##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549-1004
 
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2005
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 COMMISSION
FILE NUMBER 1-14337
 PENTON MEDIA, INC.
  DELAWARE
    
    36-2875386(State of Incorporation)
    
    (I.R.S. Employer Identification No.)1300 East Ninth Street, Cleveland, OH
    
    44114(Address of Principal Executive Offices)
    
    (Zip Code)
 216-696-7000
 þ o
 o þ
 o þ




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PENTON MEDIA, INC.
Form 10-Q
 TABLE OF CONTENTS
 PagePart I  FINANCIAL INFORMATIONItem 1. Financial StatementsConsolidated Balance Sheets (Unaudited) at September 30, 2005 and December 31, 2004
    
    
    3Consolidated Statements of Operations (Unaudited) for the Three and Nine Months
Ended September 30, 2005 and 2004
    
    
    5Condensed Consolidated Statements of Cash Flows (Unaudited) for the Nine Months
Ended September 30, 2005 and 2004
    
    
    6Notes to Consolidated Financial Statements (Unaudited)
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results
of Operations
    
    
    34Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    52Item 4. Controls and Procedures
    
    
    53Part II  OTHER INFORMATIONItem 6. Exhibits
    
    
    54Signature
    
    
    55Index of Exhibits
    
    
    56Exhibit 31.1 Certification Pursuant to Section 302-PEOExhibit 31.2 Certification Pursuant to Section 302-PFOExhibit 32 Certification Pursuant to Section 906
  2




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##### Table of Contents



Part I  FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 PENTON MEDIA, INC.
 
 CONSOLIDATED BALANCE SHEETS
(Unaudited, Dollars in thousands)
 September 30,
    
    
    December 31,2005
    
    
    2004AssetsCurrent assets:Cash and cash equivalents
    
    $
    10,254
    
    
    $
    7,661Restricted cash
    
    
    361
    
    
    
    125Accounts receivable, less allowance for doubtful accounts of $2,882
and $2,826 in 2005 and 2004, respectively
    
    
    27,406
    
    
    
    30,571Inventories
    
    
    1,210
    
    
    
    856Deferred tax assets
    
    
    276
    
    
    
    276Prepayments, deposits and other
    
    
    5,102
    
    
    
    3,672Total current assets
    
    
    44,609
    
    
    
    43,161Property and equipment, less accumulated depreciation of $33,949
and $30,989 in 2005 and 2004, respectively
    
    
    11,452
    
    
    
    14,793Other assets:Goodwill
    
    
    173,472
    
    
    
    176,162Other intangible assets, net
    
    
    6,391
    
    
    
    6,846Other non-current assets
    
    
    5,496
    
    
    
    6,412$
    241,420
    
    
    $
    247,374
  3




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##### Table of Contents



PENTON MEDIA, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited, Dollars in thousands, except share and per share amounts)
 September 30,
    
    
    December 31,2005
    
    
    2004Liabilities and stockholders deficitCurrent liabilities:Accounts payable
    
    $
    4,542
    
    
    $
    6,808Accrued compensation and benefits
    
    
    4,667
    
    
    
    5,880Other accrued expenses
    
    
    23,276
    
    
    
    13,937Unearned income, principally trade show and conference deposits
    
    
    18,042
    
    
    
    23,274Total current liabilities
    
    
    50,527
    
    
    
    49,899Long-term liabilities and deferred credits:Senior secured notes, net of discount
    
    
    157,156
    
    
    
    157,047Senior subordinated notes, net of discount
    
    
    166,842
    
    
    
    172,017Net deferred pension credits
    
    
    10,253
    
    
    
    10,568Deferred tax liability
    
    
    21,845
    
    
    
    19,903Other non-current liabilities
    
    
    6,266
    
    
    
    7,010362,362
    
    
    
    366,545Commitments and contingencies (Note 11)Mandatorily redeemable convertible preferred stock, par value $0.01
per share; 50,000 shares authorized, issued and outstanding;
redeemable at $1,000 per share
    
    
    72,837
    
    
    
    67,162Series M
preferred stock, par value $0.01 per share; 150,000 shares authorized, 69,000 and 68,625 shares issued and outstanding at September 30, 2005 and
December 31, 2004, respectively
    
    
    15
    
    
    
    4Stockholders deficit:Preferred stock, par value $0.01 per share; 1,800,000 shares
authorized, none issued or outstanding
    
    
    
    
    
    
    Common stock, par value $0.01 per share; 155,000,000 shares
authorized; 34,487,872 and 33,832,004 shares issued and outstanding
at September 30, 2005 and December 31, 2004, respectively
    
    
    343
    
    
    
    337Capital in excess of par value
    
    
    209,462
    
    
    
    215,027Retained deficit
    
    
    (453,799
    )
    
    
    (450,067
    )Notes
receivable from officers, less reserve of $5,848 at
September 30, 2005 and December 31, 2004, respectively
    
    
    
    
    
    
    Accumulated other comprehensive loss
    
    
    (327
    )
    
    
    (1,533
    )(244,321
    )
    
    
    (236,236
    )$
    241,420
    
    
    $
    247,374
  4




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##### Table of Contents



PENTON MEDIA, INC.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, Dollars and shares in thousands, except per share amounts)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Revenues
    
    $
    50,986
    
    
    $
    44,663
    
    
    $
    148,131
    
    
    $
    143,560Operating expenses:Editorial, production and circulation
    
    
    21,322
    
    
    
    20,944
    
    
    
    61,992
    
    
    
    63,091Selling, general and administrative (including
$2.7 million of executive separation costs
for the nine months ended September 30,
2004)
    
    
    17,434
    
    
    
    17,324
    
    
    
    51,597
    
    
    
    61,113Impairment of assets
    
    
    
    
    
    
    34,466
    
    
    
    
    
    
    
    34,466Provision for loan impairment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,717Restructuring and other charges (credits)
    
    
    (22
    )
    
    
    1,261
    
    
    
    230
    
    
    
    5,623Depreciation and amortization
    
    
    1,993
    
    
    
    2,168
    
    
    
    6,570
    
    
    
    7,84340,727
    
    
    
    76,163
    
    
    
    120,389
    
    
    
    173,853Operating income (loss)
    
    
    10,259
    
    
    
    (31,500
    )
    
    
    27,742
    
    
    
    (30,293
    )Other income (expense):Interest expense
    
    
    (9,354
    )
    
    
    (9,693
    )
    
    
    (28,100
    )
    
    
    (28,513
    )Interest income
    
    
    41
    
    
    
    38
    
    
    
    103
    
    
    
    174Gain on extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    1,589
    
    
    
    Other, net
    
    
    (69
    )
    
    
    (15
    )
    
    
    (93
    )
    
    
    (11
    )(9,382
    )
    
    
    (9,670
    )
    
    
    (26,501
    )
    
    
    (28,350
    )Income (loss) from continuing operations before
income taxes
    
    
    877
    
    
    
    (41,170
    )
    
    
    1,241
    
    
    
    (58,643
    )Provision (benefit) for income taxes
    
    
    618
    
    
    
    (369
    )
    
    
    2,014
    
    
    
    1,162Income (loss) from continuing operations
    
    
    259
    
    
    
    (40,801
    )
    
    
    (773
    )
    
    
    (59,805
    )Discontinued operations:Loss from discontinued operations, net of taxes
    
    
    
    
    
    
    (3,595
    )
    
    
    (2,959
    )
    
    
    (5,719
    )Net income (loss)
    
    
    259
    
    
    
    (44,396
    )
    
    
    (3,732
    )
    
    
    (65,524
    )Amortization of deemed dividend and accretion
of preferred stock
    
    
    (1,961
    )
    
    
    (1,772
    )
    
    
    (5,675
    )
    
    
    (10,373
    )Net loss applicable to common stockholders
    
    $
    (1,702
    )
    
    $
    (46,168
    )
    
    $
    (9,407
    )
    
    $
    (75,897
    )Net loss per common share  basic and diluted:Loss from continuing operations applicable
to common stockholders
    
    $
    (0.05
    )
    
    $
    (1.25
    )
    
    $
    (0.19
    )
    
    $
    (2.08
    )Discontinued operations, net of taxes
    
    
    
    
    
    
    (0.11
    )
    
    
    (0.08
    )
    
    
    (0.17
    )Net loss applicable to common stockholders
    
    $
    (0.05
    )
    
    $
    (1.36
    )
    
    $
    (0.27
    )
    
    $
    (2.25
    )Weighted-average number of shares outstanding:Basic and diluted
    
    
    34,489
    
    
    
    33,875
    
    
    
    34,489
    
    
    
    33,665
  5




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##### Table of Contents



PENTON MEDIA, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, Dollars in thousands)
 Nine Months EndedSeptember 30,2005
    
    
    2004Net cash provided by (used for) operating activities
    
    $
    5,090
    
    
    $
    (9,954
    )Cash flows from investing activities:Capital expenditures
    
    
    (780
    )
    
    
    (1,818
    )Cash paid for acquisitions
    
    
    (1,748
    )
    
    
    Increase in notes receivable
    
    
    
    
    
    
    (140
    )Increase in restricted cash
    
    
    (236
    )
    
    
    (193
    )Net proceeds from sale of properties
    
    
    4,073
    
    
    
    Net cash provided by (used for) investing activities
    
    
    1,309
    
    
    
    (2,151
    )Cash flows from financing activities:Repurchase of 10-3/8% senior subordinated notes
    
    
    (3,795
    )
    
    
    Payment of financing costs
    
    
    
    
    
    
    (10
    )Decrease in cash overdraft balance
    
    
    (77
    )
    
    
    (224
    )Net cash used for financing activities
    
    
    (3,872
    )
    
    
    (234
    )Effect of exchange rate changes on cash
    
    
    66
    
    
    
    44Net increase (decrease) in cash and cash equivalents
    
    
    2,593
    
    
    
    (12,295
    )Cash and cash equivalents at beginning of year
    
    
    7,661
    
    
    
    29,626Cash and cash equivalents at end of period
    
    $
    10,254
    
    
    $
    17,331
  6




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##### Table of Contents



PENTON MEDIA, INC.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 NOTE 1  ACCOUNTING POLICIES
 Basis of Presentation
    Restatement of Financial Statements
  Form
10-Qs.
 Use of Estimates
  Reclassifications
  Restricted Cash
  7




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PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 Accounting for Stock-Based Compensation
   Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Net loss applicable to common stockholders as reported
    
    $
    (1,702
    )
    
    $
    (46,168
    )
    
    $
    (9,407
    )
    
    $
    (75,897
    )Add: Stock-based employee compensation expense included in net
loss applicable to common stockholders, net of related tax effects
    
    
    
    
    
    
    24
    
    
    
    
    
    
    
    726Less: Total stock-based employee compensation expense determined under
fair value based methods for all awards, net of related tax effects
    
    
    (7
    )
    
    
    (123
    )
    
    
    (25
    )
    
    
    (3,171
    )Pro forma net loss applicable to common stockholders
    
    $
    (1,709
    )
    
    $
    (46,267
    )
    
    $
    (9,432
    )
    
    $
    (78,342
    )Basic and diluted earnings per share:As reported
    
    $
    (0.05
    )
    
    $
    (1.36
    )
    
    $
    (0.27
    )
    
    $
    (2.25
    )Pro forma
    
    $
    (0.05
    )
    
    $
    (1.37
    )
    
    $
    (0.27
    )
    
    $
    (2.33
    )
 New Accounting Pronouncements
    8




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##### Table of Contents



PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
    NOTE 2  ACQUISITIONS AND DISPOSALS
  Acquisitions
   9




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##### Table of Contents



PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 Disposals
     Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Revenues
    
    $
    
    
    
    $
    8,179
    
    
    $
    654
    
    
    $
    14,686Discontinued operations:Loss from operations of discontinued component
    
    $
    
    
    
    $
    (3,571
    )
    
    $
    (2,959
    )
    
    $
    (5,215
    )Gain (loss) on disposal
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Income tax provision
    
    
    
    
    
    
    (24
    )
    
    
    
    
    
    
    (504
    )Loss on discontinued operations, net of taxes
    
    $
    
    
    
    $
    (3,595
    )
    
    $
    (2,959
    )
    
    $
    (5,719
    )
 NOTE 3  GOODWILL AND OTHER INTANGIBLES
   10




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##### Table of Contents



PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
  Balance at
    
    
    
    
    
    
    
    
    
    
    Balance atDecember 31,
    
    
    Impairment
    
    
    
    
    
    
    September 30,2004
    
    
    charge
    
    
    Activity
    
    
    2005Industry
    
    $
    23,519
    
    
    $
    
    
    
    $
    
    
    
    $
    23,519Technology
    
    
    38,501
    
    
    
    
    
    
    
    601
    (2)
    
    
    39,102Retail
    
    
    25,865
    
    
    
    
    
    
    
    
    
    
    
    25,865Lifestyle
    
    
    84,986
    
    
    
    
    
    
    
    
    
    
    
    84,986International
    
    
    3,291
    
    
    
    (1,407
    )
    
    
    (1,884
    )(1)
    
    
    Total
    
    $
    176,162
    
    
    $
    (1,407
    )
    
    $
    (1,283
    )
    
    $
    173,472
 
 (1)
    
    Represents goodwill related to PM Europe, which was sold in April
2005.(2)
    
    Represents goodwill related to MSD2D, which was acquired in
August 2005.    Gross
    
    
    
    
    
    
    NetCarrying
    
    
    Accumulated
    
    
    BookValue
    
    
    Amortization
    
    
    ValueTrade names
    
    $
    4,958
    
    
    $
    (4,145
    )
    
    $
    813Mailing/exhibitor lists
    
    
    10,129
    
    
    
    (5,961
    )
    
    
    4,168Advertiser relationships
    
    
    5,624
    
    
    
    (4,619
    )
    
    
    1,005Subscriber relationships
    
    
    1,929
    
    
    
    (1,605
    )
    
    
    324Noncompete agreements
    
    
    85
    
    
    
    (4
    )
    
    
    81Balance at September 30, 2005
    
    $
    22,725
    
    
    $
    (16,334
    )
    
    $
    6,391
  Year EndedDecember 31,
    
    Amount2005
    
    $
    1,8162006
    
    $
    1,7562007
    
    $
    1,1242008
    
    $
    5682009
    
    $
    466
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##### Table of Contents



PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 NOTE 4  DEBT
 Loan and Security Agreement
   (i)
    
    the obligation of the lender to provide any advances under the agreement is
subject to no material adverse change events;(ii)
    
    reserves may be established against the borrowing base for sums that the
Company is required to pay, such as taxes and assessments and other types of required
payments, and has failed to pay;(iii)
    
    in the event of a default under the agreement, the lender has the right to
direct all cash that is deposited in the Companys lock boxes to the lender to pay down
outstanding borrowings;(iv)
    
    the agreement establishes cross-defaults to the Companys other indebtedness
(such as the 11-7/8% senior secured notes and 10-3/8% senior subordinated notes) such
that a default under the Loan and Security Agreement could cause a default under the
note agreements and vice versa; however, default-triggering thresholds are different in
the loan agreement and the notes; and(v)
    
    if the Company is in default of any material agreement to which it is a party
and the counter-party to that agreement has the right to terminate such agreement as a
result of the default, this constitutes an event of default under the Loan and Security
Agreement.
 10-3/8%
 Senior Secured Notes
   12




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##### Table of Contents



PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 Senior Subordinated Notes
   Interest Payments
  NOTE 5  PREFERRED STOCK
  
    
    the new series allows for the sharing of the liquidation preference with the new Series
M Preferred stock (discussed below),
    
    certain technical and correcting amendments have been made to the Certificate of
Designations for the Series C Preferred stock, including fixing the formula used to
calculate the Change of Control Cap (as defined in the Series C Preferred Stock
Certificate of Designations), and
    
    certain conforming changes were made to the Series C Preferred Stock Certificate of
Designations to account for the fact that the Series C Preferred stock was issued in
exchange for the Series B Preferred stock.
     13




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PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
    NOTE 6  COMMON STOCK AND COMMON STOCK AWARD PROGRAMS
 Executive Loan Program
  Management Stock Purchase Plan
  Equity and Performance Incentive Plan
 Stock Options
  Deferred Shares
  Performance Units
  14




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##### Table of Contents



PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 Treasury Stock
  NOTE 7  EMPLOYEE BENEFIT PLANS
   Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Interest cost
    
    $
    691
    
    
    $
    643
    
    
    $
    1,922
    
    
    $
    1,929Expected return on plan assets
    
    
    (745
    )
    
    
    (782
    )
    
    
    (2,237
    )
    
    
    (2,344
    )Net periodic benefit cost (benefit)
    
    $
    (54
    )
    
    $
    (139
    )
    
    $
    (315
    )
    
    $
    (415
    )
   Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Interest cost
    
    $
    7
    
    
    $
    8
    
    
    $
    20
    
    
    $
    34Expected return on plan assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net periodic benefit cost (benefit)
    
    $
    7
    
    
    $
    8
    
    
    $
    20
    
    
    $
    34
 15




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##### Table of Contents



PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 NOTE 8  EARNINGS PER SHARE
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Net loss applicable to common stockholders
    
    $
    (1,702
    )
    
    $
    (46,168
    )
    
    $
    (9,407
    )
    
    $
    (75,897
    )Number of shares:Weighted average shares outstanding  basic and diluted
    
    
    34,489
    
    
    
    33,875
    
    
    
    34,489
    
    
    
    33,665Per share amount:Loss
applicable to common stockholders 
basic and diluted
    
    $
    (0.05
    )
    
    $
    (1.36
    )
    
    $
    (0.27
    )
    
    $
    (2.25
    )
    NOTE 9  COMPREHENSIVE INCOME (LOSS)
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Net income (loss)
    
    $
    259
    
    
    $
    (44,396
    )
    
    $
    (3,732
    )
    
    $
    (65,524
    )Cumulative translation adjustment related to sale of business
    
    
    
    
    
    
    
    
    
    
    1,244
    
    
    
    Change in accumulated translation adjustment
    
    
    (2
    )
    
    
    11
    
    
    
    (37
    )
    
    
    52Total comprehensive income (loss)
    
    $
    257
    
    
    $
    (44,385
    )
    
    $
    (2,525
    )
    
    $
    (65,472
    )
 16




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##### Table of Contents



PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 NOTE 10  INCOME TAXES
      NOTE 11  COMMITMENTS AND CONTINGENCIES
 Legal Proceedings
  17




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PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
  Tax Matters
  Current Liquidity
  Other Commitments
  NOTE 12  BUSINESS RESTRUCTURING CHARGES
    18




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PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
  2001 Restructuring Plan
   Severanceand Other
    
    
    Facility
    
    
    OtherPersonnel Costs
    
    
    Closing Costs
    
    
    Exit Costs
    
    
    TotalCharged to costs and expenses
    
    $
    6,774
    
    
    $
    8,669
    
    
    $
    4,364
    
    
    $
    19,807Adjustments
    
    
    (23
    )
    
    
    
    
    
    
    (994
    )
    
    
    (1,017
    )Cash payments
    
    
    (4,468
    )
    
    
    (267
    )
    
    
    (2,423
    )
    
    
    (7,158
    )Restructuring balance, December 31, 2001
    
    
    2,283
    
    
    
    8,402
    
    
    
    947
    
    
    
    11,632Adjustments
    
    
    (135
    )
    
    
    (459
    )
    
    
    (422
    )
    
    
    (1,016
    )Cash payments
    
    
    (2,129
    )
    
    
    (1,590
    )
    
    
    (250
    )
    
    
    (3,969
    )Restructuring balance, December 31, 2002
    
    
    19
    
    
    
    6,353
    
    
    
    275
    
    
    
    6,647Adjustments
    
    
    (8
    )
    
    
    598
    
    
    
    82
    
    
    
    672Cash payments
    
    
    (11
    )
    
    
    (1,304
    )
    
    
    (357
    )
    
    
    (1,672
    )Restructuring balance, December 31, 2003
    
    
    
    
    
    
    5,647
    
    
    
    
    
    
    
    5,647Adjustments
    
    
    
    
    
    
    288
    
    
    
    
    
    
    
    288Cash payments
    
    
    
    
    
    
    (1,394
    )
    
    
    
    
    
    
    (1,394
    )Restructuring balance, December 31, 2004
    
    
    
    
    
    
    4,541
    
    
    
    
    
    
    
    4,541Adjustments
    
    
    
    
    
    
    12
    
    
    
    
    
    
    
    12Cash payments
    
    
    
    
    
    
    (1,222
    )
    
    
    
    
    
    
    (1,222
    )Restructuring balance, September 30, 2005
    
    $
    
    
    
    $
    3,331
    
    
    $
    
    
    
    $
    3,331
  2002 Restructuring Plan
  19




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##### Table of Contents



PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
  Severanceand Other
    
    
    Facility
    
    
    OtherPersonnel Costs
    
    
    Closing Costs
    
    
    Exit Costs
    
    
    TotalCharged to costs and expenses
    
    $
    10,344
    
    
    $
    3,421
    
    
    $
    1,648
    
    
    $
    15,413Adjustments
    
    
    200
    
    
    
    1,705
    
    
    
    59
    
    
    
    1,964Cash payments
    
    
    (5,440
    )
    
    
    (693
    )
    
    
    (967
    )
    
    
    (7,100
    )Restructuring balance, December 31, 2002
    
    
    5,104
    
    
    
    4,433
    
    
    
    740
    
    
    
    10,277Adjustments
    
    
    (45
    )
    
    
    (604
    )
    
    
    (92
    )
    
    
    (741
    )Cash payments
    
    
    (4,928
    )
    
    
    (1,469
    )
    
    
    (375
    )
    
    
    (6,772
    )Restructuring balance, December 31, 2003
    
    
    131
    
    
    
    2,360
    
    
    
    273
    
    
    
    2,764Adjustments
    
    
    25
    
    
    
    300
    
    
    
    291
    
    
    
    616Cash payments
    
    
    (64
    )
    
    
    (708
    )
    
    
    (564
    )
    
    
    (1,336
    )Restructuring balance, December 31, 2004
    
    
    92
    
    
    
    1,952
    
    
    
    
    
    
    
    2,044Adjustments
    
    
    
    
    
    
    151
    
    
    
    
    
    
    
    151Cash payments
    
    
    (4
    )
    
    
    (534
    )
    
    
    
    
    
    
    (538
    )Restructuring balance, September 30, 2005
    
    $
    88
    
    
    $
    1,569
    
    
    $
    
    
    
    $
    1,657
  2003 Restructuring Plan
  
    
    Personnel costs of $2.7 million are associated with the elimination of 85 positions.
    
    The Company recorded office closure costs of $3.8 million primarily related to the closure of one floor at
the Companys corporate headquarters and the partial closure of one additional facility. This charge was offset
by $2.3 million of estimated sublease income related to these facilities.
    
    The charge for other exit costs of $0.7 million relates primarily to equipment lease payments at closed
office facilities, cancellation of certain contracts, and broker commissions.
  Severanceand Other
    
    
    Facility
    
    
    OtherPersonnel Costs
    
    
    Closing Costs
    
    
    Exit Costs
    
    
    TotalCharged to costs and expenses
    
    $
    2,736
    
    
    $
    1,505
    
    
    $
    661
    
    
    $
    4,902Adjustments
    
    
    35
    
    
    
    (11
    )
    
    
    
    
    
    
    24Cash payments
    
    
    (1,105
    )
    
    
    (500
    )
    
    
    (233
    )
    
    
    (1,838
    )Restructuring balance, December 31, 2003
    
    
    1,666
    
    
    
    994
    
    
    
    428
    
    
    
    3,088Adjustments
    
    
    76
    
    
    
    69
    
    
    
    (9
    )
    
    
    136Cash payments
    
    
    (1,742
    )
    
    
    (114
    )
    
    
    (241
    )
    
    
    (2,097
    )Restructuring balance, December 31, 2004
    
    
    
    
    
    
    949
    
    
    
    178
    
    
    
    1,127Adjustments
    
    
    
    
    
    
    33
    
    
    
    (164
    )
    
    
    (131
    )Cash payments
    
    
    
    
    
    
    (29
    )
    
    
    (14
    )
    
    
    (43
    )Restructuring balance, September 30, 2005
    
    $
    
    
    
    $
    953
    
    
    $
    
    
    
    $
    953
 20




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##### Table of Contents



PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
  2004 Restructuring Plan
  
    
    Personnel costs of $4.7 million are associated with the elimination of 68 positions.
    
    Office closure costs of $0.1 million primarily relate to the closure of a warehouse in Colorado.
    
    The charge for other exit costs of $0.4 million relates primarily to the cancellation of
an agreement with a former employee to provide trade show and conference services to select
Penton events, as well as costs for other miscellaneous contracts.
  Severanceand Other
    
    
    Facility
    
    
    OtherPersonnel Costs
    
    
    Closing Costs
    
    
    Exit Costs
    
    
    TotalCharged to costs and expenses
    
    $
    4,752
    
    
    $
    51
    
    
    $
    364
    
    
    $
    5,167Adjustments
    
    
    15
    
    
    
    
    
    
    
    (27
    )
    
    
    (12
    )Cash payments
    
    
    (4,024
    )
    
    
    (1
    )
    
    
    (98
    )
    
    
    (4,123
    )Restructuring balance, December 31, 2004
    
    
    743
    
    
    
    50
    
    
    
    239
    
    
    
    1,032Adjustments
    
    
    6
    
    
    
    (3
    )
    
    
    39
    
    
    
    42Cash payments
    
    
    (741
    )
    
    
    (32
    )
    
    
    (219
    )
    
    
    (992
    )Restructuring balance, September 30, 2005
    
    $
    8
    
    
    $
    15
    
    
    $
    59
    
    
    $
    82
  2005 Restructuring Plan
 Wireless Systems
Design
  Severanceand OtherPersonnel CostsCharged to costs and expenses
    
    $
    156Cash payments
    
    
    (156
    )Restructuring balance, September 30, 2005
    
    $
    
  21




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##### Table of Contents



PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 Estimated Future Payments
    Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Industry
    
    $
    10
    
    
    $
    998
    
    
    $
    319
    
    
    $
    1,639Technology
    
    
    (36
    )
    
    
    130
    
    
    
    (54
    )
    
    
    863Lifestyle
    
    
    
    
    
    
    
    
    
    
    (65
    )
    
    
    10Retail
    
    
    
    
    
    
    15
    
    
    
    
    
    
    
    714Corporate
    
    
    4
    
    
    
    118
    
    
    
    30
    
    
    
    2,281Total
    
    $
    (22
    )
    
    $
    1,261
    
    
    $
    230
    
    
    $
    5,507
  NOTE 13  SEGMENTS
   22




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##### Table of Contents



PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
  Industry

    
    TechnologyManufacturing
    
    Business TechnologyDesign/Engineering
    
    AviationMechanical Systems/Construction
    
    Enterprise Information TechnologyGovernment/Compliance
    
    ElectronicsLifestyle
    
    RetailNatural Products
    
    Food/RetailHospitality
   Revenues
    
    
    Adjusted Segment EBITDA2005
    
    
    2004
    
    
    2005
    
    
    2004Industry
    
    $
    19,772
    
    
    $
    20,897
    
    
    $
    6,016
    
    
    $
    6,378Technology
    
    
    14,354
    
    
    
    14,101
    
    
    
    3,281
    
    
    
