---

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SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-Q

|ý | Quarterly Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934.
|- | ----------------------------------------------------------------------------------------
|  | For the quarterly period ended: September 30, 2002                                      

Commission File Number: 333-61386

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

|Delaware(State or other jurisdiction of
incorporation or organization)             |  | 94-3243499(I.R.S. Employer
Identification No.)
|---------------------------------------------------------------------------------- |  | ----------------------------------------------
|545 Boylston Street, Boston, Massachusetts(Address of principal executive offices) |  | 02116(Zip Code)                               
|(617) 267-6500Registrant's Telephone Number, Including Area Code:                 

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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 November 14, 2002, 100 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 September 30, 2002 (unaudited) and December 31, 2001                      |  | 2                            
|           |  | Condensed Consolidated Statements of Operations (unaudited) for the three months ended September 30, 2002 and 2001 |  | 3                            
|           |  | Condensed Consolidated Statements of Operations (unaudited) for the nine months ended September 30, 2002 and 2001  |  | 4                            
|           |  | Condensed Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 2002 and 2001  |  | 5                            
|           |  | Notes to Condensed Consolidated Financial Statements (unaudited)                                                   |  | 6                            
|Item 2.    |  | Management's Discussion and Analysis of Financial Condition and Results of Operations                              |  | 18                           
|Item 3.    |  | Qualitative and Quantitative Disclosure about Market Risk                                                          |  | 31                           
|Item 4.    |  | