SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-Q

|(Mark One)                                     |                                                                                         
|---------------------------------------------- | ----------------------------------------------------------------------------------------
|ý                                              | Quarterly Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934.
|For the quarterly period ended: March 31, 2004
|OR                                            
|                                               | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number: 333-57201

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

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

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

One Park Avenue, New York, NY
(Address of principal executive offices)

10016
(Zip Code)

Registrant's Telephone Number, Including Area Code: (212) 951-6600

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

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
Yes  o    No  ý

As of May 14, 2004, 1,000,000 shares of the registrant's common stock were outstanding.



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PART I    FINANCIAL INFORMATION

Item 1.Financial Statements:

|                          |  |                                                                                                                |  | Page in this
Quarterly
Report
|------------------------- |  | -------------------------------------------------------------------------------------------------------------- |  | -----------------------------
|                          |  | Condensed Consolidated Balance Sheets at March 31, 2004 (unaudited) and December 31, 2003.                     |  | 2                            
|                          |  | Condensed Consolidated Statements of Operations (unaudited) for the three months ended March 31, 2004 and 2003 |  | 3                            
|                          |  | Condensed Consolidated Statements of Cash Flows (unaudited) for the three months ended March 31, 2004 and 2003 |  | 4                            
|                          |  | Notes to Condensed Consolidated Financial Statements (unaudited)                                               |  | 5                            
|Item 2.                   |  | Management's Discussion and Analysis of Financial Condition and Results of Operations                          |  | 21                           
|Item 3.                   |  | Quantitative and Qualitative Disclosure about Market Risk                                                      |  | 33                           
|Item 4.                   |  | Controls and Procedures                                                                                        |  | 33                           
|PART II Other Information |  |                                                                                                               
|Item 6.                   |  | Exhibits and Reports on Form 8-K                                                                               |  | 35                           
|Signatures                |  |                                                                                                               

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Advanstar Communications Inc.  Condensed Consolidated Balance Sheets  (in thousands, except share and per share data)

|                                              |                                                                                                                                             | March 31,
2004                         |         | December 31,
2003 |        
|--------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------- | ------- | ----------------- | -------
|
|ASSETS                                        |                                                                                                                                             |                                        |         |                   |        
|Current assets:                               |                                                                                                                                             |                                        |         |                   |        
|                                              | Cash and cash equivalents                                                                                                                   |                                        | $       | 31,804            |        
|                                              | Accounts receivable, net of allowance of $1,195 and $1,006 at March 31, 2004 and December 31, 2003                                          |                                        |         | 33,106            |        
|                                              | Prepaid expenses                                                                                                                            |                                        |         | 7,715             |        
|                                              | Other                                                                                                                                       |                                        |         | 1,942             |        
|                                              | Current assets of discontinued operations                                                                                                   |                                        |         |                  |        
|                                              |                                                                                                                                             |                                        |         |                   |        
|                                              |                                                                                                                                             | Total current assets                   |         |                   | 74,567 
|Property, plant and equipment, net            |                                                                                                                                             |                                        | 23,523  |                   |        
|Intangible and other assets:                  |                                                                                                                                             |                                        |         |                   |        
|                                              | Goodwill                                                                                                                                    |                                        |         | 729,674           |        
|                                              | Intangibles and other, net                                                                                                                  |                                        |         | 137,039           |        
|                                              |                                                                                                                                             |                                        |         |                   |        
|                                              |                                                                                                                                             | Total intangible and other assets, net |         |                   | 866,713
|Non current assets of discontinued operations |                                                                                                                                             |                                        |        |                   |        
|                                              |                                                                                                                                             |                                        |         |                   |        
|                                              |                                                                                                                                             | $                                      | 964,803 |                   | $      
|                                              |                                                                                                                                             |                                        |         |                   |        
|LIABILITIES AND STOCKHOLDER'S EQUITY          |                                                                                                                                             |                                        |         |                   |        
|Current liabilities:                          |                                                                                                                                             |                                        |         |                   |        
|                                              | Current maturities of long-term debt                                                                                                        |                                        | $       | 3,200             |        
|                                              | Accounts payable                                                                                                                            |                                        |         | 28,384            |        
|                                              | Accrued compensation                                                                                                                        |                                        |         | 5,133             |        
|                                              | Other accrued expenses                                                                                                                      |                                        |         | 28,220            |        
|                                              | Deferred revenue                                                                                                                            |                                        |         | 34,016            |        
|                                              | Current liabilities of discontinued operations                                                                                              |                                        |         |                  |        
|                                              |                                                                                                                                             |                                        |         |                   |        
|                                              |                                                                                                                                             | Total current liabilities              |         |                   | 98,953 
|Long-term debt, net of current maturities     |                                                                                                                                             |                                        | 614,006 |                   |        
|Deferred income taxes                         |                                                                                                                                             |                                        | 7,630   |                   |        
|Other long-term liabilities                   |                                                                                                                                             |                                        | 4,808   |                   |        
|Due to parent                                 |                                                                                                                                             |                                        | 3,585   |                   |        
|Minority interests                            |                                                                                                                                             |                                        | 10,385  |                   |        
|Commitments and contingencies                 |                                                                                                                                             |                                        |         |                   |        
|Stockholder's equity:                         |                                                                                                                                             |                                        |         |                   |        
|                                              | Common stock, $.01 par value, 40,000,000 shares authorized; 1,000,000 shares issued and outstanding at March 31, 2004 and December 31, 2003 |                                        |         | 10                |        
|                                              | Capital in excess of par value                                                                                                              |                                        |         | 447,367           |        
|                                              | Accumulated deficit                                                                                                                         |                                        |         | (225,494          | )      
|                                              | Accumulated other comprehensive loss                                                                                                        |                                        |         | 3,553             |        
|                                              |                                                                                                                                             |                                        |         |                   |        
|                                              |                                                                                                                                             | Total stockholder's equity             |         |                   | 225,436
|                                              |                                                                                                                                             |                                        |         |                   |        
|                                              |                                                                                                                                             | $                                      | 964,803 |                   | $      
|                                              |                                                                                                                                             |                                        |         |                   |        

The accompanying notes are an integral part of these condensed consolidated financial statements.

2

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Advanstar Communications Inc.  Condensed Consolidated Statements of Operations  (In thousands)

|                                                                             |                                                               | For the
Three Months Ended
March 31, |        
|---------------------------------------------------------------------------- | ------------------------------------------------------------- | ------------------------------------ | -------
|
|
|Revenue                                                                      |                                                               | $                                    | 119,889
|Operating expenses:                                                          |                                                               |                                      |        
|                                                                             | Cost of production                                            |                                      |        
|                                                                             | Selling, editorial and circulation                            |                                      |        
|                                                                             | General and administrative                                    |                                      |        
|                                                                             | Funding of affiliated dot.com company operations (see Note 9) |                                      |        
|                                                                             | Amortization of intangibles                                   |                                      |        
|                                                                             | Depreciation                                                  |                                      |        
|                                                                             |                                                               |                                      |        
|                                                                             |                                                               | Total operating expenses             |        
|                                                                             |                                                               |                                      |        
|Operating income (loss)                                                      |                                                               |                                      | 29,926 
|Other income (expense):                                                      |                                                               |                                      |        
|                                                                             | Interest expense, net                                         |                                      |        
|                                                                             | Other income (expense), net                                   |                                      |        
|                                                                             |                                                               |                                      |        
|Income from continuing operations before income taxes and minority interests |                                                               |                                      | 12,947 
|Provision for income taxes                                                   |                                                               |                                      | 3,125  
|Minority interests                                                           |                                                               |                                      | (493   
|                                                                             |                                                               |                                      |        
|Income from continuing operations                                            |                                                               |                                      | 9,329  
|Discontinued operations (see Note 3):                                        |                                                               |                                      |        
|Income from operations of discontinued business (including gain on disposal  |                                                               |                                      |        
|of $1,017 and income tax benefit of $2,404)                                  |                                                               |                                      | 6,771  
|                                                                             |                                                               |                                      |        
|Net income                                                                   |                                                               | $                                    | 16,100 
|                                                                             |                                                               |                                      |        

The
accompanying notes are an integral part of these condensed consolidated financial statements.

3

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Advanstar Communications Inc.  Condensed Consolidated Statements of Cash Flows  (in thousands)

|                                                     |                                                                                           | For the
Three Months Ended
March 31,                |       
|---------------------------------------------------- | ----------------------------------------------------------------------------------------- | --------------------------------------------------- | ------
|
|
|Operating activities:                                |                                                                                           |                                                     |       
|                                                     | Net income (loss)                                                                         |                                                     | $     
|                                                     | Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |                                                     |       
|                                                     |                                                                                           | Depreciation and amortization                       |       
|                                                     |                                                                                           | (Gain) loss on derivative financial instruments     |       
|                                                     |                                                                                           | Undistributed earnings of minority interest holders |       
|                                                     |                                                                                           | Noncash interest                                    |       
|                                                     |                                                                                           | Gain on sale of business and other assets           |       
|                                                     |                                                                                           | Deferred income taxes                               |       
|                                                     |                                                                                           | Provision for bad debts                             |       
|                                                     |                                                                                           | Changes in operating assets and liabilities         |       
|                                                     |                                                                                           |                                                     |       
|                                                     |                                                                                           | Net cash provided by operating activities           |       
|                                                     |                                                                                           |                                                     |       
|Investing activities:                                |                                                                                           |                                                     |       
|                                                     | Additions to property, plant and equipment                                                |                                                     |       
|                                                     | Acquisitions of publications and trade shows, net of cash acquired                        |                                                     |       
|                                                     | Proceeds from sale of business and other assets                                           |                                                     |       
|                                                     |                                                                                           |                                                     |       
|                                                     |                                                                                           | Net cash provided by (used in) investing activities |       
|                                                     |                                                                                           |                                                     |       
|Financing activities:                                |                                                                                           |                                                     |       
|                                                     | Proceeds from revolving credit loan                                                       |                                                     |       
|                                                     | Payments on revolving credit loan                                                         |                                                     |       
|                                                     | Payments of long-term debt                                                                |                                                     |       
|                                                     | Deferred financing costs                                                                  |                                                     |       
|                                                     |                                                                                           |                                                     |       
|                                                     |                                                                                           | Net cash used in financing activities               |       
|                                                     |                                                                                           |                                                     |       
|Effect of exchange rate changes on cash              |                                                                                           |                                                     | (99   
|                                                     |                                                                                           |                                                     |       
|Net increase (decrease) in cash and cash equivalents |                                                                                           |                                                     | 2,530 
|Cash and cash equivalents, beginning of period       |                                                                                           |                                                     | 29,274
|                                                     |                                                                                           |                                                     |       
|Cash and cash equivalents, end of period             |                                                                                           | $                                                   | 31,804
|                                                     |                                                                                           |                                                     |       

The
accompanying notes are an integral part of these condensed consolidated financial statements.

4

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Advanstar Communications Inc.  Notes to Condensed Consolidated Financial Statements

1.    Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared by Advanstar Communications Inc. ("Communications", or the
"Company") in accordance with the instructions to Form 10-Q and, therefore, do not include all the information and footnotes required by generally accepted accounting principles for
complete financial statements. Management believes that all adjustments, consisting solely of normal recurring items, considered necessary for a fair presentation have been included. These condensed
consolidated financial statements, however, should be read in conjunction with the audited financial statements and the related notes included in the Company's annual report on
Form 10-K for the year ended December 31, 2003, filed with the Securities and Exchange Commission on March 29, 2003. The results of operations for the three month
period ended March 31, 2004 are not necessarily indicative of the operating results that may be expected for the entire year ending December 31, 2004.