    2,425Lifestyle
    
    
    11,233
    
    
    
    3,914
    
    
    
    5,142
    
    
    
    (424
    )Retail
    
    
    5,627
    
    
    
    5,751
    
    
    
    1,905
    
    
    
    1,920Total
    
    $
    50,986
    
    
    $
    44,663
    
    
    $
    16,344
    
    
    $
    10,299
  Revenues
    
    
    Adjusted Segment EBITDA2005
    
    
    2004
    
    
    2005
    
    
    2004Industry
    
    $
    57,225
    
    
    $
    57,563
    
    
    $
    17,219
    
    
    $
    16,351Technology
    
    
    42,931
    
    
    
    44,563
    
    
    
    8,949
    
    
    
    7,545Lifestyle
    
    
    32,069
    
    
    
    25,022
    
    
    
    15,800
    
    
    
    9,669Retail
    
    
    15,906
    
    
    
    16,412
    
    
    
    5,047
    
    
    
    4,526Total
    
    $
    148,131
    
    
    $
    143,560
    
    
    $
    47,015
    
    
    $
    38,091
 23




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##### Table of Contents



PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Total adjusted segment EBITDA
    
    $
    16,344
    
    
    $
    10,299
    
    
    $
    47,015
    
    
    $
    38,091General and administrative costs
    
    
    (4,109
    )
    
    
    (3,858
    )
    
    
    (12,451
    )
    
    
    (15,306
    )Depreciation and amortization
    
    
    (1,993
    )
    
    
    (2,168
    )
    
    
    (6,570
    )
    
    
    (7,843
    )Impairment of assets
    
    
    
    
    
    
    (34,466
    )
    
    
    
    
    
    
    (34,466
    )Restructuring and other charges
    
    
    22
    
    
    
    (1,261
    )
    
    
    (230
    )
    
    
    (5,623
    )Executive separation costs
    
    
    (1
    )
    
    
    (21
    )
    
    
    (4
    )
    
    
    (2,722
    )Non-cash compensation
    
    
    (4
    )
    
    
    (25
    )
    
    
    (18
    )
    
    
    (707
    )Provision for loan impairment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,717
    )Interest expense
    
    
    (9,354
    )
    
    
    (9,693
    )
    
    
    (28,100
    )
    
    
    (28,513
    )Interest income
    
    
    41
    
    
    
    38
    
    
    
    103
    
    
    
    174Gain on extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    1,589
    
    
    
    Other, net
    
    
    (69
    )
    
    
    (15
    )
    
    
    (93
    )
    
    
    (11
    )Income (loss) from continuing operations
before income taxes
    
    $
    877
    
    
    $
    (41,170
    )
    
    $
    1,241
    
    
    $
    (58,643
    )
 NOTE 14  SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
     NOTE 15  GUARANTOR AND NON-GUARANTOR SUBSIDIARIES
   24




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##### Table of Contents



PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 NOTE 15  GUARANTOR AND NON-GUARANTOR SUBSIDIARIES (Continued)
 PENTON MEDIA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
At September 30, 2005
 Guarantor
    
    
    Non-guarantor
    
    
    
    
    
    
    PentonParent
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(Dollars in thousands)AssetsCurrent assets:Cash and cash equivalents
    
    $
    9,616
    
    
    $
    171
    
    
    $
    467
    
    
    $
    
    
    
    $
    10,254Restricted cash
    
    
    361
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    361Accounts receivable, net
    
    
    21,972
    
    
    
    3,756
    
    
    
    1,678
    
    
    
    
    
    
    
    27,406Inventories
    
    
    888
    
    
    
    317
    
    
    
    5
    
    
    
    
    
    
    
    1,210Deferred tax assets
    
    
    273
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    276Prepayments, deposits and other
    
    
    4,549
    
    
    
    181
    
    
    
    372
    
    
    
    
    
    
    
    5,10237,659
    
    
    
    4,428
    
    
    
    2,522
    
    
    
    
    
    
    
    44,609Property and equipment, net
    
    
    9,778
    
    
    
    1,558
    
    
    
    116
    
    
    
    
    
    
    
    11,452Goodwill
    
    
    136,689
    
    
    
    36,783
    
    
    
    
    
    
    
    
    
    
    
    173,472Other intangible assets, net
    
    
    4,466
    
    
    
    1,925
    
    
    
    
    
    
    
    
    
    
    
    6,391Other non-current assets
    
    
    5,350
    
    
    
    138
    
    
    
    8
    
    
    
    
    
    
    
    5,496Investments in subsidiaries
    
    
    (233,723
    )
    
    
    
    
    
    
    
    
    
    
    233,723
    
    
    
    $
    (39,781
    )
    
    $
    44,832
    
    
    $
    2,646
    
    
    $
    233,723
    
    
    $
    241,420Liabilities and stockholders deficitCurrent liabilities:Accounts payable and accrued expenses
    
    $
    25,266
    
    
    $
    1,999
    
    
    $
    553
    
    
    $
    
    
    
    $
    27,818Accrued compensation and benefits
    
    
    3,982
    
    
    
    659
    
    
    
    26
    
    
    
    
    
    
    
    4,667Unearned income
    
    
    13,144
    
    
    
    2,750
    
    
    
    2,148
    
    
    
    
    
    
    
    18,04242,392
    
    
    
    5,408
    
    
    
    2,727
    
    
    
    
    
    
    
    50,527Long-term liabilities and deferred credits:Senior secured notes, net of discount
    
    
    80,150
    
    
    
    77,006
    
    
    
    
    
    
    
    
    
    
    
    157,156Senior subordinated notes, net of discount
    
    
    85,089
    
    
    
    81,753
    
    
    
    
    
    
    
    
    
    
    
    166,842Net deferred pension credits
    
    
    10,253
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,253Deferred tax liability
    
    
    20,889
    
    
    
    956
    
    
    
    
    
    
    
    
    
    
    
    21,845Intercompany advances
    
    
    (111,453
    )
    
    
    75,118
    
    
    
    36,335
    
    
    
    
    
    
    
    Other non-current liabilities
    
    
    4,368
    
    
    
    1,898
    
    
    
    
    
    
    
    
    
    
    
    6,26689,296
    
    
    
    236,731
    
    
    
    36,335
    
    
    
    
    
    
    
    362,362Commitments and contingenciesMandatorily redeemable convertible
preferred stock
    
    
    72,837
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    72,837Series M preferred stock
    
    
    15
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15Stockholders deficit:Common stock and capital in excess
of par value
    
    
    209,805
    
    
    
    202,401
    
    
    
    16,567
    
    
    
    (218,968
    )
    
    
    209,805Retained deficit
    
    
    (453,799
    )
    
    
    (399,663
    )
    
    
    (52,701
    )
    
    
    452,364
    
    
    
    (453,799
    )Notes receivable from officers, less
reserve of $5,848
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accumulated other comprehensive
income (loss)
    
    
    (327
    )
    
    
    (45
    )
    
    
    (282
    )
    
    
    327
    
    
    
    (327
    )(244,321
    )
    
    
    (197,307
    )
    
    
    (36,416
    )
    
    
    233,723
    
    
    
    (244,321
    )$
    (39,781
    )
    
    $
    44,832
    
    
    $
    2,646
    
    
    $
    233,723
    
    
    $
    241,420
 25




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##### Table of Contents



PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 NOTE 15  GUARANTOR AND NON-GUARANTOR SUBSIDIARIES (Continued)
 PENTON MEDIA, INC.
CONDENSED CONSOLIDATING BALANCE SHEETS
At December 31, 2004
 Guarantor
    
    
    Non-guarantor
    
    
    
    
    
    
    PentonParent
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(Dollars in thousands)AssetsCurrent assets:Cash and cash equivalents
    
    $
    5,991
    
    
    $
    73
    
    
    $
    1,597
    
    
    $
    
    
    
    $
    7,661Restricted cash
    
    
    125
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    125Accounts receivable, net
    
    
    22,033
    
    
    
    4,248
    
    
    
    4,290
    
    
    
    
    
    
    
    30,571Inventories
    
    
    560
    
    
    
    291
    
    
    
    5
    
    
    
    
    
    
    
    856Deferred tax asset
    
    
    273
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    276Prepayments, deposits and other
    
    
    2,896
    
    
    
    39
    
    
    
    737
    
    
    
    
    
    
    
    3,67231,878
    
    
    
    4,654
    
    
    
    6,629
    
    
    
    
    
    
    
    43,161Property and equipment, net
    
    
    12,304
    
    
    
    1,693
    
    
    
    796
    
    
    
    
    
    
    
    14,793Goodwill
    
    
    136,689
    
    
    
    36,182
    
    
    
    3,291
    
    
    
    
    
    
    
    176,162Other intangible assets, net
    
    
    4,688
    
    
    
    1,950
    
    
    
    208
    
    
    
    
    
    
    
    6,846Other non-current assets
    
    
    6,168
    
    
    
    208
    
    
    
    36
    
    
    
    
    
    
    
    6,412Investment in subsidiaries
    
    
    (221,148
    )
    
    
    
    
    
    
    
    
    
    
    221,148
    
    
    
    $
    (29,421
    )
    
    $
    44,687
    
    
    $
    10,960
    
    
    $
    221,148
    
    
    $
    247,374Liabilities and stockholders deficitCurrent liabilities:Accounts payable and accrued expenses
    
