##### 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 June 30, 2006
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 COMMISSION FILE NUMBER 1-14337
 PENTON MEDIA, INC.
 
 DELAWARE
    
    36-2875386(State of Incorporation)
    
    (I.R.S. Employer Identification No.)1300 East Ninth Street, Cleveland, OH
    
    44114(Address of Principal Executive Offices)
    
    (Zip Code)
 
 þ o
  o o þ
 o þ




---



##### 



PENTON MEDIA, INC.
Form 10-Q
 INDEX
 PagePart I  FINANCIAL INFORMATIONItem 1.
    
    Financial StatementsConsolidated Balance Sheets (Unaudited) at June 30, 2006 and December 31, 2005
    
    
    3Consolidated Statements of Operations (Unaudited) for the Three and Six Months Ended June 30, 2006 and 2005
    
    
    4Condensed Consolidated Statements of Cash Flows (Unaudited) for the Six Months Ended June 30, 2006 and 2005
    
    
    5Notes to Consolidated Financial Statements (Unaudited)
    
    
    6Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    29Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    41Item 4.
    
    Controls and Procedures
    
    
    41Part II  OTHER INFORMATIONItem 1A.
    
    Risk Factors
    
    
    42Item 6.
    
    Exhibits
    
    
    42Signature
    
    
    43Exhibit Index
    
    
    44EX-10.1EX-10.2EX-31.1EX-31.2EX-32
  2




---



##### Table of Contents



Part I  FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 
 PENTON MEDIA, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited, Dollars in thousands)
 June 30,
    
    
    December 31,2006
    
    
    2005AssetsCurrent assets:Cash and cash equivalents
    
    $
    2,265
    
    
    $
    632Restricted cash
    
    
    318
    
    
    
    299Accounts receivable, net
    
    
    28,613
    
    
    
    27,471Inventories
    
    
    874
    
    
    
    1,098Deferred tax asset
    
    
    314
    
    
    
    314Prepayments, deposits and other
    
    
    3,803
    
    
    
    2,452Total current assets
    
    
    36,187
    
    
    
    32,266Property and equipment, net
    
    
    8,868
    
    
    
    10,401Goodwill
    
    
    173,612
    
    
    
    173,603Other intangible assets, net
    
    
    5,250
    
    
    
    5,962Other non-current assets
    
    
    3,927
    
    
    
    4,937$
    227,844
    
    
    $
    227,169Liabilities and stockholders deficitCurrent liabilities:Loan and security agreement revolver
    
    $
    10,800
    
    
    $
    10,200Accounts payable
    
    
    4,944
    
    
    
    4,557Accrued compensation and benefits
    
    
    4,174
    
    
    
    5,016Other accrued expenses
    
    
    10,695
    
    
    
    9,890Unearned income, principally trade show and conference deposits
    
    
    20,025
    
    
    
    22,702Total current liabilities
    
    
    50,638
    
    
    
    52,365Senior secured notes, net of discount
    
    
    157,276
    
    
    
    157,195Senior subordinated notes, net of discount
    
    
    153,119
    
    
    
    152,956Accrued pension liability
    
    
    12,276
    
    
    
    12,400Deferred tax liability
    
    
    24,009
    
    
    
    22,667Other non-current liabilities
    
    
    7,243
    
    
    
    8,061Total liabilities
    
    
    404,561
    
    
    
    405,644Commitments and contingencies (Note 10)Mandatorily redeemable convertible preferred stock, par value $0.01
per share; 50,000 shares authorized, issued and outstanding;
redeemable at $1,000 per share (Note 11)
    
    
    78,959
    
    
    
    74,849Series M preferred stock, par value $0.01 per share; 150,000 shares authorized,
73,500 and 69,000 shares issued and outstanding at June 30, 2006 and
December 31, 2005, respectively (Note 11)
    
    
    28
    
    
    
    18Stockholders deficit:Preferred stock, par value $0.01 per share; 1,800,000 shares
authorized; none issued or outstanding
    
    
    
    
    
    
    Common stock, par value $0.01 per share; 155,000,000 shares
authorized; 34,508,469 and 34,487,872 shares issued and outstanding
at June 30, 2006 and December 31, 2005, respectively
    
    
    343
    
    
    
    343Capital in excess of par value
    
    
    203,352
    
    
    
    207,449Retained deficit
    
    
    (456,717
    )
    
    
    (458,489
    )Notes receivable from officers, less reserve of $5,848
    
    
    
    
    
    
    Accumulated other comprehensive loss
    
    
    (2,682
    )
    
    
    (2,645
    )(255,704
    )
    
    
    (253,342
    )$
    227,844
    
    
    $
    227,169
  3




---



##### Table of Contents



PENTON MEDIA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, Dollars and shares in thousands, except per share amounts)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Revenues
    
    $
    47,635
    
    
    $
    43,814
    
    
    $
    101,952
    
    
    $
    97,145Operating expenses:Editorial, production and circulation
    
    
    21,196
    
    
    
    20,300
    
    
    
    40,937
    
    
    
    40,670Selling, general and administrative
    
    
    18,226
    
    
    
    16,698
    
    
    
    35,574
    
    
    
    34,163Restructuring and other charges, net
    
    
    37
    
    
    
    186
    
    
    
    27
    
    
    
    252Depreciation and amortization
    
    
    1,476
    
    
    
    1,808
    
    
    
    2,931
    
    
    
    3,57540,935
    
    
    
    38,992
    
    
    
    79,469
    
    
    
    78,660Operating income
    
    
    6,700
    
    
    
    4,822
    
    
    
    22,483
    
    
    
    18,485Other income (expense):Interest expense
    
    
    (9,721
    )
    
    
    (9,865
    )
    
    
    (19,391
    )
    
    
    (19,748
    )Interest income
    
    
    23
    
    
    
    32
    
    
    
    43
    
    
    
    62Gain on extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,589Other, net
    
    
    
    
    
    
    (16
    )
    
    
    
    
    
    
    (24
    )(9,698
    )
    
    
    (9,849
    )
    
    
    (19,348
    )
    
    
    (18,121
    )Income (loss) from continuing operations before
income taxes
    
    
    (2,998
    )
    
    
    (5,027
    )
    
    
    3,135
    
    
    
    364Provision for income taxes
    
    
    689
    
    
    
    618
    
    
    
    1,363
    
    
    
    1,396Income (loss) from continuing operations
    
    
    (3,687
    )
    
    
    (5,645
    )
    
    
    1,772
    
    
    
    (1,032
    )Discontinued operations:Loss from discontinued operations, net of
taxes (Note 2)
    
    
    
    
    
    
    (159
    )
    
    
    
    
    
    
    (2,959
    )Net income (loss)
    
    
    (3,687
    )
    
    
    (5,804
    )
    
    
    1,772
    
    
    
    (3,991
    )Amortization of deemed dividend and accretion
of preferred stock
    
    
    (2,093
    )
    
    
    (1,891
    )
    
    
    (4,111
    )
    
    
    (3,714
    )Net loss applicable to common stockholders
    
    $
    (5,780
    )
    
    $
    (7,695
    )
    
    $
    (2,339
    )
    
    $
    (7,705
    )Net loss per common share  basic and diluted: (Note 13)Loss from continuing operations applicable
to common stockholders
    
    $
    (0.17
    )
    
    $
    (0.22
    )
    
    $
    (0.07
    )
    
    $
    (0.13
    )Discontinued operations, net of taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.09
    )Net loss applicable to common stockholders
    
    $
    (0.17
    )
    
    $
    (0.22
    )
    
    $
    (0.07
    )
    
    $
    (0.22
    )Weighted-average number of shares outstanding:Basic and diluted
    
    
    34,495
    
    
    
    34,489
    
    
    
    34,501
    
    
    
    34,490
  4




---



##### Table of Contents



PENTON MEDIA, INC.
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, Dollars in thousands)
 Six Months EndedJune 30,2006
    
    
    2005Net cash
provided by (used for) operating activities
    
    $
    1,694
    
    
    $
    (6,242
    )Cash flows from investing activities:Capital expenditures
    
    
    (391
    )
    
    
    (463
    )Cash paid for acquisitions
    
    
    (250
    )
    
    
    (375
    )Increase in restricted cash
    
    
    (19
    )
    
    
    (236
    )Net proceeds from sale of properties
    
    
    
    
    
    
    4,073Net cash provided by (used for) investing activities
    
    
    (660
    )
    
    
    2,999Cash flows from financing activities:Repurchase of senior subordinated notes
    
    
    
    
    
    
    (3,795
    )Repayment of loan and security agreement revolver, net
    
    
    600
    
    
    
    1,200Decrease in cash overdraft balance
    
    
    (56
    )
    
    
    (213
    )Net cash provided by (used for) financing activities
    
    
    544
    
    
    
    (2,808
    )Effect of exchange rate changes on cash
    
    
    55
    
    
    
    66Net increase (decrease) in cash and cash equivalents
    
    
    1,633
    
    
    
    (5,985
    )Cash and cash equivalents at beginning of year
    
    
    632
    
    
    
    7,661Cash and cash equivalents at end of period
    
    $
    2,265
    
    
    $
    1,676
  5




---



##### Table of Contents



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




---



##### Table of Contents



PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
    NOTE 2  ACQUISITIONS AND DISPOSALS
 Acquisitions
   Disposals
  7




---



##### Table of Contents



PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2005
    
    
    2005Revenues
    
    $
    95
    
    
    $
    654Discontinued operations:Loss from operations of discontinued component
    
    $
    (159
    )
    
    $
    (2,959
    )Gain (loss) on disposal
    
    
    
    
    
    
    Income tax provision
    
    
    
    
    
    
    Loss from discontinued operations, net of taxes
    
    $
    (159
    )
    
    $
    (2,959
    )
 NOTE 3 ACCOUNTS RECEIVABLE
  June 30,
    
    
    December 31,2006
    
    
    2005Trade
    
    $
    31,174
    
    
    $
    28,747Employee
    
    
    26
    
    
    
    36Other
    
    
    5
    
    
    
    1,01031,205
    
    
    
    29,793Less: Allowance for doubtful accounts
    
    
    (2,592
    )
    
    
    (2,322
    )$
    28,613
    
    
    $
    27,471
 NOTE 4 PROPERTY AND EQUIPMENT
  June 30,
    
    
    December 31,2006
    
    
    2005Leasehold improvements
    
    $
    8,350
    
    
    $
    8,348Furniture and fixtures
    
    
    9,496
    
    
    
    9,480Computer hardware and software
    
    
    23,079
    
    
    
    23,151Web site development costs
    
    
    3,225
    
    
    
    3,106Other
    
    
    509
    
    
    
    30844,659
    
    
    
    44,393Less: Accumulated depreciation
    
    
    (35,791
    )
    
    
    (33,992
    )$
    8,868
    
    
    $
    10,401
  8




---



##### Table of Contents



PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 NOTE 5  GOODWILL AND OTHER INTANGIBLES
  Balance at
    
    
    
    
    
    
    Balance atDecember 31,
    
    
    
    
    
    
    June 30,2005
    
    
    Activity (1)
    
    
    2006Industry
    
    $
    23,519
    
    
    $
    
    
    
    $
    23,519Technology
    
    
    39,233
    
    
    
    9
    
    
    
    39,242Retail
    
    
    25,865
    
    
    
    
    
    
    
    25,865Lifestyle
    
    
    84,986
    
    
    
    
    
    
    
    84,986Total
    
    $
    173,603
    
    
    $
    9
    
    
    $
    173,612
 
 (1)
    
    Activity represents adjustments related to MSD2D, which was acquired in August 2005.  NOTE 6  OTHER ACCRUED EXPENSES
  June 30,
    
    
    December 31,2006
    
    
    2005Accrued restructuring costs  short term
    
    $
    1,384
    
    
    $
    1,159Accrued interest
    
    
    5,488
    
    
    
    5,414Accrued taxes
    
    
    269
    
    
    
    329Accrued other
    
    
    3,554
    
    
    
    2,988$
    10,695
    
    
    $
    9,890
 NOTE 7  DEBT
  Loan and Security Agreement
  9




---



##### Table of Contents



PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
   Senior Secured Notes
 
 Senior Subordinated Notes
 
  NOTE 8  INCOME TAXES
    10




---



##### Table of Contents



PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 NOTE 9  EMPLOYEE BENEFIT PLANS
 Retirement and Savings Plan
  Defined Benefit Plan and Supplemental Executive Retirement Plan
    Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Interest cost
    
    $
    673
    
    
    $
    599
    
    
    $
    1,318
    
    
    $
    1,231Expected return on plan assets
    
    
    (715
    )
    
    
    (777
    )
    
    
    (1,442
    )
    
    
    (1,492
    )Net periodic benefit cost (benefit)
    
    $
    (42
    )
    
    $
    (178
    )
    
    $
    (124
    )
    
    $
    (261
    )
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Interest cost
    
    $
    7
    
    
    $
    7
    
    
    $
    14
    
    
    $
    13
 11




---



##### Table of Contents



PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 NOTE 10  COMMITMENTS AND CONTINGENCIES
 Leases
  June 30,20062007
    
    $
    3912008
    
    
    6172009
    
    
    6382010
    
    
    5312011
    
    
    Total
    
    $
    2,177
 Legal Proceedings
  Tax Matters
  NOTE 11  PREFERRED STOCK
 Series C Preferred Stock
    12




---



##### Table of Contents



PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
   Series M Preferred Stock
   NOTE 12  COMMON STOCK AND COMMON STOCK AWARD PROGRAMS
 Equity and Performance Incentive Plan
    13




---



##### Table of Contents



PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
   Three Months
    
    
    Six MonthsEnded
    
    
    EndedJune 30,
    
    
    June 30,2005
    
    
    2005Net loss applicable to common stockholders:As reported
    
    $
    (7,695
    )
    
    $
    (7,705
    )Add: Stock-based employee compensation expense included in net
loss applicable to common stockholders, net of related tax effects
    
    
    
    
    
    
    2Less: Total stock-based employee compensation expense determined under
fair value based methods for all awards, net of related tax effects
    
    
    (7
    )
    
    
    (18
    )Pro forma net loss applicable to common stockholders
    
    $
    (7,702
    )
    
    $
    (7,721
    )Basic and diluted earnings per share:As reported
    
    $
    (0.22
    )
    
    $
    (0.22
    )Pro forma
    
    $
    (0.22
    )
    
    $
    (0.22
    )
  Number of Options
    
    Weighted-Average
    
    AggregateEmployees
    
    Directors
    
    Exercise Price
    
    Intrinsic ValueOutstanding and exercisable at December 31, 2005
    
    
    1,080
    
    
    
    163
    
    
    $
    6.08Granted
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    (20
    )
    
    
    
    
    
    $
    0.37Canceled
    
    
    (56
    )
    
    
    
    
    
    $
    4.93Outstanding and exercisable at June 30, 2006
    
    
    1,004
    
    
    
    163
    
    
    $
    6.23
    
    
    $
    
  Options Outstanding and ExercisableWeighted-average
    
    Weighted-Number
    
    remaining
    
    averageRange of
    
    of
    
    contractual
    
    exerciseexercise prices
    
    options
    
    life
    
    price$27.75 - 28.375
    
    
    36
    
    
    4.1 years
    
    $
    28.10$16.225 - 24.29
    
    
    193
    
    
    3.1 years
    
    $
    20.11$      6.89 - 6.89
    
    
    294
    
    
    5.4 years
    
    $
    6.89$      0.90 - 0.90
    
    
    249
    
    
    7.6 years
    
    $
    0.90$      0.37 - 0.37
    
    
    395
    
    
    5.7 years
    
    $
    0.37Total
    
    
    1,167
    
    
    5.6 years
    
    $
    6.23
 14




---



##### Table of Contents



PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 Executive Loan Program
  Management Stock Purchase Plan
  NOTE 13  EARNINGS PER SHARE
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Net loss applicable to common stockholders
    
    $
    (5,780
    )
    
    $
    (7,695
    )
    
    $
    (2,339
    )
    
    $
    (7,705
    )Number of shares:Weighted average shares outstanding  basic and diluted
    
    
    34,495
    
    
    
    34,489
    
    
    
    34,501
    
    
    
    34,490Per share amount:Loss applicable to common stockholders  basic and diluted
    
    $
    (0.17
    )
    
    $
    (0.22
    )
    
    $
    (0.07
    )
    
    $
    (0.22
    )
    15




---



##### Table of Contents



PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 NOTE 14  COMPREHENSIVE INCOME (LOSS)
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Net income (loss)
    
    $
    (3,687
    )
    
    $
    (5,804
    )
    
    $
    1,772
    
    
    $
    (3,991
    )Cumulative translation adjustment related to sale of business
    
    
    
    
    
    
    1,244
    
    
    
    
    
    
    
    1,244Change in accumulated translation adjustment
    
    
    (20
    )
    
    
    57
    
    
    
    (37
    )
    
    
    (35
    )Total comprehensive income (loss)
    
    $
    (3,707
    )
    
    $
    (4,503
    )
    
    $
    1,735
    
    
    $
    (2,782
    )
 NOTE 15    RESTRUCTURING CHARGES
   EmployeeSeparation
    
    
    FacilityCosts
    
    
    Closing Costs
    
    
    TotalAccrual at December 31, 2005
    
    $
    25
    
    
    $
    5,998
    
    
    $
    6,023Adjustments
    
    
    
    
    
    
    6
    
    
    
    6Cash payments
    
    
    (4
    )
    
    
    (745
    )
    
    
    (749
    )Accrual at June 30, 2006
    
    $
    21
    
    
    $
    5,259
    
    
    $
    5,280
    Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Industry
    
    $
    5
    
    
    $
    260
    
    
    $
    11
    
    
    $
    309Technology
    
    
    (13
    )
    
    
    (7
    )
    
    
    (21
    )
    
    
    (18
    )Lifestyle
    
    
    
    
    
    
    (65
    )
    
    
    
    
    
    
    (65
    )Corporate
    
    
    45
    
    
    
    (2
    )
    
    
    37
    
    
    
    26$
    37
    
    
    $
    186
    
    
    $
    27
    
    
    $
    252
 16




---



##### Table of Contents



PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 NOTE 16  SEGMENTS
   Industry
    
    TechnologyManufacturing
    
    Business TechnologyDesign/Engineering
    
    AviationMechanical Systems/Construction
    
    Enterprise Information TechnologyGovernment/Compliance
    
    Electronics
 Lifestyle
    
    RetailNatural Products
    
    Food/RetailHospitality
   Revenues
    
    
    Adjusted Segment EBITDA2006
    
    
    2005
    
    
    2006
    
    
    2005Industry
    
    $
    20,806
    
    
    $
    20,038
    
    
    $
    7,082
    
    
    $
    6,284Technology
    
    
    17,188
    
    
    
    15,251
    
    
    
    4,326
    
    
    
    3,437Lifestyle
    
    
    3,193
    
    
    
    2,918
    
    
    
    (954
    )
    
    
    (1,137
    )Retail
    
    
    6,448
    
    
    
    5,607
    
    
    
    2,479
    
    
    
    1,897Total
    
    $
    47,635
    
    
    $
    43,814
    
    
    $
    12,933
    
    
    $
    10,481
  Revenues
    
    
    Adjusted Segment EBITDA2006
    
    
    2005
    
    
    2006
    
    
    2005Industry
    
    $
    38,327
    
    
    $
    37,453
    
    
    $
    12,164
    
    
    $
    11,203Technology
    
    
    29,527
    
    
    
    28,577
    
    
    
    6,768
    
    
    
    5,668Lifestyle
    
    
    23,169
    
    
    
    20,836
    
    
    
    12,233
    
    
    
    10,658Retail
    
    
    10,929
    
    
    
    10,279
    
    
    
    3,558
    
    
    
    3,142Total
    
    $
    101,952
    
    
    $
    97,145
    
    
    $
    34,723
    
    
    $
    30,671
 17




---



##### Table of Contents



PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Total adjusted segment EBITDA
    
    $
    12,933
    
    
    $
    10,481
    
    
    $
    34,723
    
    
    $
    30,671General and administrative costs
    
    
    (4,714
    )
    
    
    (3,662
    )
    
    
    (9,270
    )
    
    
    (8,342
    )Depreciation and amortization
    
    
    (1,476
    )
    
    
    (1,808
    )
    
    
    (2,931
    )
    
    
    (3,575
    )Restructuring and other charges
    
    
    (37
    )
    
    
    (186
    )
    
    
    (27
    )
    
    
    (252
    )Non-cash compensation
    
    
    (6
    )
    
    
    (3
    )
    
    
    (12
    )
    
    
    (17
    )Interest expense
    
    
    (9,721
    )
    
    
    (9,865
    )
    
    
    (19,391
    )
    
    
    (19,748
    )Interest income
    
    
    23
    
    
    
    32
    
    
    
    43
    
    
    
    62Gain on extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,589Other, net
    
    
    
    
    
    
    (16
    )
    
    
    
    
    
    
    (24
    )Income (loss) from continuing operations
before income taxes
    
    $
    (2,998
    )
    
    $
    (5,027
    )
    
    $
    3,135
    
    
    $
    364
 NOTE 17  GUARANTOR AND NON-GUARANTOR SUBSIDIARIES
   18




---



##### Table of Contents



PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 NOTE 17  GUARANTOR AND NON-GUARANTOR SUBSIDIARIES (Continued)
 PENTON MEDIA, INC.
CONDENSED CONSOLIDATIED BALANCE SHEETS
At June 30, 2006
 Guarantor
    
    
    Non-guarantor
    
    
    
    
    
    
    PentonParent
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(Dollars in thousands)AssetsCurrent assets:Cash and cash equivalents
    
    $
    1,297
    
    
    $
    248
    
    
    $
    720
    
    
    $
    
    
    
    $
    2,265Restricted cash
    
    
    318
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    318Accounts receivable, net
    
    
    24,007
    
    
    
    3,638
    
    
    
    968
    
    
    
    
    
    
    
    28,613Inventories
    
    
    673
    
    
    
    196
    
    
    
    5
    
    
    
    
    
    
    
    874Deferred tax assets
    
    
    402
    
    
    
    (88
    )
    
    
    
    
    
    
    
    
    
    
    314Prepayments, deposits and other
    
    
    3,480
    
    
    
    214
    
    
    
    109
    
    
    
    
    
    
    
    3,803Total current assets
    
    
    30,177
    
    
    
    4,208
    
    
    
    1,802
    
    
    
    
    
    
    
    36,187Property and equipment, net
    
    
    7,665
    
    
    
    1,126
    
    
    
    77
    
    
    
    
    
    
    
    8,868Goodwill
    
    
    136,689
    
    
    
    36,923
    
    
    
    
    
    
    
    
    
    
    
    173,612Other intangible assets, net
    
    
    3,993
    
    
    
    1,257
    
    
    
    
    
    
    
    
    
    
    
    5,250Other non-current assets
    
    
    3,782
    
    
    
    138
    
    
    
    7
    
    
    
    
    
    
    
    3,927Investments in subsidiaries
    
    
    (250,074
    )
    
    
    
    
    
    
    
    
    
    
    250,074
    
    
    
    $
    (67,768
    )
    
    $
    43,652
    
    
    $
    1,886
    
    
    $
    250,074
    
    
    $
    227,844Liabilities and stockholders deficitCurrent liabilities:Loan and security agreement revolver
    
    $
    10,800
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    10,800Accounts payable and accrued expenses
    
    
    13,866
    
    
    
    1,295
    
    
    
    478
    
    
    
    
    
    
    
    15,639Accrued compensation and benefits
    
    
    3,544
    
    
    
    602
    
    
    
    28
    
    
    
    
    
    
    
    4,174Unearned income
    
    
    15,818
    
    
    
    2,732
    
    
    
    1,475
    
    
    
    
    
    
    
    20,025Total current liabilities
    
    
    44,028
    
    
    
    4,629
    
    
    
    1,981
    
    
    
    
    
    
    
    50,638Senior secured notes, net of discount
    
    
    80,211
    
    
    
    77,065
    
    
    
    
    
    
    
    
    
    
    
    157,276Senior subordinated notes, net of discount
    
    
    78,091
    
    
    
    75,028
    
    
    
    
    
    
    
    
    
    
    
    153,119Accrued pension liability
    
    
    12,276
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,276Deferred tax liability
    
    
    23,145
    
    
    
    864
    
    
    
    
    
    
    
    
    
    
    
    24,009Intercompany advances
    
    
    (134,541
    )
    
    
    97,588
    
    
    
    36,953
    
    
    
    
    
    
    
    Other non-current liabilities
    
    
    5,739
    
    
    
    1,504
    
    
    
    
    
    
    
    
    
    
    
    7,243Total liabilities
    
    
    108,949
    
    
    
    256,678
    
    
    
    38,934
    
    
    
    
    
    
    
    404,561Commitments and contingenciesMandatorily redeemable convertible
preferred stock
    
    
    78,959
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    78,959Series M preferred stock
    
    
    28
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28Stockholders deficit:Common stock and capital in excess
of par value
    
    
    203,695
    
    
    
    202,443
    
    
    
    16,566
    
    
    
    (219,009
    )
    
    
    203,695Retained deficit
    
    
    (456,717
    )
    
    
    (415,424
    )
    
    
    (53,291
    )
    
    
    468,715
    
    
    
    (456,717
    )Notes receivable from officers, less
reserve of $5,848
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accumulated other comprehensive
income (loss)
    
    
    (2,682
    )
    
    
    (45
    )
    
    
    (323
    )
    
    
    368
    
    
    
    (2,682
    )(255,704
    )
    
    
    (213,026
    )
    
    
    (37,048
    )
    
    
    250,074
    
    
    
    (255,704
    )$
    (67,768
    )
    
    $
    43,652
    
    
    $
    1,886
    
    
    $
    250,074
    
    
    $
    227,844
 19




---



##### Table of Contents



PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 NOTE 17  GUARANTOR AND NON-GUARANTOR SUBSIDIARIES (Continued)
 PENTON MEDIA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
As of December 31, 2005
 Guarantor
    
    
    Non-guarantor
    
    
    
    
    
    
    PentonParent
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(Dollars in thousands)AssetsCurrent assets:Cash and cash equivalents
    
    $
    286
    
    
    $
    58
    
    
    $
    288
    
    
    $
    
    
    
    $
    632Restricted cash
    
    
    299
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    299Accounts receivable, net
    
    
    22,853
    
    
    
    3,558
    
    
    
    1,060
    
    
    
    
    
    
    
    27,471Inventories
    
    
    904
    
    
    
    190
    
    
    
    4
    
    
    
    
    
    
    
    1,098Deferred tax asset
    
    
    402
    
    
    
    (88
    )
    
    
    
    
    
    
    
    
    
    
    314Prepayments, deposits and other
    
    
    2,179
    
    
    
    227
    
    
    
    46
    
    
    
    
    
    
    
    2,452Total current assets
    
    
    26,923
    
    
    
    3,945
    
    
    
    1,398
    
    
    
    
    
    
    
    32,266Property and equipment, net
    
    
    9,003
    
    
    
    1,304
    
    
    
    94
    
    
    
    
    
    
    
    10,401Goodwill
    
    
    136,689
    
    
    
    36,914
    
    
    
    
    
    
    
    
    
    
    
    173,603Other intangible assets, net
    
    
    4,219
    
    
    
    1,743
    
    
    
    
    
    
    
    
    
    
    
    5,962Other non-current assets
    
    
    4,791
    
    
    
    138
    
    
    
    8
    
    
    
    
    
    
    
    4,937Investment in subsidiaries
    
    
    (240,510
    )
    
    
    
    
    
    
    
    
    
    
    240,510
    
    
    
    $
    (58,885
    )
    
    $
    44,044
    
    
    $
    1,500
    
    
    $
    240,510
    
    
    $
    227,169Liabilities and stockholders deficitCurrent liabilities:Loan and security agreement revolver
    
    $
    10,200
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    10,200Accounts payable and accrued expenses
    
    
    12,676
    
    
    
    1,512
    
    
    
    259
    
    
    
    
    
    
    
    14,447Accrued compensation and benefits
    
    
    4,218
    
    
    
    736
    
    
    
    62
    
    
    
    
    
    
    
    5,016Unearned income
    
    
    18,774
    
    
    
    2,464
    
    
    
    1,464
    
    
    
    
    
    
    
    22,702Total current liabilities
    
    
    45,868
    
    
    
    4,712
    
    
    
    1,785
    
    
    
    
    
    
    
    52,365Senior secured notes, net of discount
    
    
    80,169
    
    
    
    77,026
    
    
    
    
    
    
    
    
    
    
    
    157,195Senior subordinated notes, net of discount
    
    
    78,008
    
    
    
    74,948
    
    
    
    
    
    
    
    
    
    
    
    152,956Accrued pension liability
    
    
    12,400
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,400Deferred tax liability
    
    
    21,803
    
    
    
    864
    
    
    
    
    
    
    
    
    
    
    
    22,667Intercompany advances
    
    
    (125,039
    )
    
    
    88,547
    
    
    
    36,492
    
    
    
    
    
    
    
    Other non-current liabilities
    
    
    6,381
    
    
    
    1,680
    
    
    
    
    
    
    
    
    
    
    
    8,061Total liabilities
    
    
    119,590
    
    
    
    247,777
    
    
    
    38,277
    
    
    
    
    
    
    
    405,644Mandatorily redeemable convertible
preferred stock (Note 11)
    
    
    74,849
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    74,849Series M preferred stock (Note 11)
    
    
    18
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18Stockholders deficit:Common stock and capital in excess
of par value
    
    
    207,792
    
    
    
    202,405
    
    
    
    16,566
    
    
    
    (218,971
    )
    
    
    207,792Retained deficit
    
    
    (458,489
    )
    
    
    (406,093
    )
    
    
    (53,058
    )
    
    
    459,151
    
    
    
    (458,489
    )Notes receivable from officers
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accumulated other comprehensive loss
    
    
    (2,645
    )
    
    
    (45
    )
    
    
    (285
    )
    
    
    330
    
    
    
    (2,645
    )(253,342
    )
    
    
    (203,733
    )
    
    
    (36,777
    )
    
    
    240,510
    
    
    
    (253,342
    )$
    (58,885
    )
    
    $
    44,044
    
    
    $
    1,500
    
    
    $
    240,510
    
    
    $
    227,169
 20




---



##### Table of Contents



PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 NOTE 17  GUARANTOR AND NON-GUARANTOR SUBSIDIARIES (Continued)
 PENTON MEDIA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended June 30, 2006
 Guarantor
    
    
    Non-guarantor
    
    
    
    
    
    
    PentonParent
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(Dollars in thousands)Revenues
    
    $
    39,746
    
    
    $
    7,276
    
    
    $
    613
    
    
    $
    
    
    
    $
    47,635Operating expenses:Editorial, production and circulation
    
    
    17,564
    
    
    
    3,343
    
    
    
    289
    
    
    
    
    
    
    
    21,196Selling, general and administrative
    
    
    13,616
    
    
    
    4,196
    
    
    
    414
    
    
    
    
    
    
    
    18,226Restructuring and other charges, net
    
    
    50
    
    
    
    (13
    )
    
    
    
    
    
    
    
    
    
    
    37Depreciation and amortization
    
    
    1,090
    
    
    
    372
    
    
    
    14
    
    
    
    
    
    
    
    1,47632,320
    
    
    
    7,898
    
    
    
    717
    
    
    
    
    
    
    
    40,935Operating income (loss)
    
    
    7,426
    
    
    
    (622
    )
    
    
    (104
    )
    
    
    
    
    
    
    6,700Other income (expense):Interest expense
    
    
    (5,587
    )
    
    
    (4,103
    )
    
    
    (31
    )
    
    
    
    
    
    
    (9,721
    )Interest income
    
    
    23
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23Equity in losses of subsidiaries
    
    
    (4,860
    )
    
    
    
    
    
    
    
    
    
    
    4,860
    
    
    
    (10,424
    )
    
    
    (4,103
    )
    
    
    (31
    )
    
    
    4,860
    
    
    
    (9,698
    )Income (loss) from continuing operations before
income taxes
    
    
    (2,998
    )
    
    
    (4,725
    )
    
    
    (135
    )
    
    
    4,860
    
    
    
    (2,998
    )Provision for income taxes
    
    
    689
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    689Net income (loss)
    
    $
    (3,687
    )
    
    $
    (4,725
    )
    
    $
    (135
    )
    
    $
    4,860
    
    
    $
    (3,687
    )
 21




---



##### Table of Contents



PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 NOTE 17  GUARANTOR AND NON-GUARANTOR SUBSIDIARIES (Continued)
 PENTON MEDIA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended June 30, 2005
 Guarantor
    
    
    Non-guarantor
    
    
    
    
    
    
    PentonParent
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(Dollars in thousands)Revenues
    
    $
    34,621
    
    
    $
    8,163
    
    
    $
    1,030
    
    
    $
    
    
    
    $
    43,814Operating expenses:Editorial, production and circulation
    
    
    16,147
    
    
    
    3,820
    
    
    
    333
    
    
    
    
    
    
    
    20,300Selling, general and administrative
    
    
    13,837
    
    
    
    2,361
    
    
    
    500
    
    
    
    
    
    
    
    16,698Restructuring and other charges, net
    
    
    193
    
    
    
    (7
    )
    
    
    
    
    
    
    
    
    
    
    186Depreciation and amortization
    
    
    1,431
    
    
    
    358
    
    
    
    19
    
    
    
    
    
    
    
    1,80831,608
    
    
    
    6,532
    
    
    
    852
    
    
    
    
    
    
    
    38,992Operating income
    
    
    3,013
    
    
    
    1,631
    
    
    
    178
    
    
    
    
    
    
    
    4,822Other income (expense):Interest expense
    
    
    (5,268
    )
    
    
    (4,578
    )
    
    
    (19
    )
    
    
    
    
    
    
    (9,865
    )Interest income
    
    
    32
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32Equity in losses of subsidiaries
    
    
    (2,956
    )
    
    
    
    
    
    
    
    
    
    
    2,956
    
    
    
    Other, net
    
    
    (2
    )
    
    
    
    
    
    
    (14
    )
    
    
    
    
    
    
    (16
    )(8,194
    )
    
    
    (4,578
    )
    
    
    (33
    )
    
    
    2,956
    
    
    
    (9,849
    )Income (loss) from continuing operations before
income taxes
    
    
    (5,181
    )
    
    
    (2,947
    )
    
    
    145
    
    
    
    2,956
    
    
    
    (5,027
    )Provision for income taxes
    
    
    623
    
    
    
    (5
    )
    
    
    
    
    
    
    
    
    
    
    618Income (loss) from continuing operations
    
    
    (5,804
    )
    
    
    (2,942
    )
    
    
    145
    
    
    
    2,956
    
    
    
    (5,645
    )Loss from discontinued operations, net of taxes
    
    
    
    
    
    
    
    
    
    
    (159
    )
    
    
    
    
    
    
    (159
    )Net income (loss)
    
    $
    (5,804
    )
    
    $
    (2,942
    )
    
    $
    (14
    )
    
    $
    2,956
    
    
    $
    (5,804
    )
 22




---



##### Table of Contents



PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 NOTE 17  GUARANTOR AND NON-GUARANTOR SUBSIDIARIES (Continued)
 PENTON MEDIA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Six Months Ended June 30, 2006
 Guarantor
    
    
    Non-guarantor
    
    
    
    
    
    
    PentonParent
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(Dollars in thousands)Revenues
    
    $
    87,097
    
    
    $
    13,813
    
    
    $
    1,042
    
    
    $
    
    
    
    $
    101,952Operating expenses:Editorial, production and circulation
    
    
    33,943
    
    
    
    6,498
    
    
    
    496
    
    
    
    
    
    
    
    40,937Selling, general and administrative
    
    
    27,149
    
    
    
    7,718
    
    
    
    707
    
    
    
    
    
    
    
    35,574Restructuring and other charges, net
    
    
    48
    
    
    
    (21
    )
    
    
    
    
    
    
    
    
    
    
    27Depreciation and amortization
    
    
    2,186
    
    
    
    717
    
    
    
    28
    
    
    
    
    
    
    
    2,93163,326
    
    
    
    14,912
    
    
    
    1,231
    
    
    
    
    
    
    
    79,469Operating income
    
    
    23,771
    
    
    
    (1,099
    )
    
    
    (189
    )
    
    
    
    
    
    
    22,483Other income (expense):Interest expense
    
    
    (11,102
    )
    
    
    (8,232
    )
    
    
    (57
    )
    
    
    
    
    
    
    (19,391
    )Interest income
    
    
    43
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    43Equity in losses of subsidiaries
    
    
    (9,564
    )
    
    
    
    
    
    
    
    
    
    
    9,564
    
    
    
    (20,623
    )
    
    
    (8,232
    )
    
    
    (57
    )
    
    
    9,564
    
    
    
    (19,348
    )Income (loss) from continuing operations before
income taxes
    
    
    3,148
    
    
    
    (9,331
    )
    
    
    (246
    )
    
    
    9,564
    
    
    
    3,135Provision for income taxes
    
    
    1,376
    
    
    
    
    
    
    
    (13
    )
    
    
    
    
    
    
    1,363Net income (loss)
    
    $
    1,772
    
    
    $
    (9,331
    )
    
    $
    (233
    )
    
    $
    9,564
    
    
    $
    1,772
 23




---



##### Table of Contents



PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 NOTE 17  GUARANTOR AND NON-GUARANTOR SUBSIDIARIES (Continued)
 PENTON MEDIA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Six Months Ended June 30, 2005
 Guarantor
    
    
    Non-guarantor
    
    
    
    
    
    
    PentonParent
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(Dollars in thousands)Revenues
    
    $
    81,650
    
    
    $
    14,266
    
    
    $
    1,229
    
    
    $
    
    
    
    $
    97,145Operating expenses:Editorial, production and circulation
    
    
    33,138
    
    
    
    7,165
    
    
    
    367
    
    
    
    
    
    
    
    40,670Selling, general and administrative
    
    
    29,282
    
    
    
    4,176
    
    
    
    705
    
    
    
    
    
    
    
    34,163Restructuring and other charges, net
    
    
    270
    
    
    
    (18
    )
    
    
    
    
    
    
    
    
    
    
    252Depreciation and amortization
    
    
    2,821
    
    
    
    715
    
    
    
    39
    
    
    
    
    
    
    
    3,57565,511
    
    
    
    12,038
    
    
    
    1,111
    
    
    
    
    
    
    
    78,660Operating income
    
    
    16,139
    
    
    
    2,228
    
    
    
    118
    
    
    
    
    
    
    
    18,485Other income (expense):Interest expense
    
    
    (10,523
    )
    
    
    (9,148
    )
    
    
    (77
    )
    
    
    
    
    
    
    (19,748
    )Interest income
    
    
    62
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    62Equity in losses of subsidiaries
    
    
    (9,849
    )
    
    
    
    
    
    
    
    
    
    
    9,849
    
    
    
    Gain on extinguishment of debt
    
    
    1,589
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,589Other, net
    
    
    (10
    )
    
    
    
    
    
    
    (14
    )
    
    
    
    
    
    
    (24
    )(18,731
    )
    
    
    (9,148
    )
    
    
    (91
    )
    
    
    9,849
    
    
    
    (18,121
    )Income (loss) from continuing operations before
income taxes
    
    
    (2,592
    )
    
    
    (6,920
    )
    
    
    27
    
    
    
    9,849
    
    
    
    364Provision for income taxes
    
    
    1,399
    
    
    
    (3
    )
    
    
    
    
    
    
    
    
    
    
    1,396Income (loss) from continuing operations
    
    
    (3,991
    )
    
    
    (6,917
    )
    
    
    27
    
    
    
    9,849
    
    
    
    (1,032
    )Loss from discontinued operations, net of taxes
    
    
    
    
    
    
    
    
    
    
    (2,959
    )
    
    
    
    
    
    
    (2,959
    )Net income (loss)
    
    $
    (3,991
    )
    
    $
    (6,917
    )
    
    $
    (2,932
    )
    
    $
    9,849
    
    
    $
    (3,991
    )
 24




---



##### Table of Contents



PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 NOTE 17  GUARANTOR AND NON-GUARANTOR SUBSIDIARIES (Continued)
 PENTON MEDIA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
For the Six Months Ended June 30, 2006
 Guarantor
    
    
    Non-guarantor
    
    
    
    
    
    
    PentonParent
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(Dollars in thousands)Net cash provided by operating activities
    
    $
    1,010
    
    
    $
    243
    
    
    $
    441
    
    
    $
    
    
    
    $
    1,694Cash flows from investing activities:Capital expenditures
    
    
    (330
    )
    
    
    (53
    )
    
    
    (8
    )
    
    
    
    
    
    
    (391
    )Cash paid for acquisitions
    
    
    (250
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (250
    )Increase in restricted cash
    
    
    (19
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19
    )Net cash used for investing activities
    
    
    (599
    )
    
    
    (53
    )
    
    
    (8
    )
    
    
    
    
    
    
    (660
    )Cash flows from financing activities:Repayment of loan and security agreement revolver, net
    
    
    600
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    600Decrease in cash overdraft balance
    
    
    (55
    )
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    (56
    )Net cash provided by (used for) financing activities
    
    
    545
    
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    544Effect of exchange rate changes on cash
    
    
    55
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    55Net increase (decrease) in cash and cash equivalents
    
    
    1,011
    
    
    
    190
    
    
    
    432
    
    
    
    
    
    
    
    1,633Cash and cash equivalents at beginning of year
    
    
    286
    
    
    
    58
    
    
    
    288
    
    
    
    
    
    
    