2.    Summary of Significant Interim Accounting Policies



As permitted by Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based Compensation," the Company has elected to account
for stock options and awards to employees under the provisions of Accounting Principles Board (APB) Opinion No. 25, "Accounting for Stock Issued to Employees," and related interpretations.

If
the Company had elected to recognize compensation cost based on the fair value of the options granted as prescribed by SFAS No. 123, results would have been adjusted to the pro
forma amounts indicated in the table below (in thousands):

For the
Three Months Ended
March 31,2004

2003Net income (loss)as reported

$
16,100

$
15,686Less: pro forma stock based employee compensation


(677
)

(583
)Net income (loss)pro forma

$
15,423

$
15,103




The Company determines its quarterly income tax provision based upon an estimated annual effective income tax rate. In determining the effective income tax rate
applicable to interim periods, the Company excludes tax jurisdictions where no tax expense or benefit is expected for the entire year.



In December 2003, the FASB issued Interpretation No. 46R,Consolidation of Variable Interest
Entities, which addresses accounting for special-purpose and variable interest entities and which superseded Interpretation No. 46. The provisions of Interpretation
No. 46R are effective for the Company in the first quarter of 2005. Specifically, based upon the Company's preliminary analysis, the Company believes that it will be required to consolidate the
operations of Advanstar.com effective January 1, 2005. If the Company consolidates Advanstar.com, management believes the effect of adoption will be to reduce the amount of Advanstar.com losses
included in the Company's operating

5

---



results.
The Company does not expect this consolidation to have a material effect on its financial position, results of operations or cash flows.

3.    Acquisitions and Divestitures



On October 1, 2003, the Company purchased a portfolio of healthcare industry magazines and related custom projects business from the Thomson Corporation
and its subsidiaries ("Thomson") for $150.7 million, including $136.5 million in cash (including related fees and expenses) and $14.1 million of assumed liabilities.

On
March 8, 2004, the Company purchased a portfolio of pharmaceutical industry magazines and conferences from the Institute of Validation Technology, Inc. ("IVT") for
$8.0 million in cash plus assumed liabilities. In addition, the Company agreed to pay additional contingent cash purchase price based on 2004 and 2005 operating results of the acquired assets.
Certain of the acquired assets and assumed liabilities are recorded based upon preliminary estimates of their respective fair values as of the date of the acquisition. The Company does not believe the
final allocation of purchase price will be materially different from preliminary allocations.

The
following table provides the unaudited pro forma operating results of the Company for the three month period ended March 31, 2003 as if the Thomson acquisition had taken place
at January 1, 2003. The pro forma operating results due not include the effect of the IVT acquisition described above because the acquisition is not material (in thousands):

For the
Three Months Ended
March 31, 2003Revenue

$
120,397Income from continuing operations


8,827Net income


12,095


The
unaudited pro forma operating results do not purport to represent what our results of operations actually would have been if the acquisition had occurred as of the date indicated or
what such results will be for any future periods.



On March 12, 2004, the Company completed the sale of its art industry trade shows and magazines (the "Art Group") for a total selling price of
$19.5 million in cash, subject to a working capital adjustment. The portfolio included three trade shows and two publications. The Company recorded a gain on the sale of $1.0 million
plus a tax benefit of $2.4 million. The results of the Art Group have been reported separately as discontinued operations in the condensed consolidated statements of operations for the three
months ended March 31, 2004 and 2003. In addition, the assets and liabilities of the Art Group are reported separately in the balance sheet at March 31, 2004. The results of the
discontinued operations do not reflect any interest expense or overhead allocated from the Company. Prior year consolidated financial statements have been restated to present the Art Group as a
discontinued operation. Revenues of the Art Group, included in discontinued operations in the

6

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condensed
consolidated statements of operations, were $8.5 million for the period from January 1, 2004 to March 12, 2004, and $9.3 million for the three months ended
March 31, 2003.

4.    Goodwill and Other Intangible Assets

The changes in the carrying amount of goodwill for the three months ended March 31, 2004, by operating segment, are as follows (in thousands):

|                                                         |  | Trade Shows
and
Conferences |         | Trade
Publications |   | Marketing
Services |   | Totals |       
|-------------------------------------------------------- |  | --------------------------- | ------- | ------------------ | - | ------------------ | - | ------ | ------
|Balance as of December 31, 2003                          |  | $                           | 497,095 |                    | $ | 214,323            |   | $      | 31,078
|Goodwill acquired or finally allocated during the period |  |                             | 3,040   |                    |   | 1,015              |   |        |      
|Goodwill allocated to business disposition               |  |                             | (13,264 | )                  |   | (3,346             | ) |        |      
|Foreign currency translation                             |  |                             | (593    | )                  |   | 340                |   |        | (14   
|                                                         |  |                             |         |                    |   |                    |   |        |       
|Balance as of March 31, 2004                             |  | $                           | 486,278 |                    | $ | 212,332            |   | $      | 31,064
|                                                         |  |                             |         |                    |   |                    |   |        |       

Trade
exhibitor and advertiser lists are amortized on a double-declining balance method over six years and five years, respectively, subscriber lists and other intangible assets are
amortized on a straight-line basis over three to ten years, trademarks and trade names are amortized on a straight-line basis over 20 years. These intangible assets
consist of the following as of March 31, 2004 and December 31, 2003 (in thousands):

March 31,
2004

December 31,
2003Trade exhibitor lists

$
156,994

$
156,939Advertiser lists


62,297


62,303Subscriber lists


29,290


28,577Trade names and trademarks


18,016


18,016Other intangible assets


25,625


21,593Deferred financing costs


22,245


21,942314,467


309,370Accumulated amortization


(177,428
)

(167,000
)Total intangible and other assets, net

$
137,039

$
142,370


Estimated
amortization expense of identified intangible assets and other for the remaining nine months of 2004 and for the next five years is as follows: (in thousands):

2004

$
33,4792005


37,5262006


26,8832007


11,1172008


7,5732009


3,601


7

---



5.    Financial Derivative Instruments

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



Variable rate debt instruments are subject to interest rate risk. In 2001 the Company entered into an interest rate collar agreement expiring
February 2004, to manage its exposure to interest rate movements on a portion of its variable rate debt obligations. The effective portion of the cumulative gain or loss on the interest rate
collar agreement was reported as a component of accumulated other comprehensive income in stockholder's equity and recognized in earnings as the underlying interest expense was incurred. The
ineffective portion of the interest rate collar agreement was recognized in current earnings. Gains and losses on the undesignated portion of this agreement were recognized in current earnings until
expiration.

In
May 2003 the Company entered into an interest rate swap agreement expiring November 2005, and subsequently terminated the agreement in December 2003. The net gain
at termination of approximately $0.2 million will continue to be reported in accumulated other comprehensive income and amortized into earnings over the original contract term.



The Company uses forward contracts to manage its exposure associated with forecasted international revenue and expense transactions for up to 15 months in
the future. Foreign currencies hedged are the Euro, British Pound Sterling and the Brazilian Real. Changes in the fair value of these instruments are reported as a component of accumulated other
comprehensive income in stockholder's equity and are recognized in earnings as the underlying revenue is recognized. Forward contracts not designated as hedging instruments under SFAS No. 133
are also used to manage the impact of the variability in exchange rates. Changes in the fair value of these foreign exchange contracts are recognized in current earnings.

At
March 31, 2004, the Company had foreign exchange derivative contracts to sell with a notional amount totaling $5.1 million and to buy totaling $1.7 million. The
estimated fair value of the foreign exchange contracts based upon market quotes was a net liability of $0.1 million.

8

---





The following table summarizes the effects of SFAS 133 on the Company's accumulated other comprehensive income as of March 31, 2004 and 2003 (in
thousands):

Interest Rate
Collar
Agreements

Foreign
Exchange
Contracts

TotalAccumulated other comprehensive income (loss) balance at December 31, 2003

$
(42
)
$


$
(42
)Unwound from accumulated other comprehensive income (loss) during the period


244





244Mark to market hedge contracts


(52
)




(52
)Accumulated other comprehensive income (loss) balance at March 31, 2004

$
150




$
150Accumulated other comprehensive income (loss) balance at December 31, 2002

$
(4,350
)
$


$
(4,350
)Unwound from accumulated other comprehensive income (loss) during the period


1,363





1,363Mark to market hedge contracts


(451
)

(69
)

(520
)Accumulated other comprehensive income (loss) balance at March 31, 2003

$
(3,438
)
$
(69
)
$
(3,507
)


At
March 31, 2004, the Company estimates that it will reclassify out of accumulated other comprehensive income approximately $0.1 million of deferred gains into earnings
within the next 12 months. The fair value of the Company's derivatives was a net liability position of $0.1 million and $1.5 million at March 31, 2004 and
December 31, 2003, respectively, which is included in accrued liabilities in the accompanying condensed consolidated balance sheets.



The following tables summarize the effects of SFAS No. 133 included in other income (expense) in the Company's statement of operations related to the
ineffective portion of the Company's interest rate protection agreements and foreign exchange contracts not designated as hedging instruments for the three months ended March 31, 2004 and 2003
(in thousands):

Interest Rate
Collar
Agreements

Foreign
Exchange
Contracts

TotalThree months ended March 31, 2004

$
1,273

$
7

$
1,280Three months ended March 31, 2003

$
532

$
(89
)
$
443


9

---



6.    Debt



The credit facility (the "Credit Facility") originally consisted of (i) $415.0 million of term loans A and B payable in quarterly installments
through October 11, 2007, and (ii) $80.0 million of revolving loans availability through April 11, 2007. The Credit Facility contained restrictive covenants which required
the Company to, among other things, maintain a maximum quarterly leverage ratio (as defined) that declined quarterly through the fourth quarter of 2004, and maintain a minimum fixed charge ratio (as
defined).

In
connection with its private placement of Senior Secured Notes in August 2003 described below, the Company and the lenders amended the Credit Facility to permit the private
placement and the proposed use of the proceeds to eliminate the leverage ratio covenant and amended certain other covenants contained in the Credit Facility and reduce the revolving loan commitments
from $80.0 million to $60.0 million. Failure of the Company to comply with the current covenants may cause an event of default under the Credit Facility. Borrowings under the Credit
Facility are collateralized by substantially all of the Company's assets.



On August 18, 2003, the Company issued $360.0 million of second priority senior secured notes (the "August senior secured notes"). On
September 25, 2003, the Company issued an additional $70.0 million of second priority senior secured notes (the "September senior secured notes") which were issued at a premium (together
with the August senior secured notes, the "Senior Secured Notes"). The Senior Secured Notes were issued in two tranches: $130.0 million of Second Priority Senior Secured Floating Rate Notes due
2008, which require quarterly amortization equal to 0.25% of the principal amount thereof (the "floating rate notes"), and $300.0 million of 10.75% Second Priority Senior Secured Notes due
2010. Interest on the floating rate notes is payable at a rate equal to three-month LIBOR, which is reset quarterly, plus 7.5%. Each tranche of the notes is collateralized by second priority liens on
substantially all the collateral pledged against borrowings under the Company's Credit Facility (other than the capital stock of certain of its subsidiaries and assets of its parent companies). The
notes contain restrictive covenants that, among other things, limit the Company's ability to incur debt, pay dividends and make investments. The Company entered into a registration rights agreement in
connection with the private placement pursuant to which the Company has registered substantially all of the notes.

The
Company used the net proceeds from the August senior secured notes offering to repay and terminate all outstanding term A loans under its credit facility and all but
$25.0 million of the outstanding term B loans and a portion of its revolving credit borrowings under its Credit Facility. The Company used the net proceeds of the September senior secured notes
offering to reduce revolver borrowings and acquire a portfolio of healthcare industry magazines and related custom projects business from the Thomson Corporation (Note 3).

The
Senior Secured Notes are fully and unconditionally guaranteed on a senior basis, jointly and severally, by the Company's wholly owned domestic subsidiaries. The financial covenants
under the Senior Secured Notes include limitations on certain asset dispositions, payments, debt incurrence, dividends and other restricted payments.

10

---





The Company's $160.0 million unsecured, 12% senior subordinated notes due 2011 (the "Senior Subordinated Notes") require semiannual
interest-only payments on February 15 and August 15 of each year. The Senior Subordinated Notes are fully and unconditionally guaranteed on a
senior subordinated basis, jointly and severally, by the Company's wholly owned domestic subsidiaries. The financial covenants under the Senior Subordinated Notes include limitations on certain asset
dispositions, payments, debt incurrence, dividends and other restricted payments.

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

March 31,
2004

December 31,
2003Term loan B, interest at LIBOR plus 4.50%; 5.59% at March 31, 2004, due quarterly through October 11, 2008

$
25,000

$
25,000Revolving credit loan, interest at LIBOR plus 3.75%; 4.87% at March 31, 2004, due April 11, 2007





8,000Second priority senior secured floating rate notes, interest at LIBOR plus 7.5%, due 2008


129,350


129,67510.75% Second priority senior secured notes, due 2010, plus unamortized premium of $956 and $994 at March 31, 2004 and December 31, 2003, respectively


300,956


300,994Senior subordinated notes, interest at 12.00%, due 2011


160,000


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


1,500


2,000Acquisition note payable, interest at 6.00%, due April 1, 2004


400


400617,206


626,069Less current maturities


(3,200
)

(3,700
)$
614,006

$
622,369


7.    Comprehensive Income

The table below presents comprehensive income (loss), defined as changes in the equity of the Company excluding changes resulting from investments by and
distributions to shareholders (in thousands):

Three Months Ended
March 31,2004

2003Net income

$
16,100

$
15,686Change in cumulative translation Adjustment


(151
)

1,011Change in unrealized losses on derivative financial instruments


192


843Comprehensive income

$
16,141

$
17,540


11

---



8.    Segments

The Company follows the provisions of SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information," and has three reportable
segments: trade shows and conferences, trade publications and marketing services.

The
Company evaluates the performance of, and allocates resources to, its segments based on contribution margindefined as net revenue less cost of production and selling,
editorial, and circulation costs. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies. There are no inter-segment sales
or transfers. Segment assets are primarily intangible assets, prepaid expenses and accounts receivable. Revenues, contribution margins and segment assets of the Company's reportable segments are as
follows (in thousands):

|                                  |                            | Trade Shows
and
Conferences |   | Trade
Publications |  | Marketing
Services |         | Corporate
and Other |   | Total 
|--------------------------------- | -------------------------- | --------------------------- | - | ------------------ |  | ------------------ | ------- | ------------------- | - | ------
|Three months ended March 31, 2004 |                            |                             |   |                    |  |                    |         |                     |   |       
|                                  | Revenues                   |                             | $ | 68,225             |  | $                  | 47,169  |                     | $ | 4,309 
|                                  | Contribution margin (loss) |                             |   | 38,758             |  |                    | 13,186  |                     |   | 2,287 
|                                  | Segment assets             |                             |   | 546,253            |  |                    | 309,527 |                     |   | 33,159
|Three months ended March 31, 2003 |                            |                             |   |                    |  |                    |         |                     |   |       
|                                  | Revenues                   |                             | $ | 65,572             |  | $                  | 30,749  |                     | $ | 3,491 
|                                  | Contribution margin (loss) |                             |   | 38,015             |  |                    | 8,717   |                     |   | 1,170 
|                                  | Segment assets             |                             |   | 580,304            |  |                    | 180,263 |                     |   | 32,361

The
reconciliation of total segment contribution margin to consolidated (loss) income before taxes, minority interests and cumulative effect of accounting change is as follows (in
thousands):

Three Months Ended
March 31,2004

2003Total segment contribution margin

$
53,425

$
47,485General and administrative expense


(11,437
)

(9,868
)Funding of affiliated dot.com company operations


(538
)

(210
)Depreciation and amortization


(11,524
)

(12,870
)Other expense (primarily interest)


(16,979
)

(11,687
)Income from continuing operations before income taxes and minority interests

$
12,947

$
12,850


9.    Relationship with Advanstar.com, Inc.

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

12

---



The
Company records advances and notes issued in support of Advanstar.com operations as an operating expense on the Company's consolidated statement of operations, as a reflection of the
ongoing nature of the operations of Advanstar.com in support of the Company's operations. Net advances and notes charged to the Company's operations during the three months ended March 31, 2004
and 2003 were approximately $0.5 million and $0.2 million, respectively. As described in Note 2, the Company expects to begin consolidating the operations of Advanstar.com with
those of the Company, beginning on January 1, 2005.

10.    Parent Company Notes

As part of the financing for the acquisition of the Company by the DLJ Merchant Banking Funds in October 2000 (the "Acquisition") and concurrently with the
closing of the offering of the Senior Subordinated Notes in February 2001, the Company's parent, Advanstar, Inc., issued discount notes (the "Discount Notes") with an aggregate principal
amount at maturity in aggregate of $171.8 million. These notes do not require cash interest payments until 2006. Neither the Company nor any of its subsidiaries guaranteed the Discount Notes.
Advanstar, Inc., however, is a holding company and its ability to pay interest on these Discount Notes will be dependent upon the receipt of dividends from its subsidiaries, principally
including the Company. The Credit Facility, the Senior Secured Notes and the Senior Subordinated Notes impose substantial restrictions on the Company's and its subsidiaries' ability to pay dividends.

11.    Supplemental Guarantor Condensed Consolidating Financial Statements



The Company's Senior Subordinated Notes and Senior Secured Notes are fully and unconditionally guaranteed on a senior subordinated basis and senior basis,
respectively, jointly and severally, by the Company and its wholly owned domestic subsidiaries. The subsidiary guarantors are MAGIC and Applied Business TeleCommunications. The condensed consolidating
financial statements of the guarantors are presented below and should be read in conjunction with the consolidated financial statements of the Company. Separate financial statements of the guarantors
are not presented because the guarantors are jointly, severally, fully, and unconditionally liable under the guarantees and the Company believes the condensed consolidating financial statements
presented are sufficiently meaningful in understanding the financial position and results of the guarantors.

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

13

---





Advanstar Communications Inc.  Condensed Consolidating Balance Sheets  At March 31, 2004(In thousands)

|                                                     |                                         | Communications             |           | Guarantor
Subsidiaries |         | Nonguarantor
Subsidiaries |         | Eliminations |         | Consolidated
Total |       
|---------------------------------------------------- | --------------------------------------- | -------------------------- | --------- | ---------------------- | ------- | ------------------------- | ------- | ------------ | ------- | ------------------ | ------
|ASSETS                                               |                                         |                            |           |                        |         |                           |         |              |         |                    |       
|Current assets:                                      |                                         |                            |           |                        |         |                           |         |              |         |                    |       
|                                                     | Cash and cash equivalents               |                            | $         | 24,061                 |         | $                         |        |              | $       | 7,743              |       
|                                                     | Accounts receivable, net                |                            |           | 31,115                 |         |                           | 94      |              |         | 1,897              |       
|                                                     | Prepaid expenses                        |                            |           | 5,722                  |         |                           | 132     |              |         | 1,861              |       
|                                                     | Other                                   |                            |           | 1,920                  |         |                           |        |              |         | 22                 |       
|                                                     |                                         |                            |           |                        |         |                           |         |              |         |                    |       
|                                                     |                                         | Total current assets       |           |                        | 62,818  |                           |         | 226          |         |                    | 11,523
|Noncurrent assets:                                   |                                         |                            |           |                        |         |                           |         |              |         |                    |       
|                                                     | Property, plant and equipment, net      |                            |           | 22,242                 |         |                           | 763     |              |         | 518                |       
|                                                     | Deferred tax asset                      |                            |           | 13,524                 |         |                           | 35      |              |         |                   |       
|                                                     | Intangible and other assets, net        |                            |           | 518,003                |         |                           | 277,986 |              |         | 70,724             |       
|                                                     | Investments in subsidiaries             |                            |           | 529,307                |         |                           |        |              |         | 26,899             |       
|                                                     | Intercompany receivable                 |                            |           | 6,656                  |         |                           | 212,221 |              |         |                   |       
|                                                     |                                         |                            |           |                        |         |                           |         |              |         |                    |       
|                                                     |                                         | $                          | 1,152,550 |                        | $       | 491,231                   |         | $            | 109,664 |                    | $     
|                                                     |                                         |                            |           |                        |         |                           |         |              |         |                    |       
|LIABILITIES AND STOCKHOLDER'S EQUITY                 |                                         |                            |           |                        |         |                           |         |              |         |                    |       
|Current liabilities:                                 |                                         |                            |           |                        |         |                           |         |              |         |                    |       
|                                                     | Current maturities of long-term debt    |                            | $         | 3,200                  |         | $                         |        |              | $       |                   |       
|                                                     | Accounts payable                        |                            |           | 18,748                 |         |                           | 7,248   |              |         | 2,388              |       
|                                                     | Accrued liabilities                     |                            |           | 25,274                 |         |                           | 6,631   |              |         | 1,448              |       
|                                                     | Deferred revenue                        |                            |           | 30,741                 |         |                           | 574     |              |         | 2,701              |       
|                                                     |                                         |                            |           |                        |         |                           |         |              |         |                    |       
|                                                     |                                         | Total current liabilities  |           |                        | 77,963  |                           |         | 14,453       |         |                    | 6,537 
|Long-term debt, net of current maturities            |                                         |                            | 614,006   |                        |         |                          |         |              |        |                    |       
|Deferred income taxes and other long-term iabilities |                                         |                            | 12,110    |                        |         | 13,559                    |         |              | 328     |                    |       
|Intercompany payable                                 |                                         |                            | 210,050   |                        |         |                          |         |              | 8,827   |                    |       
|Due to parent                                        |                                         |                            | 3,585     |                        |         |                          |         |              |        |                    |       
|Minority interests                                   |                                         |                            | 9,400     |                        |         |                          |         |              | 985     |                    |       
|Stockholder's equity:                                |                                         |                            |           |                        |         |                           |         |              |         |                    |       
|                                                     | Common stock                            |                            |           | 10                     |         |                           | 3       |              |         | 947                |       
|                                                     | Capital in excess of par value          |                            |           | 447,367                |         |                           | 438,117 |              |         | 109,706            |       
|                                                     | (Accumulated deficit) retained earnings |                            |           | (225,494               | )       |                           | 25,099  |              |         | (21,071            | )     
|                                                     | Accumulated other comprehensive loss    |                            |           | 3,553                  |         |                           |        |              |         | 3,405              |       
|                                                     |                                         |                            |           |                        |         |                           |         |              |         |                    |       
|                                                     |                                         | Total stockholder's equity |           |                        | 225,436 |                           |         | 463,219      |         |                    | 92,987
|                                                     |                                         |                            |           |                        |         |                           |         |              |         |                    |       
|                                                     |                                         | $                          | 1,152,550 |                        | $       | 491,231                   |         | $            | 109,664 |                    | $     
|                                                     |                                         |                            |           |                        |         |                           |         |              |         |                    |       