    $
    18,121
    
    
    $
    1,724
    
    
    $
    900
    
    
    $
    
    
    
    $
    20,745Accrued compensation and benefits
    
    
    4,961
    
    
    
    902
    
    
    
    17
    
    
    
    
    
    
    
    5,880Unearned income
    
    
    16,337
    
    
    
    2,760
    
    
    
    4,177
    
    
    
    
    
    
    
    23,27439,419
    
    
    
    5,386
    
    
    
    5,094
    
    
    
    
    
    
    
    49,899Long-term liabilities and deferred credits:Senior secured notes, net of discount
    
    
    80,094
    
    
    
    76,953
    
    
    
    
    
    
    
    
    
    
    
    157,047Senior subordinated notes, net of discount
    
    
    87,729
    
    
    
    84,288
    
    
    
    
    
    
    
    
    
    
    
    172,017Net deferred pension credits
    
    
    10,568
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,568Deferred tax liability
    
    
    18,947
    
    
    
    956
    
    
    
    
    
    
    
    
    
    
    
    19,903Intercompany advances
    
    
    (102,089
    )
    
    
    61,420
    
    
    
    40,669
    
    
    
    
    
    
    
    Other non-current liabilities
    
    
    4,981
    
    
    
    2,029
    
    
    
    
    
    
    
    
    
    
    
    7,010100,230
    
    
    
    225,646
    
    
    
    40,669
    
    
    
    
    
    
    
    366,545Commitments and contingenciesMandatorily redeemable convertible
preferred stock
    
    
    67,162
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    67,162Series M preferred stock
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4Stockholders deficit:Common stock and capital in excess
of par value
    
    
    215,364
    
    
    
    203,660
    
    
    
    16,566
    
    
    
    (220,226
    )
    
    
    215,364Retained deficit
    
    
    (450,067
    )
    
    
    (389,963
    )
    
    
    (49,826
    )
    
    
    439,789
    
    
    
    (450,067
    )Notes
receivable from officers, less reserve of $5,848
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accumulated other comprehensive loss
    
    
    (1,533
    )
    
    
    (42
    )
    
    
    (1,543
    )
    
    
    1,585
    
    
    
    (1,533
    )(236,236
    )
    
    
    (186,345
    )
    
    
    (34,803
    )
    
    
    221,148
    
    
    
    (236,236
    )$
    (29,421
    )
    
    $
    44,687
    
    
    $
    10,960
    
    
    $
    221,148
    
    
    $
    247,374
 26




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##### Table of Contents



PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 NOTE 15  GUARANTOR AND NON-GUARANTOR SUBSIDIARIES (Continued)
 PENTON MEDIA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended September 30, 2005
 Guarantor
    
    
    Non-guarantor
    
    
    
    
    
    
    PentonParent
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(Dollars in thousands)Revenues
    
    $
    42,064
    
    
    $
    8,353
    
    
    $
    569
    
    
    $
    
    
    
    $
    50,986Operating expenses:Editorial, production and circulation
    
    
    17,196
    
    
    
    4,036
    
    
    
    90
    
    
    
    
    
    
    
    21,322Selling, general and administrative
    
    
    14,880
    
    
    
    2,174
    
    
    
    380
    
    
    
    
    
    
    
    17,434Restructuring and other charges (credits)
    
    
    10
    
    
    
    (32
    )
    
    
    
    
    
    
    
    
    
    
    (22
    )Depreciation and amortization
    
    
    1,618
    
    
    
    356
    
    
    
    19
    
    
    
    
    
    
    
    1,99333,704
    
    
    
    6,534
    
    
    
    489
    
    
    
    
    
    
    
    40,727Operating income (loss)
    
    
    8,360
    
    
    
    1,819
    
    
    
    80
    
    
    
    
    
    
    
    10,259Other income (expense):Interest expense
    
    
    (4,759
    )
    
    
    (4,572
    )
    
    
    (23
    )
    
    
    
    
    
    
    (9,354
    )Interest income
    
    
    41
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    41Equity in losses of subsidiaries
    
    
    (2,726
    )
    
    
    
    
    
    
    
    
    
    
    2,726
    
    
    
    Other, net
    
    
    (42
    )
    
    
    (27
    )
    
    
    
    
    
    
    
    
    
    
    (69
    )(7,486
    )
    
    
    (4,599
    )
    
    
    (23
    )
    
    
    2,726
    
    
    
    (9,382
    )Income (loss) from continuing operations before
income taxes
    
    
    874
    
    
    
    (2,780
    )
    
    
    57
    
    
    
    2,726
    
    
    
    877Provision (benefit) for income taxes
    
    
    615
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    618Net income (loss)
    
    $
    259
    
    
    $
    (2,783
    )
    
    $
    57
    
    
    $
    2,726
    
    
    $
    259
 27




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##### Table of Contents



PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 NOTE 15  GUARANTOR AND NON-GUARANTOR SUBSIDIARIES (Continued)
 PENTON MEDIA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended September 30, 2004
 Guarantor
    
    
    Non-guarantor
    
    
    
    
    
    
    PentonParent
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(Dollars in thousands)Revenues
    
    $
    36,476
    
    
    $
    7,804
    
    
    $
    383
    
    
    $
    
    
    
    $
    44,663Operating expenses:Editorial, production and circulation
    
    
    16,638
    
    
    
    4,189
    
    
    
    117
    
    
    
    
    
    
    
    20,944Selling, general and administrative
    
    
    14,611
    
    
    
    2,219
    
    
    
    494
    
    
    
    
    
    
    
    17,324Impairment of assets
    
    
    11,408
    
    
    
    23,058
    
    
    
    
    
    
    
    
    
    
    
    34,466Restructuring and other charges
    
    
    1,150
    
    
    
    111
    
    
    
    
    
    
    
    
    
    
    
    1,261Depreciation and amortization
    
    
    1,623
    
    
    
    517
    
    
    
    28
    
    
    
    
    
    
    
    2,16845,430
    
    
    
    30,094
    
    
    
    639
    
    
    
    
    
    
    
    76,163Operating income (loss)
    
    
    (8,954
    )
    
    
    (22,290
    )
    
    
    (256
    )
    
    
    
    
    
    
    (31,500
    )Other income (expense):Interest expense
    
    
    (5,756
    )
    
    
    (3,867
    )
    
    
    (70
    )
    
    
    
    
    
    
    (9,693
    )Interest income
    
    
    38
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    38Equity in losses of subsidiaries
    
    
    (30,067
    )
    
    
    
    
    
    
    
    
    
    
    30,067
    
    
    
    Other, net
    
    
    (6
    )
    
    
    (9
    )
    
    
    
    
    
    
    
    
    
    
    (15
    )(35,791
    )
    
    
    (3,876
    )
    
    
    (70
    )
    
    
    30,067
    
    
    
    (9,670
    )Income (loss) from continuing operations
before income taxes
    
    
    (44,745
    )
    
    
    (26,166
    )
    
    
    (326
    )
    
    
    30,067
    
    
    
    (41,170
    )Provision (benefit) for income taxes
    
    
    (349
    )
    
    
    4
    
    
    
    (24
    )
    
    
    
    
    
    
    (369
    )Income (loss) from continuing operations
    
    
    (44,396
    )
    
    
    (26,170
    )
    
    
    (302
    )
    
    
    30,067
    
    
    
    (40,801
    )Loss from discontinued operations, net of taxes
    
    
    
    
    
    
    
    
    
    
    (3,595
    )
    
    
    
    
    
    
    (3,595
    )Net income (loss)
    
    $
    (44,396
    )
    
    $
    (26,170
    )
    
    $
    (3,897
    )
    
    $
    30,067
    
    
    $
    (44,396
    )
 28




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##### Table of Contents



PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 NOTE 15  GUARANTOR AND NON-GUARANTOR SUBSIDIARIES (Continued)
 PENTON MEDIA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Nine Months Ended September 30, 2005
 Guarantor
    
    
    Non-guarantor
    
    
    
    
    
    
    PentonParent
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(Dollars in thousands)Revenues
    
    $
    123,714
    
    
    $
    22,619
    
    
    $
    1,798
    
    
    $
    
    
    
    $
    148,131Operating expenses:Editorial, production and circulation
    
    
    50,334
    
    
    
    11,201
    
    
    
    457
    
    
    
    
    
    
    
    61,992Selling, general and administrative
    
    
    44,162
    
    
    
    6,350
    
    
    
    1,085
    
    
    
    
    
    
    
    51,597Restructuring and other charges (credits)
    
    
    280
    
    
    
    (50
    )
    
    
    
    
    
    
    
    
    
    
    230Depreciation and amortization
    
    
    5,441
    
    
    
    1,071
    
    
    
    58
    
    
    
    
    
    
    
    6,570100,217
    
    
    
    18,572
    
    
    
    1,600
    
    
    
    
    
    
    
    120,389Operating
income (loss)
    
    
    23,497
    
    
    
    4,047
    
    
    
    198
    
    
    
    
    
    
    
    27,742Other income (expense):Interest expense
    
    
    (14,280
    )
    
    
    (13,720
    )
    
    
    (100
    )
    
    
    
    
    
    
    (28,100
    )Interest income
    
    
    103
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    103Equity in losses of subsidiaries
    