    632Cash and cash equivalents at end of period
    
    $
    1,297
    
    
    $
    248
    
    
    $
    720
    
    
    $
    
    
    
    $
    2,265
 25




---



##### Table of Contents



PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 NOTE 17  GUARANTOR AND NON-GUARANTOR SUBSIDIARIES (Continued)
 PENTON MEDIA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
For the Six Months Ended June 30, 2005
 Guarantor
    
    
    Non-guarantor
    
    
    
    
    
    
    PentonParent
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(Dollars in thousands)Net cash provided by (used for)
operating activities
    
    $
    (5,710
    )
    
    $
    218
    
    
    $
    (750
    )
    
    $
    
    
    
    $
    (6,242
    )Cash flows from investing activities:Capital expenditures
    
    
    (379
    )
    
    
    (67
    )
    
    
    (17
    )
    
    
    
    
    
    
    (463
    )Cash paid for acquisitions
    
    
    (375
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (375
    )Increase in restricted cash
    
    
    (236
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (236
    )Net proceeds from sale of properties
    
    
    4,073
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,073Net cash provided by (used for) investing activities
    
    
    3,083
    
    
    
    (67
    )
    
    
    (17
    )
    
    
    
    
    
    
    2,999Cash flows from financing activities:Repurchase of senior subordinated notes
    
    
    (3,795
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,795
    )Proceeds from loan and security agreement revolver, net
    
    
    1,200
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,200Decrease in cash overdraft balance
    
    
    (318
    )
    
    
    (23
    )
    
    
    128
    
    
    
    
    
    
    
    (213
    )Net cash provided by (used for) financing activities
    
    
    (2,913
    )
    
    
    (23
    )
    
    
    128
    
    
    
    
    
    
    
    (2,808
    )Effect of exchange rate changes on cash
    
    
    66
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    66Net increase (decrease) in cash and cash equivalents
    
    
    (5,474
    )
    
    
    128
    
    
    
    (639
    )
    
    
    
    
    
    
    (5,985
    )Cash and cash equivalents at beginning of year
    
    
    5,991
    
    
    
    73
    
    
    
    1,597
    
    
    
    
    
    
    
    7,661Cash and cash equivalents at end of period
    
    $
    517
    
    
    $
    201
    
    
    $
    958
    
    
    $
    
    
    
    $
    1,676
 26




---



##### Table of Contents



PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 NOTE 18  SUBSEQUENT EVENTS
 Strategic Alternatives
       Senior Managers  Sale Bonuses
  27




---



##### Table of Contents



PENTON MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
  Equity Proceeds from Sale of Company
    
    Sale BonusLess than $135.0 million
    
    $
    25,000$135.0 million or more but less than $145.0 million
    
    $
    50,000$145.0 million or more but less than $185.0 million
    
    $
    100,000$185.0 million or greater
    
    $
    150,000
 Acquisition
  28




---



##### Table of Contents



ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
  
    
    our exploration of strategic alternatives may create uncertainties that could affect our business;
    
    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.
  OVERVIEW
     29




---



##### Table of Contents



Strategic Alternatives
       Senior Managers  Sale Bonuses
  30




---



##### Table of Contents



Equity Proceeds from Sale of Company
    
    Sale BonusLess than $135.0 million
    
    $
    25,000$135.0 million or more but less than $145.0 million
    
    $
    50,000$145.0 million or more but less than $185.0 million
    
    $
    100,000$185.0 million or greater
    
    $
    150,000
 2006 Acquisitions
 
    
    In February 2006, the Company acquired the assets of WeldingWeb.com. WeldingWeb.com is a
web site with more than 7,000 registered members and generates more than 220,000 page views
monthly. The site has been integrated with our Metalworking group, which is part of our
Industry segment.
    
    In April 2006, the Company acquired the assets of HVAC-Talk.com, a website with more
than 43,000 registered members and generates over 104,000 unique visitors and 2,700,000
page views per month. HVAC-Talk.com has been integrated with Pentons Contracting Business
group, which is part of our Industry segment. The web site adds a key interactive
component to the group.
    
    In July 2006, the Company acquired the assets of Web-EE. Web-EE offers schematics,
project and tutorial content, and components application notes for electronic design
engineers. The Website will be integrated with Pentons Electronics group, which is part
of our Technology segment.
  RESULTS OF OPERATIONS
 Revenues
 Three-Month Comparison
  2006
    
    
    2005
    
    
    $Change
    
    
    % Change(In thousands)Publishing
    
    $
    36,349
    
    
    $
    35,456
    
    
    $
    893
    
    
    
    2.5
    %Trade shows & conferences
    
    
    5,023
    
    
    
    3,561
    
    
    
    1,462
    
    
    
    41.1
    %Online media
    
    
    6,263
    
    
    
    4,797
    
    
    
    1,466
    
    
    
    30.6
    %Total revenues
    
    $
    47,635
    
    
    $
    43,814
    
    
    $
    3,821
    
    
    
    8.7
    %
   31




---



##### Table of Contents



Six-Month Comparison
  2006
    
    
    2005
    
    
    $Change
    
    
    % Change(In thousands)Publishing
    
    $
    68,159
    
    
    $
    68,256
    
    
    $
    (97
    )
    
    
    (0.1
    )%Trade shows & conferences
    
    
    22,425
    
    
    
    20,091
    
    
    
    2,334
    
    
    
    11.6
    %Online media
    
    
    11,368
    
    
    
    8,798
    
    
    
    2,570
    
    
    
    29.2
    %Total revenues
    
    $
    101,952
    
    
    $
    97,145
    
    
    $
    4,807
    
    
    
    4.9
    %
     Editorial, Production and Circulation
 Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2006
    
    2005
    
    Change
    
    2006
    
    2005
    
    Change(In millions)Editorial, production and circulation
    
    $
    21.2
    
    
    $
    20.3
    
    
    
    4.4
    %
    
    $
    40.9
    
    
    $
    40.7
    
    
    
    0.7
    %Percent of revenues
    
    
    44.5
    %
    
    
    46.3
    %
    
    
    
    
    
    
    40.2
    %
    
    
    41.9
    %
  32




---



##### Table of Contents



Selling, General and Administrative
 Three Months Ended
    
    Six Months EndedJune 30,
    
    
    
    
    
    
    
    
    
    June 30,2006
    
    2005
    
    Change
    
    2006
    
    2005
    
    Change(In millions)Selling, general and administrative
    
    $
    18.2
    
    
    $
    16.7
    
    
    
    9.2
    %
    
    $
    35.6
    
    
    $
    34.2
    
    
    
    4.1
    %Percent of revenues
    
    
    38.3
    %
    
    
    38.1
    %
    
    
    
    
    
    
    34.9
    %
    
    
    35.2
    %
  Restructuring and Other Charges, net
  EmployeeSeparation
    
    
    FacilityCosts
    
    
    Closing Costs
    
    
    TotalAccrual at December 31, 2005
    
    $
    25
    
    
    $
    5,998
    
    
    $
    6,023Adjustments
    
    
    
    
    
    
    6
    
    
    
    6Cash payments
    
    
    (4
    )
    
    
    (745
    )
    
    
    (749
    )Accrual at June 30, 2006
    
    $
    21
    
    
    $
    5,259
    
    
    $
    5,280
   Wireless Systems Design
 33




---



##### Table of Contents



Other Income (Expense)
  Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2006
    
    2005
    
    Change
    
    2006
    
    2005
    
    Change(In millions)Interest expense
    
    $
    (9.7
    )
    
    $
    (9.9
    )
    
    
    (1.5
    )%
    
    $
    (19.4
    )
    
    $
    (19.7
    )
    
    
    (1.8
    )%Gain on extinguishment of debt
    
    $
    
    
    
    $
    
    
    
    
    n/m
    
    
    $
    
    
    
    $
    1.6
    
    
    
    n/m
   Effective Tax Rates
    Discontinued Operations
   34




---



##### Table of Contents



SEGMENTS
    Adjusted
    
    
    Adjusted SegmentRevenues
    
    
    Segment EBITDA
    
    
    EBITDA Margin2006
    
    
    2005
    
    
    2006
    
    
    2005
    
    
    2006
    
    
    2005Industry
    
    $
    20,806
    
    
    $
    20,038
    
    
    $
    7,082
    
    
    $
    6,284
    
    
    
    34.0
    %
    
    
    31.4
    %Technology
    
    
    17,188
    
    
    
    15,251
    
    
    
    4,326
    
    
    
    3,437
    
    
    
    25.2
    %
    
    
    22.5
    %Lifestyle
    
    
    3,193
    
    
    
    2,918
    
    
    
    (954
    )
    
    
    (1,137
    )
    
    
    (29.9
    )%
    
    
    (39.0
    )%Retail
    
    
    6,448
    
    
    
    5,607
    
    
    
    2,479
    
    
    
    1,897
    
    
    
    38.4
    %
    
    
    33.8
    %Total
    
    $
    47,635
    
    
    $
    43,814
    
    
    $
    12,933
    
    
    $
    10,481
  Adjusted
    
    
    Adjusted SegmentRevenues
    
    
    Segment EBITDA
    
    
    EBITDA Margin2006
    
    
    2005
    
    
    2006
    
    
    2005
    
    
    2006
    
    
    2005Industry
    
    $
    38,327
    
    
    $
    37,453
    
    
    $
    12,164
    
    
    $
    11,203
    
    
    
    31.7
    %
    
    
    29.9
    %Technology
    
    
    29,527
    
    
    
    28,577
    
    
    
    6,768
    
    
    
    5,668
    
    
    
    22.9
    %
    
    
    19.8
    %Lifestyle
    
    
    23,169
    
    
    
    20,836
    
    
    
    12,233
    
    
    
    10,658
    
    
    
    52.8
    %
    
    
    51.2
    %Retail
    
    
    10,929
    
    
    
    10,279
    
    
    
    3,558
    
    
    
    3,142
    
    
    
    32.6
    %
    
    
    30.6
    %Total
    
    $
    101,952
    
    
    $
    97,145
    
    
    $
    34,723
    
    
    $
    30,671
 Industry
 Three Months
   35




---



##### Table of Contents



Six Months
    Technology
 Three Months
   36




---



##### Table of Contents



Six Months
    Lifestyle
 Three Months
    Six Months
  37




---



##### Table of Contents



Retail
 Three Months
  Restaurant Hospitality
  Six Months
  Restaurant Hospitality
  38




---



##### Table of Contents



LIQUIDITY AND CAPITAL RESOURCES
 Current Liquidity
   
    
    repayment of Loan and Security Agreement balance of $10.8 million;
    
    annual insurance premium of approximately $1.1 million;
    
    capital expenditures of approximately $0.6 million;
    
    payments related to our business restructuring initiatives of approximately $0.3 million; and
    
    a contribution of $0.3 million to our Retirement and Savings Plan.
     Analysis of Cash Flows
  39




---



##### Table of Contents



Consolidated Adjusted EBITDA
   Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Net income (loss)
    
    $
    (3,687
    )
    
    $
    (5,804
    )
    
    $
    1,772
    
    
    $
    (3,991
    )Interest expense
    
    
    9,721
    
    
    
    9,865
    
    
    
    19,391
    
    
    
    19,748Provision for income taxes
    
    
    689
    
    
    
    618
    
    
    
    1,363
    
    
    
    1,396Depreciation and amortization
    
    
    1,476
    
    
    
    1,808
    
    
    
    2,931
    
    
    
    3,575EBITDA
    
    
    8,199
    
    
    
    6,487
    
    
    
    25,457
    
    
    
    20,728Loan and Security Agreement Adjustments:Restructuring and other charges
    
    
    37
    
    
    
    186
    
    
    
    27
    
    
    
    252Non-cash compensation
    
    
    6
    
    
    
    3
    
    
    
    12
    
    
    
    17Interest income
    
    
    (23
    )
    
    
    (32
    )
    
    
    (43
    )
    
    
    (62
    )Discontinued operations, net of taxes
    
    
    
    
    
    
    159
    
    
    
    
    
    
    
    2,959Gain on extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,589
    )Other, net
    
    
    
    
    
    
    16
    
    
    
    
    
    
    
    24Consolidated Adjusted EBITDA
    
    $
    8,219
    
    
    $
    6,819
    
    
    $
    25,453
    
    
    $
    22,329
 NEW ACCOUNTING PRONOUCEMENTS
  40




---



##### Table of Contents



CRITICAL ACCOUNTING POLICIES AND ESTIMATES
  
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 ITEM 4. CONTROLS AND PROCEDURES
  41




---



##### Table of Contents



Part II  OTHER INFORMATION
 
 ITEM 1A. RISK FACTORS
  Our Exploration of Strategic Alternatives May Create Uncertainties That Could Affect Our Business
  
    
    the exploration of strategic alternatives may distract management and disrupt
operation, which could have a material adverse effect on our operating results;
    
    we may not be able to successfully achieve the benefits of any strategic alternative undertaken by us;
    
    the process of exploring strategic alternatives may be time consuming and expensive; and
    
    perceived uncertainties as to our future direction may result in the loss of employees or business partners.
 
 ITEM 6. EXHIBITS
 Exhibit No.
    
    Description of Document10.1
    
    Allocation Agreement dated July 11, 2006 between Penton Media, Inc. and the Series C Preferred Holders.10.2
    
    Summary of Senior Manager 
Sale Bonuses terms as approved by the Companys Board of Directors on July 17, 2006.31.1
    
    Principal executive officers certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Principal financial officers certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 42




---



##### Table of Contents



SIGNATURE
  Penton Media, Inc.
(Registrant)By:
    /s/ PRESTON L. VICEPreston L. ViceChief Financial Officer  43




---



##### Table of Contents



EXHIBIT INDEX
 Exhibit No.
    
    Description of Document10.1
    
    Allocation Agreement dated July 11, 2006 between Penton Media, Inc. and the Series C Preferred Holders.10.2
    
    Summary of Senior Manager  Sale Bonuses terms as approved by the Companys Board of Directors on July 17, 2006.31.1
    
    Principal executive officers certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Principal financial officers certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 44