14

---





Advanstar Communications Inc.  Condensed Consolidating Statements of Operations  For the three months ended March 31, 2004(In thousands)

|                                                                                    |                                                           | Communications           |        | Guarantor
Subsidiaries |        | Nonguarantor
Subsidiaries |        | Eliminations |       | Consolidated
Total |      
|----------------------------------------------------------------------------------- | --------------------------------------------------------- | ------------------------ | ------ | ---------------------- | ------ | ------------------------- | ------ | ------------ | ----- | ------------------ | -----
|Revenue                                                                             |                                                           | $                        | 78,927 |                        | $      | 32,762                    |        | $            | 8,200 |                    | $    
|Operating expenses:                                                                 |                                                           |                          |        |                        |        |                           |        |              |       |                    |      
|                                                                                    | Cost of production and selling, editorial and circulation |                          |        | 50,199                 |        |                           | 11,199 |              |       | 5,066              |      
|                                                                                    | General and administrative                                |                          |        | 9,866                  |        |                           | 354    |              |       | 1,217              |      
|                                                                                    | Funding of affiliated company operations                  |                          |        | 538                    |        |                           |       |              |       |                   |      
|                                                                                    | Depreciation and amortization                             |                          |        | 7,626                  |        |                           | 3,470  |              |       | 428                |      
|                                                                                    |                                                           |                          |        |                        |        |                           |        |              |       |                    |      
|                                                                                    |                                                           | Total operating expenses |        |                        | 68,229 |                           |        | 15,023       |       |                    | 6,711
|                                                                                    |                                                           |                          |        |                        |        |                           |        |              |       |                    |      
|Operating (loss) income                                                             |                                                           |                          | 10,698 |                        |        | 17,739                    |        |              | 1,489 |                    |      
|Other income (expense):                                                             |                                                           |                          |        |                        |        |                           |        |              |       |                    |      
|                                                                                    | Interest expense, net                                     |                          |        | (18,219                | )      |                           |       |              |       | 29                 |      
|                                                                                    | Other income, net                                         |                          |        | 942                    |        |                           |       |              |       | 269                |      
|                                                                                    |                                                           |                          |        |                        |        |                           |        |              |       |                    |      
|Income (loss) from continuing operations before income taxes and minority interests |                                                           |                          | (6,579 | )                      |        | 17,739                    |        |              | 1,787 |                    |      
|(Benefit) provision for income taxes                                                |                                                           |                          | (3,607 | )                      |        | 6,656                     |        |              | 76    |                    |      
|Minority interests                                                                  |                                                           |                          | (550   | )                      |        |                          |        |              | 57    |                    |      
|Equity in earnings of subsidiaries                                                  |                                                           |                          | 12,851 |                        |        |                          |        |              |      |                    |      
|                                                                                    |                                                           |                          |        |                        |        |                           |        |              |       |                    |      
|Income (loss) from continuing operations                                            |                                                           |                          | 9,329  |                        |        | 11,083                    |        |              | 1,768 |                    |      
|Discontinued operations:                                                            |                                                           |                          |        |                        |        |                           |        |              |       |                    |      
|Income from operations of discontinued business                                     |                                                           |                          | 6,771  |                        |        |                          |        |              |      |                    |      
|                                                                                    |                                                           |                          |        |                        |        |                           |        |              |       |                    |      
|Net income (loss)                                                                   |                                                           | $                        | 16,100 |                        | $      | 11,083                    |        | $            | 1,768 |                    | $    
|                                                                                    |                                                           |                          |        |                        |        |                           |        |              |       |                    |      

15

---





Advanstar Communications Inc.  Condensed Consolidating Statements of Cash Flows  For the three months ended March 31, 2004(In thousands)

|                                             |                                                                                 | Communications                            |        | Guarantor
Subsidiaries |         | Nonguarantor
Subsidiaries |        | Eliminations |       | Consolidated
Total |      
|-------------------------------------------- | ------------------------------------------------------------------------------- | ----------------------------------------- | ------ | ---------------------- | ------- | ------------------------- | ------ | ------------ | ----- | ------------------ | -----
|Operating activities:                        |                                                                                 |                                           |        |                        |         |                           |        |              |       |                    |      
|                                             | Net income (loss)                                                               |                                           | $      | 16,100                 |         | $                         | 11,083 |              | $     | 1,768              |      
|                                             | Adjustments to reconcile net loss to net cash provided by operating activities: |                                           |        |                        |         |                           |        |              |       |                    |      
|                                             |                                                                                 | Equity in earnings of subsidiaries        |        |                        | (12,851 | )                         |        |             |       |                    |     
|                                             |                                                                                 | Gain on derivative financial instruments  |        |                        | (1,280  | )                         |        |             |       |                    |     
|                                             |                                                                                 | Depreciation and amortization             |        |                        | 7,689   |                           |        | 3,470        |       |                    | 428  
|                                             |                                                                                 | Other noncash items                       |        |                        | 981     |                           |        | 86           |       |                    | (2   
|                                             |                                                                                 | Change in working capital items           |        |                        | (9,879  | )                         |        | (14,592      | )     |                    | (941 
|                                             |                                                                                 |                                           |        |                        |         |                           |        |              |       |                    |      
|                                             |                                                                                 | Net cash provided by operating activities |        |                        | 760     |                           |        | 47           |       |                    | 1,253
|                                             |                                                                                 |                                           |        |                        |         |                           |        |              |       |                    |      
|Investing activities:                        |                                                                                 |                                           |        |                        |         |                           |        |              |       |                    |      
|                                             | Additions to property, plant and equipment                                      |                                           |        | (1,618                 | )       |                           | (47    | )            |       | (59                | )    
|                                             | Acquisitions of publications and trade shows, net of proceeds                   |                                           |        | (7,986                 | )       |                           |       |              |       |                   |      
|                                             | Proceeds from sale of business and other assets                                 |                                           |        | 19,407                 |         |                           |        |              |       |                    |      
|                                             |                                                                                 |                                           |        |                        |         |                           |        |              |       |                    |      
|                                             |                                                                                 | Net cash used in investing activities     |        |                        | 9,803   |                           |        | (47          | )     |                    | (59  
|                                             |                                                                                 |                                           |        |                        |         |                           |        |              |       |                    |      
|Financing activities:                        |                                                                                 |                                           |        |                        |         |                           |        |              |       |                    |      
|                                             | Borrowings of long term debt, net                                               |                                           |        | (8,826                 | )       |                           |       |              |       |                   |      
|                                             | Deferred financing costs                                                        |                                           |        | (302                   | )       |                           |        |              |       |                    |      
|                                             | Dividends paid to minority interest holders                                     |                                           |        |                       |         |                           |       |              |       |                   |      
|                                             |                                                                                 |                                           |        |                        |         |                           |        |              |       |                    |      
|                                             |                                                                                 | Net cash used in financing activities     |        |                        | (9,128  | )                         |        |             |       |                    |     
|                                             |                                                                                 |                                           |        |                        |         |                           |        |              |       |                    |      
|Effect of exchange rate changes on cash      |                                                                                 |                                           |       |                        |         |                          |        |              | (99   | )                  |      
|                                             |                                                                                 |                                           |        |                        |         |                           |        |              |       |                    |      
|Net decrease in cash and cash equivalents    |                                                                                 |                                           | 1,435  |                        |         |                          |        |              | 1,095 |                    |      
|Cash and cash equivalents, beginning of year |                                                                                 |                                           | 22,626 |                        |         |                          |        |              | 6,648 |                    |      
|                                             |                                                                                 |                                           |        |                        |         |                           |        |              |       |                    |      
|Cash and cash equivalents, end of year       |                                                                                 | $                                         | 24,061 |                        | $       |                          |        | $            | 7,743 |                    | $    
|                                             |                                                                                 |                                           |        |                        |         |                           |        |              |       |                    |      

16

---





Advanstar Communications Inc.  Condensed Consolidating Balance Sheets  At December 31, 2003(In thousands)

|                   |                                               | Communications       |           | Guarantor
Subsidiaries |        | Nonguarantor
Subsidiaries |         | Eliminations |         | Consolidated
Total |       
|------------------ | --------------------------------------------- | -------------------- | --------- | ---------------------- | ------ | ------------------------- | ------- | ------------ | ------- | ------------------ | ------
|ASSETS             |                                               |                      |           |                        |        |                           |         |              |         |                    |       
|Current assets:    |                                               |                      |           |                        |        |                           |         |              |         |                    |       
|                   | Cash and cash equivalents                     |                      | $         | 21,568                 |        | $                         |        |              | $       | 7,706              |       
|                   | Accounts receivable, net                      |                      |           | 30,256                 |        |                           |        |              |         | 4,304              |       
|                   | Prepaid expenses                              |                      |           | 4,626                  |        |                           | 1,547   |              |         | 1,767              |       
|                   | Other                                         |                      |           | 1,718                  |        |                           |        |              |         | 53                 |       
|                   | Current assets of discontinued operations     |                      |           | 1,047                  |        |                           |        |              |         |                   |       
|                   |                                               |                      |           |                        |        |                           |         |              |         |                    |       
|                   |                                               | Total current assets |           |                        | 59,215 |                           |         | 1,547        |         |                    | 13,830
|Noncurrent assets: |                                               |                      |           |                        |        |                           |         |              |         |                    |       
|                   | Property, plant and equipment, net            |                      |           | 22,406                 |        |                           | 850     |              |         | 530                |       
|                   | Deferred tax asset                            |                      |           | 13,524                 |        |                           | 35      |              |         |                   |       
|                   | Intangible and other assets, net              |                      |           | 515,599                |        |                           | 281,321 |              |         | 71,336             |       
|                   | Non current assets of discontinued operations |                      |           | 18,451                 |        |                           |        |              |         |                   |       
|                   | Investments in subsidiaries                   |                      |           | 518,214                |        |                           |        |              |         | 27,792             |       
|                   | Intercompany receivable                       |                      |           | 3                      |        |                           | 208,188 |              |         |                   |       
|                   |                                               |                      |           |                        |        |                           |         |              |         |                    |       
|                   |                                               | $                    | 1,147,412 |                        | $      | 491,941                   |         | $            | 113,488 |                    | $     
|                   |                                               |                      |           |                        |        |                           |         |              |         |                    |       
|                   |                                               |                      |           |                        |        |                           |         |              |         |                    |       