    
    (12,575
    )
    
    
    
    
    
    
    
    
    
    
    12,575
    
    
    
    Gain on extinguishment of debt
    
    
    1,589
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,589Other, net
    
    
    (52
    )
    
    
    (27
    )
    
    
    (14
    )
    
    
    
    
    
    
    (93
    )(25,215
    )
    
    
    (13,747
    )
    
    
    (114
    )
    
    
    12,575
    
    
    
    (26,501
    )Income (loss) from continuing operations before
income taxes
    
    
    (1,718
    )
    
    
    (9,700
    )
    
    
    84
    
    
    
    12,575
    
    
    
    1,241Provision (benefit) for income taxes
    
    
    2,014
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,014Income (loss) from continuing operations
    
    
    (3,732
    )
    
    
    (9,700
    )
    
    
    84
    
    
    
    12,575
    
    
    
    (773
    )Loss from discontinued operations, net of taxes
    
    
    
    
    
    
    
    
    
    
    (2,959
    )
    
    
    
    
    
    
    (2,959
    )Net income (loss)
    
    $
    (3,732
    )
    
    $
    (9,700
    )
    
    $
    (2,875
    )
    
    $
    12,575
    
    
    $
    (3,732
    )
 29




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##### Table of Contents



PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 NOTE 15  GUARANTOR AND NON-GUARANTOR SUBSIDIARIES (Continued)
 PENTON MEDIA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Nine Months Ended September 30, 2004
 Guarantor
    
    
    Non-guarantor
    
    
    
    
    
    
    PentonParent
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(Dollars in thousands)Revenues
    
    $
    117,479
    
    
    $
    23,783
    
    
    $
    2,298
    
    
    $
    
    
    
    $
    143,560Operating expenses:Editorial, production and circulation
    
    
    50,245
    
    
    
    12,043
    
    
    
    803
    
    
    
    
    
    
    
    63,091Selling, general and administrative
    
    
    51,710
    
    
    
    7,546
    
    
    
    1,857
    
    
    
    
    
    
    
    61,113Impairment of assets
    
    
    11,408
    
    
    
    23,058
    
    
    
    
    
    
    
    
    
    
    
    34,466Provision for loan impairment
    
    
    1,717
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,717Restructuring and other charges
    
    
    4,769
    
    
    
    844
    
    
    
    10
    
    
    
    
    
    
    
    5,623Depreciation and amortization
    
    
    6,042
    
    
    
    1,707
    
    
    
    94
    
    
    
    
    
    
    
    7,843125,891
    
    
    
    45,198
    
    
    
    2,764
    
    
    
    
    
    
    
    173,853Operating income (loss)
    
    
    (8,412
    )
    
    
    (21,415
    )
    
    
    (466
    )
    
    
    
    
    
    
    (30,293
    )Other income (expense):Interest expense
    
    
    (15,430
    )
    
    
    (12,845
    )
    
    
    (238
    )
    
    
    
    
    
    
    (28,513
    )Interest income
    
    
    174
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    174Equity in losses of subsidiaries
    
    
    (40,680
    )
    
    
    
    
    
    
    
    
    
    
    40,680
    
    
    
    Other, net
    
    
    (2
    )
    
    
    (9
    )
    
    
    
    
    
    
    
    
    
    
    (11
    )(55,938
    )
    
    
    (12,854
    )
    
    
    (238
    )
    
    
    40,680
    
    
    
    (28,350
    )Income (loss) from continuing operations before
income taxes
    
    
    (64,350
    )
    
    
    (34,269
    )
    
    
    (704
    )
    
    
    40,680
    
    
    
    (58,643
    )Provision (benefit) for income taxes
    
    
    1,174
    
    
    
    12
    
    
    
    (24
    )
    
    
    
    
    
    
    1,162Income (loss) from continuing operations
    
    
    (65,524
    )
    
    
    (34,281
    )
    
    
    (680
    )
    
    
    40,680
    
    
    
    (59,805
    )Loss from discontinued operations, net of taxes
    
    
    
    
    
    
    
    
    
    
    (5,719
    )
    
    
    
    
    
    
    (5,719
    )Net income (loss)
    
    $
    (65,524
    )
    
    $
    (34,281
    )
    
    $
    (6,399
    )
    
    $
    40,680
    
    
    $
    (65,524
    )
 30




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##### Table of Contents



PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 NOTE 15  GUARANTOR AND NON-GUARANTOR SUBSIDIARIES (Continued)
 PENTON MEDIA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
For the Nine Months Ended September 30, 2005
 Guarantor
    
    
    Non-guarantor
    
    
    
    
    
    
    PentonParent
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(Dollars in thousands)Net cash provided by (used for)
operating activities
    
    $
    4,786
    
    
    $
    1,544
    
    
    $
    (1,240
    )
    
    $
    
    
    
    $
    5,090Cash flows from investing activities:Capital expenditures
    
    
    (694
    )
    
    
    (69
    )
    
    
    (17
    )
    
    
    
    
    
    
    (780
    )Cash paid
for acquisitions
    
    
    (375
    )
    
    
    (1,373
    )
    
    
    
    
    
    
    
    
    
    
    (1,748
    )Net proceeds from sale of properties
    
    
    4,073
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,073Increase in restricted cash
    
    
    (236
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (236
    )Net cash provided by (used for) investing activities
    
    
    2,768
    
    
    
    (1,442
    )
    
    
    (17
    )
    
    
    
    
    
    
    1,309Cash flows from financing activities:Repurchase of 10-3/8% senior subordinated notes
    
    
    (3,795
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,795
    )Increase (decrease) in cash overdraft balance
    
    
    (200
    )
    
    
    (4
    )
    
    
    127
    
    
    
    
    
    
    
    (77
    )Net cash provided by (used for) financing activities
    
    
    (3,995
    )
    
    
    (4
    )
    
    
    127
    
    
    
    
    
    
    
    (3,872
    )Effect of exchange rate changes on cash
    
    
    66
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    66Net increase (decrease) in cash and cash equivalents
    
    
    3,625
    
    
    
    98
    
    
    
    (1,130
    )
    
    
    
    
    
    
    2,593Cash and cash equivalents at beginning of year
    
    
    5,991
    
    
    
    73
    
    
    
    1,597
    
    
    
    
    
    
    
    7,661Cash and cash equivalents at end of period
    
    $
    9,616
    
    
    $
    171
    
    
    $
    467
    
    
    $
    
    
    
    $
    10,254
 31




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##### Table of Contents



PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 NOTE 15  GUARANTOR AND NON-GUARANTOR SUBSIDIARIES (Continued)
 PENTON MEDIA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
For the Nine Months Ended September 30, 2004
 Guarantor
    
    
    Non-guarantor
    
    
    
    
    
    
    PentonParent
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(Dollars in thousands)Net cash provided by (used for)
operating activities
    
    $
    (12,230
    )
    
    $
    121
    
    
    $
    2,155
    
    
    $
    
    
    
    $
    (9,954
    )Cash flows from investing activities:Capital expenditures
    
    
    (1,606
    )
    
    
    (80
    )
    
    
    (132
    )
    
    
    
    
    
    
    (1,818
    )Increase in notes receivable
    
    
    
    
    
    
    
    
    
    
    (140
    )
    
    
    
    
    
    
    (140
    )Increase in restricted cash
    
    
    (193
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (193
    )Net cash used for investing activities
    
    
    (1,799
    )
    
    
    (80
    )
    
    
    (272
    )
    
    
    
    
    
    
    (2,151
    )Cash flows from financing activities:Payment of financing costs
    
    
    (10
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10
    )Increase
(decrease) in cash overdraft balance
    
    
    (225
    )
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    (224
    )Net cash provided by (used for) financing activities
    
    
    (235
    )
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    (234
    )Effect of exchange rate changes on cash
    
    
    44
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    44Net increase (decrease) in cash and cash equivalents
    
    
    (14,220
    )
    
    
    41
    
    
    
    1,884
    
    
    
    
    
    
    
    (12,295
    )Cash and cash equivalents at beginning of period
    
    
    27,125
    
    
    
    147
    
    
    
    2,354
    
    
    
    
    
    
    
    29,626Cash and cash equivalents at end of period
    
    $
    12,905
    
    
    $
    188
    
    
    $
    4,238
    
    
    $
    
    
    
    $
    17,331
 32




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##### Table of Contents



PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 NOTE 16  SUBSEQUENT EVENTS
  33




---



##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
 OVERVIEW AND RECENT DEVELOPMENTS
         §
    
    We redesigned New Equipment Digests Web site, newequipment.com, featuring
vertical market search capability of content from 23 Penton industrial-sector sites,
Google-inspired product and vendor search capabilities, and user customization
tools.§
    
    We launched a site for Welding Design & Fabrication, weldingdesign.com, featuring
work zones that serve information and product needs of users of welding equipment.§
    
    Vertical market directory launches and search upgrades were made to our metals
group Web sites, creating competitive advantages for Foundrymag.com and
Metalproducing.com.§
    
    Our Machine Design brand recently entered into a strategic agreement  with IDES,
a plastic materials search engine  calling for a co-branded site that will provide
additional online marketing opportunities for customers and sophisticated
product/vendor search tools for the engineering audience of machinedesign.com.
 34




