financial Accounting Standards No. 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and
Technical Corrections" (SFAS No. 145). SFAS No. 145 rescinds FASB Statement No. 4, "Reporting Gains and Losses from Extinguishment of
Debt",and an amendment of that Statement, FASB Statement No. 64, "Extinguishments of Debt Made to Satisfy Sinking-Fund
Requirements". SFAS No. 145 also rescinds FASB Statement No. 44, "Accounting for Intangible Assets of Motor Carriers". SFAS No. 145 amends FASB Statement No. 13,
"Accounting for Leases", to eliminate an inconsistency between the required accounting for sale-leaseback transactions and the required accounting for certain lease modifications that have
economic effects that are similar to sale-leaseback transactions. SFAS No. 145 also amends other existing authoritative pronouncements to make various technical corrections, clarify
meanings, or describe their applicability under changed conditions. SFAS No. 145 is generally effective for fiscal years beginning after May 15, 2002. The Company has not adopted SFAS
No. 145. The adoption of SFAS No. 145 is not expected to have a significant impact of the results of operations or financial position of the Company.

In
June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities." This statement addresses financial accounting and reporting
for costs associated with exit or disposal activities and requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred. The provisions
of SFAS No. 146 are effective for exit or disposal activities that are initiated after December 31, 2002. The adoption of SFAS 146 is not expected to have a significant impact of
the results of operations or financial position of the Company.

Item 3.Qualitative and Quantitative Disclosure about Market Risk

We are exposed to various market risks, which is the potential loss arising from adverse changes in market rates and prices, such as foreign currency exchange and
interest rates. We do not enter into derivatives or other financial instruments for trading or speculative purposes. We enter into financial instruments to manage and reduce the impact of changes in
interest rates and foreign currency exchange rates.

Interest Rates.We rely significantly on variable rate and fixed rate debt in our capital structure. At June 30, 2002,
we had fixed rate debt of $165.0 million and variable rate debt of $392.3 million. The pre-tax earnings and cash flows impact for the next year resulting from a 100 basis
point increase in interest rates on variable rate debt would be a reduction of pre-tax earnings of $3.9 million, holding other variables constant and excluding the impact of our
interest rate protection agreements. Under the credit facility, we are

39

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required to enter into interest rate protection agreements that have the effect of causing at least half of the outstanding term loan borrowings and Replacement Notes to be fixed-rate
borrowings. We have entered into agreements to cap the interest rate on $250.0 million of borrowings under our credit facility, which would have the effect of reducing the impact of interest
rate increases on our earnings and cash flows.

Currencies.Outside of the United States, we maintain assets and operations in Europe, South America and Asia. The results of
operations and financial position of our foreign operations are principally measured in their respective currency and translated into U.S. dollars. As a result, exposure to foreign currency gains and
losses exists. The reported income of these subsidiaries will be higher or lower depending on a weakening or strengthening of the U.S. dollar against the respective foreign currency. Our subsidiaries
and affiliates also purchase and sell products and services in various currencies. As a result, we may be exposed to cost increases relative to the local currencies in the markets in which we sell.

A
portion of our assets are based in our foreign locations and are translated into U.S. dollars at foreign currency exchange rates in effect as of the end of each period, with the effect
of such translation reflected in other comprehensive income (loss). Accordingly, our consolidated stockholder's equity will fluctuate depending upon the weakening or strengthening of the U.S. dollar
against the respective foreign currency.

Our
strategy for management of currency risk relies primarily upon conducting our operations in a country's respective currency and may, from time to time, involve currency derivatives,
primarily forward exchange contracts, to reduce our exposure to currency fluctuations. As of June 30, 2002, there were open foreign exchange derivative contracts to sell with a notional amount
totaling $2.0 million and to buy with a notional amount totaling $0.9 million. The estimated fair value of the foreign exchange contracts based upon market quotes was a net liability of
approximately $0.1 million. The potential loss in fair value resulting from a hypothetical 10% adverse change in quoted foreign currency exchange rates amounts to an additional loss of
approximately $0.1 million. Actual results may differ.

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PART II Other Information

|Item 4.    |  | Submissions of Matters to a Vote of Security Holders.
None                                                                                                                                       
|---------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Item 6.    |  | Exhibits and Reports on Form 8-K                                                                                                                                                                 
|Item 6(a). |  | Exhibits
99.1CEO's Certificate
99.2CFO's Certificate                                                                                                                                           
|Item 6(b). |  | Reports on Form 8-K                                                                                                                                                                              
|           |  | A report on Form 8-K was filed by the Company on April 18, 2002 to report an event under ItemChanges in Registrant's Certifying Accountant. No financial statements were filed with such report.

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SIGNATURES

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

|                | ADVANSTAR COMMUNICATIONS INC.                                                                          
|--------------- | -------------------------------------------------------------------------------------------------------
|August 14, 2002 | /s/DAVID W. MONTGOMERYDavid W. Montgomery
Vice President-Finance, Secretary and
Chief Financial Officer

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