17

---



|LIABILITIES AND
STOCKHOLDER'S EQUITY      |                                                |                            |           |          |         |         |         |         |         |         |        |          |          |          |         |         
|----------------------------------------- | ---------------------------------------------- | -------------------------- | --------- | -------- | ------- | ------- | ------- | ------- | ------- | ------- | ------ | -------- | -------- | -------- | ------- | --------
|Current liabilities:                      |                                                |                            |           |          |         |         |         |         |         |         |        |          |          |          |         |         
|                                          | Current maturities of long-term debt           |                            | $         | 3,700    |         | $       |        |         | $       |        |        | $        |         |          | $       | 3,700   
|                                          | Accounts payable                               |                            |           | 23,289   |         |         | 2,738   |         |         | 3,433   |        |          |         |          |         | 29,460  
|                                          | Accrued liabilities                            |                            |           | 23,513   |         |         | 6,554   |         |         | 3,244   |        |          |         |          |         | 33,311  
|                                          | Deferred revenue                               |                            |           | 37,124   |         |         | 16,954  |         |         | 2,622   |        |          |         |          |         | 56,700  
|                                          | Current liabilities of discontinued operations |                            |           | 4,198    |         |         |        |         |         |        |        |          |         |          |         | 4,198   
|                                          |                                                |                            |           |          |         |         |         |         |         |         |       
|                                          |                                                | Total current liabilities  |           |          | 91,824  |         |         | 26,246  |         |         | 9,299  |          |          |         |         |         
|Long-term debt, net of current maturities |                                                |                            | 622,369   |          |         |        |         |         |        |         |        |         |          |          | 622,369 |         
|Deferred income taxes and other long-term |                                                |                            |           |          |         |         |         |         |         |         |        |          |          |          |         |         
|liabilities                               |                                                |                            | 12,017    |          |         | 13,559  |         |         | 295     |         |        | (13,559  | )        |          | 12,312  |         
|Intercompany payable                      |                                                |                            | 199,239   |          |         |        |         |         | 8,952   |         |        | (208,191 | )        |          |        |         
|Due to parent                             |                                                |                            | 3,650     |          |         |        |         |         |        |         |        |         |          |          | 3,650   |         
|Minority interests                        |                                                |                            | 9,017     |          |         |        |         |         | 1,072   |         |        |         |          |          | 10,089  |         
|Stockholder's equity:                     |                                                |                            |           |          |         |         |         |         |         |         |        |          |          |          |         |         
|                                          | Common stock                                   |                            |           | 10       |         |         | 3       |         |         | 950     |        |          | (953     | )        |         | 10      
|                                          | Capital in excess of par value                 |                            |           | 447,367  |         |         | 438,117 |         |         | 112,204 |        |          | (550,321 | )        |         | 447,367 
|                                          | (Accumulated deficit) retained earnings        |                            |           | (241,594 | )       |         | 14,016  |         |         | (22,839 | )      |          | 8,823    |          |         | (241,594
|                                          | Accumulated other comprehensive loss           |                            |           | 3,513    |         |         |        |         |         | 3,555   |        |          | (3,555   | )        |         | 3,513   
|                                          |                                                |                            |           |          |         |         |         |         |         |         |       
|                                          |                                                | Total stockholder's equity |           |          | 209,296 |         |         | 452,136 |         |         | 93,870 |          |          | (546,006 | )       |         
|                                          |                                                |                            |           |          |         |         |         |         |         |         |       
|                                          |                                                | $                          | 1,147,412 |          | $       | 491,941 |         | $       | 113,488 |         | $      | (767,756 | )        | $        | 985,085 |         
|                                          |                                                |                            |           |          |         |         |         |         |         |         |       

18

---





Advanstar Communications Inc.  Condensed Consolidating Statements of Operations  For the three months ended March 31, 2003(In thousands)

|                                                                |                                                           | Communications           |        | Guarantor
Subsidiaries |        | Nonguarantor
Subsidiaries |       | Eliminations |       | Consolidated
Total |      
|--------------------------------------------------------------- | --------------------------------------------------------- | ------------------------ | ------ | ---------------------- | ------ | ------------------------- | ----- | ------------ | ----- | ------------------ | -----
|Revenue                                                         |                                                           | $                        | 59,003 |                        | $      | 31,589                    |       | $            | 9,483 |                    | $    
|Operating expenses:                                             |                                                           |                          |        |                        |        |                           |       |              |       |                    |      
|                                                                | Cost of production and selling, editorial and circulation |                          |        | 36,442                 |        |                           | 9,287 |              |       | 6,861              |      
|                                                                | General and administrative                                |                          |        | 8,282                  |        |                           | 327   |              |       | 1,259              |      
|                                                                | Funding of affiliated company operations                  |                          |        | 210                    |        |                           |      |              |       |                   |      
|                                                                | Depreciation and amortization                             |                          |        | 7,483                  |        |                           | 4,841 |              |       | 546                |      
|                                                                |                                                           |                          |        |                        |        |                           |       |              |       |                    |      
|                                                                |                                                           | Total operating expenses |        |                        | 52,417 |                           |       | 14,455       |       |                    | 8,666
|                                                                |                                                           |                          |        |                        |        |                           |       |              |       |                    |      
|Operating (loss) income                                         |                                                           |                          | 6,586  |                        |        | 17,134                    |       |              | 817   |                    |      
|Other income (expense):                                         |                                                           |                          |        |                        |        |                           |       |              |       |                    |      
|                                                                | Interest expense, net                                     |                          |        | (12,191                | )      |                           |      |              |       | 105                |      
|                                                                | Other income, net                                         |                          |        | 623                    |        |                           |      |              |       | (224               | )    
|                                                                |                                                           |                          |        |                        |        |                           |       |              |       |                    |      
|Income (loss) income before income taxes and minority interests |                                                           |                          | (4,982 | )                      |        | 17,134                    |       |              | 698   |                    |      
|(Benefit) provision for income taxes                            |                                                           |                          | (6,288 | )                      |        | 6,288                     |       |              | 304   |                    |      
|Minority interests                                              |                                                           |                          | (242   | )                      |        |                          |       |              | 114   |                    |      
|Equity in earnings of subsidiaries                              |                                                           |                          | 11,354 |                        |        |                          |       |              |      |                    |      
|                                                                |                                                           |                          |        |                        |        |                           |       |              |       |                    |      
|Net income (loss) from continuing operations                    |                                                           |                          | 12,418 |                        |        | 10,846                    |       |              | 508   |                    |      
|Discontinued operations:                                        |                                                           |                          |        |                        |        |                           |       |              |       |                    |      
|Income from operations of discontinued business                 |                                                           |                          | 3,268  |                        |        |                          |       |              |      |                    |      
|                                                                |                                                           |                          |        |                        |        |                           |       |              |       |                    |      
|Net income (loss)                                               |                                                           | $                        | 15,686 |                        | $      | 10,846                    |       | $            | 508   |                    | $    
|                                                                |                                                           |                          |        |                        |        |                           |       |              |       |                    |      

19

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Advanstar Communications Inc.  Condensed Consolidating Statements of Cash Flows  For the three months ended March 31, 2003(In thousands)

|                                             |                                                                                 | Communications                              |        | Guarantor
Subsidiaries |         | Nonguarantor
Subsidiaries |        | Eliminations |       | Consolidated
Total |      
|-------------------------------------------- | ------------------------------------------------------------------------------- | ------------------------------------------- | ------ | ---------------------- | ------- | ------------------------- | ------ | ------------ | ----- | ------------------ | -----
|Operating activities:                        |                                                                                 |                                             |        |                        |         |                           |        |              |       |                    |      
|                                             | Net income (loss)                                                               |                                             | $      | 15,686                 |         | $                         | 10,846 |              | $     | 508                |      
|                                             | Adjustments to reconcile net loss to net cash provided by operating activities: |                                             |        |                        |         |                           |        |              |       |                    |      
|                                             |                                                                                 | Equity in earnings of subsidiaries          |        |                        | (11,354 | )                         |        |             |       |                    |     
|                                             |                                                                                 | Gain on derivative financial instruments    |        |                        | (443    | )                         |        |             |       |                    |     
|                                             |                                                                                 | Depreciation and amortization               |        |                        | 7,768   |                           |        | 4,841        |       |                    | 546  
|                                             |                                                                                 | Other noncash items                         |        |                        | 1,218   |                           |        | 67           |       |                    | (44  
|                                             |                                                                                 | Change in working capital items             |        |                        | (13,140 | )                         |        | (15,458      | )     |                    | 1,224
|                                             |                                                                                 |                                             |        |                        |         |                           |        |              |       |                    |      
|                                             |                                                                                 | Net cash provided by operating activities   |        |                        | (265    | )                         |        | 296          |       |                    | 2,234
|                                             |                                                                                 |                                             |        |                        |         |                           |        |              |       |                    |      
|Investing activities:                        |                                                                                 |                                             |        |                        |         |                           |        |              |       |                    |      
|                                             | Additions to property, plant and equipment                                      |                                             |        | (1,601                 | )       |                           | (296   | )            |       | (82                | )    
|                                             | Acquisitions of publications and trade shows, net of proceeds                   |                                             |        |                       |         |                           |       |              |       | (1                 | )    
|                                             |                                                                                 |                                             |        |                        |         |                           |        |              |       |                    |      
|                                             |                                                                                 | Net cash used in investing activities       |        |                        | (1,601  | )                         |        | (296         | )     |                    | (83  
|                                             |                                                                                 |                                             |        |                        |         |                           |        |              |       |                    |      
|Financing activities:                        |                                                                                 |                                             |        |                        |         |                           |        |              |       |                    |      
|                                             |                                                                                 | Borrowings of long term debt, net           |        |                        | (7,250  | )                         |        |             |       |                    |     
|                                             |                                                                                 | Deferred financing costs                    |        |                        | (27     | )                         |        |              |       |                    |      
|                                             |                                                                                 | Dividends paid to minority interest holders |        |                        |        |                           |        |             |       |                    |     
|                                             |                                                                                 |                                             |        |                        |         |                           |        |              |       |                    |      
|                                             |                                                                                 | Net cash used in financing activities       |        |                        | (7,277  | )                         |        |             |       |                    |     
|                                             |                                                                                 |                                             |        |                        |         |                           |        |              |       |                    |      
|Effect of exchange rate changes on cash      |                                                                                 |                                             | (3     | )                      |         |                          |        |              | 321   |                    |      
|                                             |                                                                                 |                                             |        |                        |         |                           |        |              |       |                    |      
|Net decrease in cash and cash equivalents    |                                                                                 |                                             | (9,146 | )                      |         |                          |        |              | 2,472 |                    |      
|Cash and cash equivalents, beginning of year |                                                                                 |                                             | 12,282 |                        |         |                          |        |              | 6,648 |                    |      
|                                             |                                                                                 |                                             |        |                        |         |                           |        |              |       |                    |      
|Cash and cash equivalents, end of year       |                                                                                 | $                                           | 3,136  |                        | $       |                          |        | $            | 9,120 |                    | $    
|                                             |                                                                                 |                                             |        |                        |         |                           |        |              |       |                    |      

20

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

This quarterly report on Form 10-Q contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Investors are cautioned not to place undue reliance on these forward-looking statements, including statements about plans and objectives of management, potential
acquisitions, market growth and opportunity. These forward-looking statements are neither promises or guarantees and involve risks and uncertainties that could cause actual results to differ
materially from those indicated by such forward-looking statements. You should not expect that these forward-looking statements will be updated or supplemented as a result of changing circumstances or
otherwise, and we disavow and disclaim any obligation to do so. Important cautionary statements and risk factors that would affect actual results are discussed in the Company's periodic reports and
registration statements filed with the Securities and Exchange Commission, including those under the caption entitled "Certain Factors Which May Affect Future Results" in the Company's annual report
on Form 10-K filed with the Securities and Exchange Commission on March 29, 2004.