---



##### Table of Contents



§
    
    In the third quarter of 2005, Penton hired a Corporate eMedia Sales Manager to spearhead
sales and to launch new corporate-wide eMedia products.§
    
    We have expanded our relationship with Google, launching Google SiteTargeting on
select sites and Google Ads for Newsletters.§
    
    Weve also entered the behavioral targeting market and are engaged in a pilot
test with Tacoda, a leading behavioral targeting network.
 Acquisitions
   Sale of Properties
    Senior Subordinated Notes Repurchase
  Restatement of Financial Statements
  35




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##### Table of Contents



RESULTS OF OPERATIONS
 Revenues
  Three-Month Comparison
  Three Months EndedSeptember 30,2005
    
    
    2004
    
    

$ Change
    
    
    % Change(In thousands)Publishing
    
    $
    33,890
    
    
    $
    37,016
    
    
    $
    (3,126
    )
    
    
    (8.4
    )%Trade shows & conferences
    
    
    12,699
    
    
    
    3,882
    
    
    
    8,817
    
    
    
    227.1
    %Online media
    
    
    4,397
    
    
    
    3,765
    
    
    
    632
    
    
    
    16.8
    %Total revenues
    
    $
    50,986
    
    
    $
    44,663
    
    
    $
    6,323
    
    
    
    14.2
    %
 Wireless Systems Design
   36




---



##### Table of Contents



Nine-Month Comparison
  Nine Months EndedSeptember 30,2005
    
    
    2004
    
    

$ Change
    
    
    % Change(In thousands)Publishing
    
    $
    101,942
    
    
    $
    107,374
    
    
    $
    (5,432
    )
    
    
    (5.1
    )%Trade shows & conferences
    
    
    32,790
    
    
    
    24,544
    
    
    
    8,246
    
    
    
    33.6
    %Online media
    
    
    13,399
    
    
    
    11,642
    
    
    
    1,757
    
    
    
    15.1
    %Total revenues
    
    $
    148,131
    
    
    $
    143,560
    
    
    $
    4,571
    
    
    
    3.2
    %
 Wireless Systems Design ePro
    Editorial, Production and Circulation
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    Change
    
    
    2005
    
    
    2004
    
    
    Change(In millions)Editorial, production and circulation
    
    $
    21.3
    
    
    $
    20.9
    
    
    
    1.8
    %
    
    $
    62.0
    
    
    $
    63.1
    
    
    
    (1.7
    )%Percent of revenues
    
    
    41.8
    %
    
    
    46.9
    %
    
    
    
    
    
    
    41.8
    %
    
    
    43.9
    %
  37




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##### Table of Contents



Selling, General and Administrative
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    Change
    
    
    2005
    
    
    2004
    
    
    Change(In millions)Selling, general and administrative
    
    $
    17.4
    
    
    $
    17.3
    
    
    
    0.6
    %
    
    $
    51.6
    
    
    $
    61.1
    
    
    
    (15.6
    )%Percent of revenues
    
    
    34.2
    %
    
    
    38.8
    %
    
    
    
    
    
    
    34.8
    %
    
    
    42.6
    %
  Impairment of Assets
   Provision for Loan Impairment
  38




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##### Table of Contents



Restructuring and Other Charges
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    Change
    
    
    2005
    
    
    2004
    
    
    Change(In millions)Restructuring and other charges
    
    $
    
    
    
    $
    1.3
    
    
    
    (100.0
    )%
    
    $
    0.2
    
    
    $
    5.6
    
    
    
    95.9
    %Percent of revenues
    
    
    
    %
    
    
    2.8
    %
    
    
    
    
    
    
    0.2
    %
    
    
    3.9
    %
  2005 Restructuring Plan
 Wireless Systems Design
 Summary of Restructuring Activities
  Severanceand Other
    
    
    Facility
    
    
    OtherPersonnel Costs
    
    
    Closing Costs
    
    
    Exit Costs
    
    
    TotalCharges
    
    $
    6,774
    
    
    $
    8,669
    
    
    $
    4,364
    
    
    $
    19,807Adjustments
    
    
    (23
    )
    
    
    
    
    
    
    (994
    )
    
    
    (1,017
    )Cash payments
    
    
    (4,468
    )
    
    
    (267
    )
    
    
    (2,423
    )
    
    
    (7,158
    )Accrual at December 31, 2001
    
    
    2,283
    
    
    
    8,402
    
    
    
    947
    
    
    
    11,632Charges
    
    
    10,344
    
    
    
    3,421
    
    
    
    1,648
    
    
    
    15,413Adjustments
    
    
    65
    
    
    
    1,246
    
    
    
    (363
    )
    
    
    948Cash payments
    
    
    (7,569
    )
    
    
    (2,283
    )
    
    
    (1,217
    )
    
    
    (11,069
    )Accrual at December 31, 2002
    
    
    5,123
    
    
    
    10,786
    
    
    
    1,015
    
    
    
    16,924Charges
    
    
    2,736
    
    
    
    1,505
    
    
    
    661
    
    
    
    4,902Adjustments
    
    
    (18
    )
    
    
    (17
    )
    
    
    (10
    )
    
    
    (45
    )Cash payments
    
    
    (6,044
    )
    
    
    (3,273
    )
    
    
    (965
    )
    
    
    (10,282
    )Accrual at December 31, 2003
    
    
    1,797
    
    
    
    9,001
    
    
    
    701
    
    
    
    11,499Charges
    
    
    4,752
    
    
    
    51
    
    
    
    364
    
    
    
    5,167Adjustments
    
    
    116
    
    
    
    657
    
    
    
    255
    
    
    
    1,028Cash payments
    
    
    (5,830
    )
    
    
    (2,217
    )
    
    
    (903
    )
    
    
    (8,950
    )Accrual at December 31, 2004
    
    
    835
    
    
    
    7,492
    
    
    
    417
    
    
    
    8,744Charges
    
    
    156
    
    
    
    
    
    
    
    
    
    
    
    156Adjustments
    
    
    6
    
    
    
    193
    
    
    
    (125
    )
    
    
    74Cash payments
    
    
    (901
    )
    
    
    (1,817
    )
    
    
    (233
    )
    
    
    (2,951
    )Accrual at September 30, 2005
    
    $
    96
    
    
    $
    5,868
    
    
    $
    59
    
    
    $
    6,023
  39




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##### Table of Contents



Other Income (Expense)
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    Change
    
    
    2005
    
    
    2004
    
    
    Change(In millions)Interest expense
    
    $
    (9.4
    )
    
    $
    (9.7
    )
    
    
    (3.5
    )%
    
    $
    (28.1
    )
    
    $
    (28.5
    )
    
    
    (1.4
    )%Interest income
    
    $
    
    
    
    $
    
    
    
    
    n/m
    
    
    $
    0.1
    
    
    $
    0.2
    
    
    
    (40.8
    )%Gain on extinguishment of debt
    
    $
    
    
    
    $
    
    
    
    
    n/m
    
    
    $
    1.6
    
    
    $
    
    
    
    
    100.0
    %
   Effective Tax Rates
   40




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##### Table of Contents



Discontinued Operations
    SEGMENTS
     Adjusted
    
    
    Adjusted SegmentRevenues
    
    
    Segment EBITDA
    
    
    EBITDA Margin2005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Industry
    
    $
    19,772
    
    
    $
    20,897
    
    
    $
    6,016
    
    
    $
    6,378
    
    
    
    30.4
    %
    
    
    30.5
    %Technology
    
    
    14,354
    
    
    
    14,101
    
    
    
    3,281
    
    
    
    2,425
    
    
    
    22.9
    %
    
    
    17.2
    %Lifestyle
    
    
    11,233
    
    
    
    3,914
    
    
    
    5,142
    
    
    
    (424
    )
    
    
    45.8
    %
    
    
    (10.8
    )%Retail
    
    
    5,627
    
    
    
    5,751
    
    
    
    1,905
    
    
    
    1,920
    
    
    
    33.9
    %
    
    
    33.4
    %Total
    
    $
    50,986
    
    
    $
    44,663
    
    
    $
    16,344
    
    
    $
    10,299
 41




---



##### Table of Contents



Adjusted
    
    
    Adjusted SegmentRevenues
    
    
    Segment EBITDA
    
    
    EBITDA Margin2005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Industry
    
    $
    57,225
    
    
    $
    57,563
    
    
    $
    17,219
    
    
    $
    16,351
    
    
    
    30.1
    %
    
    
    28.4
    %Technology
    
    
    42,931
    
    
    
    44,563
    
    
    
    8,949
    
    
    
    7,545
    
    
    
    20.8
    %
    
    
    16.9
    %Lifestyle
    
    
    32,069
    
    
    
    25,022
    
    
    
    15,800
    
    
    
    9,669
    
    
    
    49.3
    %
    
    
    38.6
    %Retail
    
    
    15,906
    
    
    
    16,412
    
    
    
    5,047
    
    
    
    4,526
    
    
    
    31.7
    %
    
    
    27.6
    %Total
    
    $
    148,131
    
    
    $
    143,560
    
    
    $
    47,015
    
    
    $
    38,091
 Industry
 Three Months
    Nine Months
   42




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##### Table of Contents



Technology
 Three Months
  Wireless Systems
Design
  Nine Months
  ePro, Wireless Systems Design
  43