Overview

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

We
report our business in three segments:



Trade
shows and conferences accounted for approximately 57% and 65% of total revenue in the first quarter of 2004 and 2003, respectively. Trade publications accounted for approximately
39% and 30% of total revenue in the first quarter of 2004 and 2003, respectively, while marketing services accounted for approximately 4% and 5% of total revenue in the first quarter of 2004 and 2003,
respectively. We expect that publications will constitute slightly more than 50% of our full year 2004 revenue as a result of the acquisition in October 2003 of the Thomson healthcare
properties. Our revenue reaches its highest levels during the first and third quarters of the year due to the timing of the MAGIC trade shows and our other large trade shows and conferences. Because
trade shows and conferences revenue is recognized when a particular event is held, we may experience fluctuations in quarterly revenue based on the movement of trade show dates from one quarter to
another.

Trends and Developments

The rebound in marketing and advertising spending in this economic recovery remains tentative and variable across the twenty industry sectors served by our trade
shows and publications.

Many
of our publishing properties are off to a sluggish start in the first quarter compared to last year as advertisers are beginning their 2004 marketing programs cautiously as they
evaluate the strength of their particular industry's recovery. Our healthcare and pharmaceutical publications are continuing their strong growth trend from 2003 in the first quarter of 2004. The
healthcare publications we

21

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recently
acquired from Thomson are performing to our expectations and should offer us opportunities for additional growth as we move ahead into the coming year. Trade advertising for our technology
publications stabilized in the first quarter with revenue declining less than 2.5% from the first quarter of 2003 after two years of double digit declines. We do not anticipate significant near term
recovery in our technology based publications due to continued uncertainty by our customers as to the pace of a technology spending recovery. Our travel publications remain depressed. Travel industry
trade advertising pages were down approximately 10% from the first quarter of 2003 in the face of continuing geopolitical uncertainty and difficult economic conditions in the travel industry.

Our
trade shows and conferences serving consumer facing industries continued to perform well in the first quarter. Our MAGIC events in February recorded gains in square footage, revenue
and attendance over the Spring 2003 and the August 2003 events. Our Powersports motorcycle events also increased revenue significantly over the first quarter last year. Our trade shows serving
technology markets had mixed results but our largest technology events in the document management and digital printing markets began to stabilize after three years of tech market declines.

Presentation of Financial Information



On October 1, 2003, we purchased a portfolio of healthcare industry magazines and related custom projects business from The Thomson Corporation and its
subsidiaries for $136 million in cash (including $1 million of related fees and expenses).

On
March 8, 2004, we purchased a portfolio of pharmaceutical industry specific magazines and conferences from the Institute of Validation Technology, Inc. ("IVT") for
$8.0 million in cash and assumed liabilities. In addition, the Company agreed to pay additional contingent cash purchase price based upon 2004 and 2005 operating results of the acquired assets.

We
have accounted for our acquisitions under the purchase method of accounting. Accordingly, our results of operations include the effect of these acquisitions from the date of purchase.

On
December 31, 2003, we sold a portfolio of automotive and technology industry trade shows and magazines operated by our U.K. subsidiary for a total sales price of
$2.2 million in cash, subject to a working capital adjustment. Total revenue and contribution margin for these properties in the first quarter of 2003 was $2.0 million and a loss of
$0.1 million, respectively.

On
March 12, 2004, we completed the sale of our art industry trade shows and magazines (the "Art Group") for a total selling price of $19.5 million in cash, subject to a
working capital adjustment. The portfolio included three trade shows, with 186,216 aggregate square feet in 2003, and two publications, with 935 aggregate advertising pages in 2003. The Company
recorded a gain on the sale of $1.0 million plus a tax benefit of $2.4 million. The results of the Art Group, along with the after tax gain, are
reported separately as discontinued operations in the condensed consolidated statements of operations for the three months ended March 31, 2004 and 2003. The results of the discontinued
operations do not reflect any interest expense or overhead allocated from the Company. Prior year consolidated financial statements have been restated to present the Art Group as a discontinued
operation. Art Group revenue included in discontinued operations in the condensed consolidated statements of operations was $8.5 million for the period from January 1, 2004 to
March 12, 2004, and $9.3 million for the three months ended March 31, 2003. For the full year of 2003, the art portfolio revenue and operating income was $10.9 million and
$2.0 million, respectively.



In August 2003, we amended our credit facility to permit the issuance of $360.0 million of second priority senior secured notes and the use of the
proceeds thereof, eliminate the leverage ratio covenant

22

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and
amend certain other covenants contained in the credit facility and reduce the revolving loan commitments thereunder from $80 million to $60 million. We recorded an expense of
$11.3 million in the third quarter of 2003 to reflect the write-off of deferred financing costs related to the term loans which were repaid with the proceeds of the offering. Our
interest expense and cash interest will be higher in future periods as a result of this refinancing. In addition, we reclassified $1.8 million of deferred losses related to our interest rate
collar and swap agreements previously reported as a component of accumulated other comprehensive income into other expenses in the third quarter of 2003. Gains and losses on the portion of these
agreements not designated as hedges of the second priority senior secured floating rate notes at the end of each fiscal quarter (which are calculated as the net amount payable upon termination at the
date of determination) are recognized in current earnings.

In
September 2003 we issued $70 million of second priority senior secured notes and used the net proceeds to repay approximately $12 million of outstanding
borrowings under our revolving credit facility and purchase short-term investments pending completion of the Thomson acquisition. On October 1, 2003, we used $136.0 million
in cash, including $56 million of the net proceeds of the September offering to finance the Thomson acquisition.

Sources of Revenue



The trade shows and conferences segment derives revenue principally from the sale of exhibit space and conference attendance fees generated at our events. In
2003, approximately 82% of our trade show and conference revenue was from the sale of exhibit space. Events are generally held on an annual basis in major metropolitan or convention areas such as New
York City and Las Vegas. At many of our trade shows, a portion of exhibit space is reserved as much as a year in advance. The sale of exhibit space is generally impacted by the ongoing quality and
quantity of attendance, venue selection and availability, industry cycle and general market conditions. Revenue and related direct event expenses are recognized in the month in which the event is
held. Cash is collected in advance of an event and is recorded on our consolidated balance sheet as deferred revenue.



The trade publications segment derives revenue principally from the sale of advertising in our B-to-B magazines. Additionally, certain
publications derive revenue from paid subscriptions and custom publishing and projects. Paid subscriptions comprise less than 5% of total publishing revenue. Most publications are produced monthly
with advertising sold both on a scheduled and a single insertion basis. The sale of advertising is generally impacted by circulation and editorial quality, readership, new product releases and general
market conditions. Advertising revenue is recognized on the publication issue date, and subscription revenue, if any, is recognized over the subscription period, typically one year.



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

23

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Components of Expenses



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



Costs incurred by the trade publications segment include printing, paper and postage; selling and promotion; editorial and prepress; and circulation acquisition
and fulfillment. Additionally, publisher and sales staff costs, and production, editorial and circulation staff costs, with related payroll taxes and benefits, are charged to the publications segment.
We outsource the actual printing of our publications. Printing, paper and postage costs are charged to operations at the time of publication issuance. All other direct costs are charged to operations
in the month incurred.



Costs of the marketing services segment include printing and distribution costs, database administration fees and selling and product development salaries and
related payroll taxes and benefits. All direct costs are expensed in the month incurred.

Significant Accounting Policies and Estimates

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

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

Revenue Recognition.We recognize revenue as discussed in the "Sources of Revenue" section above. The balance of
deferred revenue was $34.0 million at March 31, 2004; $20.7 million for trade publications and $13.3 million for trade shows. On a relative basis, deferred revenue reaches
its highest levels during the second and fourth quarters of the year largely due to the timing of theMAGICtrade shows and our other large trade shows
and conferences.

Allowance for Doubtful Accounts.We maintain an allowance for doubtful accounts for estimated losses resulting from the
inability of our customers to make required payments. The balance of the allowance for doubtful accounts at March 31, 2004 and December 31, 2003 was $1.2 million and
$1.0 million, respectively. If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.

The
allowance for doubtful accounts is an estimate based on specifically identified accounts as well as general reserves. We evaluate specific accounts where we have information that the
customer may

24

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have
an inability to meet its financial obligations. In these cases, management uses its judgment, based on the best available facts and circumstances, to determine if a specific reserve for that
customer's receivable is warranted.. These specific reserves are reevaluated and adjusted as additional information is received that impacts the amount reserved. We also establish a general reserve
for all customers based on percentages applied to customer balances depending on the age of the amount due. This percentage is based on historical collection and write-off experience and
varies by geographic region. If circumstances change, our estimates of the recoverability of amounts due us could be reduced or increased by a material amount. Such a change in estimated
recoverability would be accounted for in the period in which the facts that give rise to the change become known.

Deferred Taxes.Pursuant to the requirements of SFAS No. 109, we record a valuation allowance to reduce our deferred
tax assets to the amount that we determine is more likely than not to be realized. At March 31, 2004 we have recorded a valuation allowance to offset the deferred tax benefit associated with
all of our U.S. and foreign net operating loss carryforwards because the realization of these benefits is not considered likely. We have considered future taxable income and ongoing prudent and
feasible tax planning strategies in assessing the need for the valuation allowance. In the event we were to subsequently determine that we would be able to realize our deferred tax assets in the
future in excess of our net recorded amount, a reduction in the valuation allowance would result in an income tax benefit and would increase net income or reduce net loss in the period such
determination was made.

Amortization of Intangible Assets.Intangible assets related to trade exhibitor and advertiser lists are amortized using a
double-declining balance method over 6 years and 5 years, respectively. Intangible assets related to tradenames and trade marks are amortized using a straight-line method
over 20 years. Intangible assets related to subscriber lists and other intangible assets are amortized using a straight-line method over 3 to 10 years. We amortize intangible
assets on a basis which corresponds to our projections of future cash flows directly related to these intangible assets. A change in circumstances could result in a determination that asset lives
should be changed or that the related assets are impaired and impairment charges to reduce the carrying value of intangible assets may be necessary. The effect of any changes in useful lives or a
determination that the carrying value of an intangible asset is impaired would be accounted for in the period that such determination was made.

Impairment of Long-Lived Assets.We evaluate the carrying value of long-lived assets, including
identifiable intangibles, for impairment when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If impairment indicators are present and the
estimated future undiscounted cash flows are less than the carrying value of the assets, the carrying value is reduced to the estimated fair value as measured by the associated discounted cash flows.

In
accordance with the provisions of SFAS No. 142, we evaluate goodwill for impairment using a two-step test based upon a fair value approach. The first step is used
to identify a potential impairment by comparing the carrying value of the net assets of each reporting unit to an estimate of the fair value of each of our reporting units (as defined by SFAS
No. 142), while the second step calculates the amount of impairment, if any. Additionally, goodwill will be tested for impairment between annual tests if an event occurs or circumstances change
that would more likely than not reduce the fair value of an entity below its carrying value. We determine the fair value of our reporting units by application of a discounted cash flow analysis. If
circumstances change, our estimates of fair value will also change and could result in a determination that additional impairment charges to reduce the carrying value of goodwill are necessary. We
engaged an appraiser to assist us in completing the first step of our annual goodwill impairment test for each of our three reporting units as of July 1, 2003. Based on this first step test,
which utilized a discounted cash flow method, there was no impairment of goodwill indicated.