---



##### Table of Contents



Lifestyle
 Three Months
    Nine Months
     44




---



##### Table of Contents



Retail
 Three Months
    Nine Months
    Liquidity and Capital Resources
 Current Liquidity
    
    
    debt service charges of $18.0 million;
    
    repurchase Subordinated Notes for $9.4 million;
    
    capital expenditures of approximately $0.3 million;
 45




---



##### Table of Contents




    
    payments related to our business restructuring initiatives of approximately $0.3 million; and
    
    a contribution of $0.5 million to our Retirement and Savings Plan.
    Analysis of Cash Flows
    Debt Service
  Subordinated Notes:
  46




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##### Table of Contents



Secured Notes:
    47




---



##### Table of Contents



Loan and Security Agreement:
  Consolidated Adjusted EBITDA
   Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Net income (loss)
    
    $
    259
    
    
    $
    (44,396
    )
    
    $
    (3,732
    )
    
    $
    (65,524
    )Interest expense
    
    
    9,354
    
    
    
    9,693
    
    
    
    28,100
    
    
    
    28,513Provision (benefit) for income taxes
    
    
    618
    
    
    
    (369
    )
    
    
    2,014
    
    
    
    1,162Depreciation and amortization
    
    
    1,993
    
    
    
    2,168
    
    
    
    6,570
    
    
    
    7,843EBITDA
    
    
    12,224
    
    
    
    (32,904
    )
    
    
    32,952
    
    
    
    (28,006
    )Loan and Security Agreement Adjustments:Impairment of assets
    
    
    
    
    
    
    34,466
    
    
    
    
    
    
    
    34,466Restructuring and other charges
    
    
    (22
    )
    
    
    1,261
    
    
    
    230
    
    
    
    5,623Provision for loan impairment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,717Executive separation costs
    
    
    1
    
    
    
    21
    
    
    
    4
    
    
    
    2,722Non-cash compensation
    
    
    4
    
    
    
    25
    
    
    
    18
    
    
    
    707Interest income
    
    
    (41
    )
    
    
    (38
    )
    
    
    (103
    )
    
    
    (174
    )Discontinued operations, net of taxes
    
    
    
    
    
    
    3,595
    
    
    
    2,959
    
    
    
    5,719Gain on extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    (1,589
    )
    
    
    Other, net
    
    
    69
    
    
    
    15
    
    
    
    93
    
    
    
    11Consolidated Adjusted EBITDA
    
    $
    12,235
    
    
    $
    6,441
    
    
    $
    34,564
    
    
    $
    22,785
 48




---



##### Table of Contents



Credit Ratings
  S&P
    

Moodys$169.5 million 10-3/8% Senior Subordinated Notes
    
    CCC-
    
    Ca$157.5 million 11-7/8% Senior Secured Notes
    
    CCC+
    
    B3Corporate Rating
    
    CCC+
    
    Caa3
  Convertible Preferred Stock
   
    
    the new series allows for the sharing of the liquidation preference with the new Series
M Preferred Stock (discussed below),
    
    certain technical and correcting amendments have been made to the Certificate of
Designations for the Series C Preferred stock, including fixing the formula used to
calculate the Change of Control Cap (as defined in the Series C Preferred stock
Certificate of Designations), and
    
    certain conforming changes were made to the Series C Preferred stock Certificate of
Designations to account for the fact that the Series C Preferred stock was issued in
exchange for the Series B Preferred stock.
     49




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##### Table of Contents



CONTRACTUAL OBLIGATIONS
  Annual Payments DueAfter2005
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    2008
    
    
    Total10-3/8% Senior Subordinated Notes (1)
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    169,500
    
    
    $
    169,50011-7/8% Senior Secured Notes (1)
    
    
    
    
    
    
    
    
    
    
    157,500
    
    
    
    
    
    
    
    
    
    
    
    157,500Interest on indebtedness (1)
    
    
    18,144
    
    
    
    36,289
    
    
    
    36,289
    
    
    
    17,586
    
    
    
    43,964
    
    
    
    152,272Capital lease obligations
    
    
    6
    
    
    
    24
    
    
    
    25
    
    
    
    25
    
    
    
    4
    
    
    
    84Operating leases obligations (2)
    
    
    1,707
    
    
    
    5,255
    
    
    
    4,663
    
    
    
    4,496
    
    
    
    8,024
    
    
    
    24,145Printing contract obligation (3)
    
    
    6,000
    
    
    
    6,000
    
    
    
    6,000
    
    
    
    6,000
    
    
    
    18,000
    
    
    
    42,000Communications service agreement (4)
    
    
    291
    
    
    
    800
    
    
    
    133
    
    
    
    
    
    
    
    
    
    
    
    1,224Expected pension contributions (5)
    
    
    
    
    
    
    
    
    
    
    1,800
    
    
    
    
    
    
    
    
    
    
    
    1,800Other long-term obligations reflected
in the balance sheet
    
    
    67
    
    
    
    44
    
    
    
    44
    
    
    
    
    
    
    
    
    
    
    
    155Total
    
    $
    26,215
    
    
    $
    48,412
    
    
    $
    206,454
    
    
    $
    28,107
    
    
    $
    239,492
    
    
    $
    548,680
 
 (1)
    
    There are no required debt principal payments until October 2007. Interest is paid
semi-annually in June and December for the Subordinated Notes and April and October for the
Secured Notes. In February 2005, the Company repurchased $5.5 million par value of its
Subordinated Notes for $3.9 million, including $0.1 million of accrued interest. The
Subordinated Notes were purchased in the open market and were trading at 69% of their par
value at the time of purchase. As a result of this repurchase, future interest payments will
be reduced annually by approximately $0.6 million. In addition, in October 2005, the Company
repurchased $10.0 million par value of the Subordinated Notes for a total of $9.4 million,
including $0.4 million of accrued interest, using excess cash on hand and borrowings of $7.0
million under the Loan and Security Agreement. The notes were purchased in the open market
and were trading at 90% of their par value at the time of purchase.(2)
    
    We lease all of our facilities and certain equipment under non-cancelable operating leases.
The leases expire at various dates through 2013 and some contain various provisions for rental
adjustments.(3)
    
    In February 2005, the Company signed a new agreement with R.R. Donnelley, which expires in
December 2011, unless a minimum revenue commitment of $42.0 million is not reached, at which
time the agreement would extend until the commitment is reached. 50




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##### Table of Contents



(4)
    
    In February 2004, the Company amended its communication services agreement with Sprint,
originally entered into in 2002, to extend the term to February 2007. The agreement provides
for annual minimum usage levels by Penton of $0.8 million each year.(5)
    
    Based on current estimates the Company expects to make a contribution of approximately $1.8
million to its defined benefit plan in 2007. No contributions are expected in 2005 or 2006.
Due to the presence of significant variables, actual future contributions may differ
materially.     Risk Factors
  New Accounting Pronouncements
  Critical Accounting Policies and Estimates
  Foreign Currency
  Seasonality
  Forward-Looking Information  Safe Harbor Statement
  51




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##### Table of Contents




    
    fluctuations in advertising revenue with general economic cycles;
    
    economic uncertainty exacerbated by potential terrorist attacks on the United States,
the impact of U.S. military and political engagement in Iraq, and other geopolitical
events;
    
    the performance of our natural products industry trade shows;
    
    the seasonality of revenues from trade shows and conferences;
    
    our ability to launch new products that fit strategically with and add value to our business;
    
    our ability to penetrate new markets internationally;
    
    increases in paper and postage costs;
    
    the effectiveness of our cost-saving efforts;
    
    the infringement or invalidation of Pentons intellectual property rights;
    
    pending litigation;
    
    government regulation;
    
    competition; and
    
    technological changes.
  
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   Expected Maturity Datefor the Years Ended December 31,Fair2005
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    2011
    
    
    Total
    
    
    ValueLong-Term Debt:Senior Subordinated Notes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    169,500
    
    
    $
    169,500
    
    
    $
    157,635Interest rate
    
    
    10-3/8
    %
    
    
    10-3/8
    %
    
    
    10-3/8
    %
    
    
    10-3/8
    %
    
    
    10-3/8
    %
    
    
    10-3/8
    %Senior Secured Notes
    
    
    
    
    
    
    
    
    
    $
    157,500
    
    
    
    
    
    
    
    
    
    
    $
    157,500
    
    
    $
    165,375Interest rate
    
    
    11-7/8
    %
    
    
    11-7/8
    %
    
    
    11-7/8
    %
    
    
    
    
    
    
    
    
    
    
    11-7/8
    %
  52




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##### Table of Contents



ITEM 4. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
       Changes in Internal Control Over Financial Reporting
  53




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##### Table of Contents



Part II  OTHER INFORMATION
 
 ITEM 6. EXHIBITS
 Exhibit No.
    
    Description of Document31.1
    
    Principal executive officers certification pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Principal financial officers certification pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.32
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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##### Table of Contents



SIGNATURE
  Penton Media, Inc.
(Registrant)By:
    /s/ PRESTON L. VICEPreston L. ViceChief Financial Officer  55




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##### Table of Contents



INDEX
OF EXHIBITS
 Exhibit No.
    
    Description of Document31.1
    
    Principal executive officers certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Principal financial officers certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
 56