25

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Selected Financial Data

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

|                                                                                                                            |                              | Three Months Ended
March 31,         |       
|--------------------------------------------------------------------------------------------------------------------------- | ---------------------------- | ------------------------------------ | ------
|
|
|Income Statement Data:                                                                                                      |                              |                                      |       
|Revenue                                                                                                                     |                              |                                      |       
|                                                                                                                            | Trade Shows and conferences  |                                      | $     
|                                                                                                                            | Publications                 |                                      |       
|                                                                                                                            | Marketing services and other |                                      |       
|                                                                                                                            |                              |                                      |       
|                                                                                                                            |                              | Total revenue                        |       
|Cost of production and selling                                                                                              |                              |                                      |       
|                                                                                                                            | Trade Shows and conferences  |                                      |       
|                                                                                                                            | Publications                 |                                      |       
|                                                                                                                            | Marketing services and other |                                      |       
|                                                                                                                            | Department and support costs |                                      |       
|                                                                                                                            |                              |                                      |       
|                                                                                                                            |                              | Total cost of production and selling |       
|General and administrative expenses                                                                                         |                              |                                      | 11,437
|Funding of affiliated dot.com company operations                                                                            |                              |                                      | 538   
|Depreciation and amortization                                                                                               |                              |                                      | 11,524
|                                                                                                                            |                              |                                      |       
|Operating income                                                                                                            |                              |                                      | 29,926
|Other income (expense):                                                                                                     |                              |                                      |       
|                                                                                                                            | Interest expense             |                                      |       
|                                                                                                                            | Other income (expense), net  |                                      |       
|                                                                                                                            |                              |                                      |       
|Income from continuing operations before income taxes and minority interests                                                |                              |                                      | 12,947
|Provision for income taxes                                                                                                  |                              |                                      | 3,125 
|Minority interests                                                                                                          |                              |                                      | (493  
|                                                                                                                            |                              |                                      |       
|Income from continuing operations                                                                                           |                              |                                      | 9,329 
|Income from operations of discontinued business (including gain on sale of $1,017 and income tax benefit of $2,404 in 2004) |                              |                                      | 6,771 
|                                                                                                                            |                              |                                      |       
|Net income                                                                                                                  |                              | $                                    | 16,100
|                                                                                                                            |                              |                                      |       

26

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Results of Operations

THREE MONTHS ENDED MARCH 31, 2004 COMPARED TO THE THREE MONTHS ENDED MARCH 31, 2003

Revenue

Revenue increased $19.8 million, or 19.8%, to $119.9 million in the quarter ended March 31, 2004 from $100.1 million in the quarter
ended March 31, 2003.

Revenue
from trade shows and conferences increased $2.6 million, or 4.0%, to $68.2 million in the first quarter of 2004 from $65.6 million in the first quarter of
2003. Three trade shows shifted between the first and second quarters from 2003 to 2004 increasing revenue by $1.6 million in the first quarter of 2004. Revenue for all events held in both the
first quarter of 2004 and 2003 increased $1.0 million, or 1.5%, in the first quarter of 2004. Strong performances came from MAGIC and the Powersports motorcycle events. MAGIC held a successful
event with revenue and square footage increasing approximately 4.7% and 4.5%, respectively, over the first quarter of 2003. Overall attendance grew 12.7% over the Spring 2003 event. The Powersports
motorcycle events, including the Dealer Expo trade show and the International Motorcycle Show tour generated an increase in revenue of 13.7% over the first quarter last year. Our trade shows serving
technology markets had mixed results with overall revenue from these events down 10.7%.

Revenue
from publications increased $16.5 million, or 53.4%, to $47.2 million in the first quarter of 2004 from $30.7 million in the first quarter of 2003
principally due to the expansion of our healthcare publication business with the acquisition of the healthcare properties from Thomson in October 2003. The acquired healthcare publication
properties contributed approximately $17.5 million of revenue in the first quarter of 2004. We continue to integrate the Thomson healthcare properties into our existing publication business.
The economic recovery remains tentative and uncertain across the various
industries served by our publications. For publications serving the technology and travel markets, revenue declined $1.3 million in the first quarter of 2004 compared to the first quarter of
2003 as advertising pages continued to decline in these markets. Revenue declined approximately $1.0 million in the first quarter of 2004 due to the sale of certain of our U.K. based properties
at the end of 2003 (see "Presentation of Financial InformationAcquisitions and Divestitures"). Across all our publications (other than the acquired healthcare properties, technology and
travel publications and the disposed properties) advertising pages increased 6.1% and revenue increased $1.3 million or 5.6% in the first quarter 2004 over the first quarter of 2003.

Revenue
from marketing services and other of $4.5 million in the first quarter of 2004 increased 19.7% from $3.8 million in the first quarter of 2003 due to positive
results in classified and recruitment advertising, principally from the acquired healthcare publications.

Cost of production and selling

Cost of production and selling expenses increased $13.9 million, or 26.4%, to $66.5 million in the first quarter of 2004 from $52.6 million
in the first quarter of 2003 primarily due to the acquisition of the healthcare properties in October 2003.

Expenses
of trade shows and conferences increased $1.9 million, or 6.9%, to $29.5 million in the first quarter of 2004 from $27.6 million in the first quarter of
2003. This increase was due in part to the impact of investments made in our MAGIC and Powersports events to pursue future revenue growth opportunities and several launches of new events in the U.S.
and Europe, partially offset by cost savings associated with the sale of certain of our U.K. based properties at the end of 2003.

Expenses
of trade publications increased $12.0 million, or 54.2%, to $34.0 million in the first quarter of 2004 from $22.0 million in the first quarter of 2003.
Operating costs were impacted by

27

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approximately
$12.8 million of additional costs associated with our acquisition of Thomson healthcare publishing properties in October 2003, including new investments in sales resources
and product enhancements. These cost increases were partially offset by cost savings of $1.0 million attributable to the sale of certain of our U.K. based properties at the end of 2003. Prices
for printing, paper and postage remained stable in the first quarter, however we have indications that paper prices may increase 5% to 8% in the second half of 2004.

Expenses
of marketing services and other declined $0.3 million, or 12.8%, to $2.0 million in the first quarter of 2004 from $2.3 million in the first quarter of
2003, due to cost savings associated with the reorganization of our marketing services department.

Department
and support costs of $1.0 million in the first quarter of 2004 increased $0.3 million compared the first quarter of 2003 due primarily to increased departmental
production staff related to the Thomson acquisition.

General and administrative expenses

General and administrative expenses increased $1.5 million, or 15.9%, to $11.4 million in the first quarter of 2004 from $9.9 million in the
first quarter of 2003, due principally to increased office and administrative costs attributable to the acquisition of the Thomson healthcare properties with the addition of three offices and
approximately 300 employees.

Funding of affiliated dot.com company operations

Advanstar.com, Inc. ("Advanstar.com"), an affiliate of ours, operates our event and publication-related web sites and develops certain enhanced web
opportunities to serve our customers in selected industries. We provide Advanstar.com with certain administrative support services and charge for these services based on a general overhead charge. In
addition, we share selected sales, editorial, marketing and production staff with Advanstar.com. We also provide Advanstar.com with marketing and promotional support through advertising pages in our
trade publications and exhibit space in our trade shows. In return, Advanstar.com provides us with support on its web sites for trade publications and trade shows.

Expense
associated with our funding of Advanstar.com increased $0.3 million to approximately $0.5 million in the first quarter of 2004 from $0.2 million in the first
quarter of 2003 due to additional development of web-based products and services. As described in "Recent Accounting Developments", we expect to begin consolidating the
operations of Advanstar.com with those of the Company, beginning on January 1, 2005.

Depreciation and amortization

Depreciation and amortization expense declined approximately $1.4 million to $11.5 million in the first quarter of 2004 from $12.9 million in
the first quarter of 2003 primarily due to the effect of the declining balance method of accelerated amortization on our exhibitor and advertiser lists, partially offset by additional amortization
related to acquisition of the Thomson healthcare properties.

Interest expense

Interest expense increased $6.1 million, or 50.5%, to $18.2 million in the first quarter of 2004 from $12.1 million in the first quarter of
2003 due to an increase in our weighted-average interest rate of approximately 300 basis points and an increase in our weighted-average debt outstanding of approximately $69.1 million as a
result of our financings discussed below.

In
August 2003, we issued $360 million of Senior Secured Notes and used the net proceeds to repay and terminate all outstanding term A loans under our credit facility and
all but $25 million of the

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outstanding
term B loans and a portion of our revolving credit borrowings under our credit facility. In September 2003, we issued $70 million of the Senior Secured Notes to finance, in
part, the Thomson acquisition. Our interest expense will be higher in future periods as a result of these financings. See "Presentation of Financial InformationPrivate Placement of Second
Priority Senior Secured Notes and Refinancing of Credit Facility".

At
March 31, 2004, approximately $462.9 million, or 75% of our total debt is at a fixed rate with the balance subject to interest rate fluctuations. A 100 basis point
increase in interest rates on our current variable rate debt would result in an increase in annual interest expense of $1.5 million. We previously entered into an interest rate collar agreement
to hedge our interest rate risk on these variable rate borrowings. The agreement expired in February 2004 and we currently have no plans to renew this interest rate collar agreement or
otherwise hedge our remaining floating rate debt.

Other income (expense), net

Other income increased $0.8 million to $1.2 million in the first quarter of 2004 from $0.4 million in the first quarter of 2003. This
increase is attributable to gains associated with our interest rate protection agreement, which expired in February 2004.

Provision (benefit) for income taxes

The provision for income taxes was $3.1 million in the first quarter of 2004 compared to $0.3 million in the first quarter of 2003. The first
quarter 2004 provision relates to income taxes in certain foreign jurisdictions and a deferred tax liability related to a basis difference resulting from goodwill for tax purposes being less than the
carrying value of goodwill for financial reporting purposes. We recorded no income tax benefit related to the net operating losses we generated during 2003 because we have established a valuation
allowance to offset any related tax benefits due to uncertainty about realization of these benefits. Our first quarter 2003 provision relates to income taxes in certain foreign jurisdictions.

Discontinued operations

On March 12, 2004, we sold our portfolio of art industry trade shows and magazines for a total sales price of $19.5 million in cash, subject to a
working capital adjustment, and recorded an after tax gain of $3.4 million. The results of the art portfolio, along with the after tax gain, are reported separately as discontinued operations
in both the current and prior quarter. Revenues and operating income of the art portfolio were $8.5 million and $3.4 million, respectively, in the first quarter of 2004, and
$9.3 million and $3.3 million, respectively, in the first quarter of 2003. For the full year of 2003, the art portfolio revenue and operating income was $10.9 million and
$2.0 million, respectively.

Liquidity and Capital Resources

Our principal sources of liquidity have been, and are expected to be, cash flows from operations and borrowings under our credit facility. Our principal uses of
cash have been, and are expected to be, the debt service requirements of our indebtedness described below, capital expenditures, investments in our publications and trade shows and strategic
acquisitions.

Debt Service.

As of March 31, 2004, we had total indebtedness of $617.2 million and approximately $57.9 million of borrowings available under our revolving
credit facility. Our principal debt obligations are described below.

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Credit Facility.Our credit facility consists of a $60.0 million revolving credit facility and $25.0 million
outstanding under the Term Loan B facility. The revolving credit facility will terminate in April 2007 and the Term Loan B matures in October 2008. Borrowings under the credit facility
generally bear interest based on a margin over, at our option, the base rate or LIBOR. The applicable margin for revolving credit loans varies based upon our ratio of consolidated debt to EBITDA, as
defined in the credit facility, and is currently 3.75% over LIBOR and 2.50% over the base rate. The applicable margin for the Term Loan B varies based upon the rating assigned by S&P and Moody's to
our credit facility and is currently 4.50% over LIBOR and 3.25% over the base rate. Our obligations under the credit facility are guaranteed by Advanstar Holdings Corp. ("Advanstar Holdings"), our
ultimate parent company, Advanstar, Inc., our direct parent company, and all our existing and future domestic subsidiaries and are collateralized by substantially all of the assets of our
company and the subsidiary guarantors, including a pledge of the capital stock of all our existing and future domestic subsidiaries, a pledge of no more than 65% of the voting stock of any foreign
subsidiary directly owned by our company or any domestic subsidiary, a pledge of all intercompany indebtedness in favor of our company and our domestic subsidiaries, a pledge of our company's and
Advanstar IH, Inc.'s capital stock by our parent company, and a pledge of our parent company's capital stock by Advanstar Holdings. Our credit facility contains restrictive covenants which
require us to, among other things, maintain a minimum fixed charge coverage ratio (as defined in the credit facility documents) as of the end of each fiscal quarter. Although there can be no
assurance, we believe, based on our anticipated performance and expected economic conditions, that we will be able to comply with the amended financial covenant contained in the credit facility in
2004.

Second Priority Senior Secured Notes.Our $130 million of floating rate notes mature in 2008 and our
$300 million of fixed rate notes mature in 2010. The notes of each series are guaranteed by each of our existing and future domestic restricted subsidiaries and collateralized by
second-priority liens on the assets collateralizing our credit facility (other than certain subsidiary stock and assets of our parent companies). The fixed rate notes bear interest at an annual rate
of 10.75% and the floating rate notes bear interest at an annual rate equal to the three-month LIBOR, which is reset quarterly, plus 7.50%. Interest on the fixed rate notes is payable
semi-annually in cash and interest on the floating rate notes, along with amortization of 0.25% of the principal of such floating rate notes, is payable quarterly in cash. The notes
contain restrictive covenants that, among other things, limit our ability to incur debt, pay dividends and make investments.

Senior Subordinated Notes.Our $160 million 12% senior subordinated notes mature in 2011 and are guaranteed by each of
our existing and future domestic restricted subsidiaries. Interest on the notes is payable semi-annually in cash. The notes contain restrictive covenants that, among other things, limit
our ability to incur debt, pay dividends and make investments.

Parent Company Notes.Our parent, Advanstar, Inc., issued 15% senior discount notes due October 2011 with a
principal amount at maturity of $171.8 million. These discount notes do not require cash interest payments until April 2006 and contain restrictive covenants that, among other things,
limit the ability of Advanstar, Inc. and its subsidiaries (including us) to incur debt, pay dividends and make investments. Neither we nor any of our subsidiaries have guaranteed the discount
notes. Advanstar, Inc., however, is a holding company and its ability to pay interest on these discount notes will be dependent upon the receipt of dividends from its subsidiaries, principally
Advanstar. However, the terms of our borrowing arrangements significantly restrict our ability to pay dividends to Advanstar, Inc. and Advanstar, Inc.'s failure to pay these notes would
be a default under our credit facility.

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Contractual and contingent obligations.Our contractual obligations (excluding accounts payable and accrued expenses), as of
December 31, 2003 are as set forth below (in millions):

|                                   |  | Payments Due By Period
|---------------------------------- |  | ----------------------
|
|Indebtedness                       |  | $                     
|Interest on indebtedness(2)        |  |                       
|Operating lease obligations        |  |                       
|                                   |  |                       
|Total Contractual Cash Obligations |  | $                     
|                                   |  |                       

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We have no material capital lease obligations or purchase obligations. Our contingent obligations are primarily composed of $2.1 million of
letters of credit and our interest rate and foreign currency derivatives discussed more fully below in Item 3. "Quantitative and Qualitative Disclosure About Market Risk."

Off-Balance Sheet Arrangements.

We have no material off-balance sheet arrangements.

Sources and Uses of Funds

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

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

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



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

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Cash flows from operating activities.Net cash provided by operations declined $0.2 million to $2.1 million in
the first quarter of 2004 compared to $2.3 million in the first quarter of 2003. Operating cash flows in the first quarter are significantly effected by the working capital characteristics of
our business, in particular the trade shows and conferences business. Deferred revenue increases on the balance sheet
in the quarters immediately preceding our busy first quarter trade show season as we collect deposits for booth space several months in advance of the trade shows. Revenue and contribution margin are
recognized in the quarter as the events are held, releasing the deferred revenue from the balance sheet resulting in a use of cash from the increase in net operating assets. This increase in net
operating assets was $25.4 million in the first quarter of 2004. Non-cash charges including depreciation and amortization expense of $11.6 million offset by other
non-cash net gains totaling $0.2 million and changes in operating assets and liabilities of $25.4 million reduced the cash effect of the first quarter 2004 net income of
$16.1 million. The use of cash caused by changes in our operating assets and liabilities is due largely to the collection of our first quarter trade show revenue in advance of our first
quarter. Non-cash charges including depreciation and amortization expense of $13.2 million and other non-cash charges of $0.8 million, offset by changes in our
operating assets and liabilities of $27.4 million served to reduce the cash effect of our first quarter 2003 net income of $15.7 million.

Cash flows provided by (used in) investing activities.Net cash provided by investing activities in the first quarter of 2004
was $9.7 million compared to net cash used in investing activities of $2.0 million in the first quarter of 2003. This change was principally due to the sale in March 2004 of our
art shows and magazines for a total sales price of $19.5 million in cash, partially offset by $8.0 million in cash used for the acquisition of the pharmaceutical publications and
conferences as further discussed below.

We
incurred capital expenditures of $1.7 million and $2.0 million in the first quarter of 2004 and 2003, respectively. We anticipate that we will spend approximately
$7.0 million on capital expenditures in 2004. The majority of these expenditures are related to expansions and enhancements to our IT and communications infrastructure and management and
operating group information systems. We believe that this amount of capital expenditure will be adequate to meet the needs of our business according to our business strategy and to maintain the key
trade shows, publications and business of our continuing operations.

Cash
used for acquisitions in the first quarter of 2004 increased $8.0 million relative to the first quarter of 2003 due to the acquisition in March 2004 of a portfolio of
pharmaceutical industry specific magazines and conferences for $8.0 million in cash. Our business strategy includes the consummation of strategic acquisitions. In connection with any future
acquisitions, we may require additional funding, which may be provided in the form of additional debt or equity financing or a combination thereof. There can be no assurance that any additional
financing will be available to us on acceptable terms or in a manner that complies with the restrictive covenants in our debt instruments.

Cash flows used in financing activities.Net cash flows used in financing activities increased $1.8 million to
$9.1 million in the first quarter of 2004 from $7.3 million in the first quarter of 2003. We paid down approximately $8.8 million in debt during the first quarter of 2004,
including $8.0 million on our revolver.



In December 2003, the FASB issued Interpretation No. 46R,Consolidation of Variable Interest
Entities, which addresses accounting for special-purpose and variable interest entities and which superseded Interpretation No. 46. The provisions of Interpretation
No. 46R are effective for the Company in the first quarter of 2005. Based upon the Company's preliminary analysis, the Company believes that it will be required to consolidate the operations of
Advanstar.com effective January 1, 2005. If the Company consolidates Advanstar.com, management believes the effect of adoption will be

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to
reduce the amount of Advanstar.com losses included in the Company's operating results. The Company does not expect this consolidation to have a material effect on its financial position, results of
operations or cash flows.

ITEM 3.Quantitative and Qualitative Disclosure about Market Risk

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

Interest Rates.At March 31,2004, we had fixed rate debt of $462.9 million and variable rate debt of
$154.3 million. The annual pre-tax earnings and cash flows impact resulting from a 100 basis point increase in interest rates on variable rate debt, holding other variables constant
and excluding the impact of the hedging agreements described below, would be approximately $1.5 million per year.

The
term loan B under our credit facility bears interest at a variable rate. We previously entered into an interest rate collar agreement to hedge our interest rate risk on these
borrowings. This interest rate collar agreement expired in February 2004. Changes in fair value of the undesignated portion of this instrument was recognized in current earnings. We currently
have no plans to renew this interest rate protection agreement or otherwise hedge our remaining floating rate debt.

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

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

Our
strategy for management of currency risk relies primarily on conducting our operations in a country's respective currency and may, from time to time, involve currency derivatives,
primarily forward exchange contracts, to reduce our exposure to currency fluctuations. As of March 31, 2004, we had open foreign exchange derivative contracts to sell with a notional amount
totaling $5.1 million, and to buy with a notional amount totaling $1.7 million. The estimated fair value of the foreign exchange contracts based upon market quotes was a net liability of
approximately $0.1 million. The potential loss in fair value resulting from a hypothetical 10% adverse change in quoted foreign currency exchange rates amounts to an additional loss of
approximately $0.4 million. Actual results may differ.

ITEM 4.Controls and Procedures

Evaluation of Disclosure Controls and Procedures.Advanstar's Chief Executive Officer and Chief Financial Officer, after
evaluating the effectiveness of the Company's disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period
covered by this report (the "Evaluation Date"), have concluded that as of the Evaluation Date, our

33

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disclosure
controls and procedures were adequate and designed to ensure that material information relating to the Company would be made known to them by others within the Company.

Changes in Internal Controls.There were no significant changes during the first fiscal quarter in our internal controls over
financial reporting that have materially affected or are reasonably likely to materially affect the Company's internal controls over financial reporting.

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PART II    OTHER INFORMATION

|Item 6.    |  | Exhibits and Reports on Form 8-K                                                                                
|---------- |  | ----------------------------------------------------------------------------------------------------------------
|Item 6(a). |  | Exhibits                                                                                                        
|           |  | 31.1                                                                                                            
|           |  | 31.2                                                                                                            
|           |  | 32.1                                                                                                            
|           |  | 32.2                                                                                                            
|Item 6(b). |  | Reports on Form 8-K                                                                                             
|           |  | The Company furnished a report on Form 8-K under Items 7 and 12 on March 3, 2004 setting forth its 2003 results.

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SIGNATURES

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

|             | ADVANSTAR COMMUNICATIONS INC.                                                                                                                                                        
|------------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|May 14, 2004 |                                                                                                                                                                                      
|             | /s/DAVID W. MONTGOMERYDavid W. Montgomery
Vice President-Finance, Secretary and
Chief Financial Officer
(Principal Financial Officer and Authorized
Representative of the Registrant)

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Exhibit Index

|Exhibit No. |  | Document                                                                                                      
|----------- |  | --------------------------------------------------------------------------------------------------------------
|31.1        |  | Certification of principal executive officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act 
|31.2        |  | Certification of principal financial officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act.
|32.1        |  | Certification of principal executive officer required by Rule 13a-14(b) or 15d-14(b) of the Exchange Act.     
|32.2        |  | Certification of principal financial officer required by Rule 13a-14(b) or 15d-14(b) of the Exchange Act.     

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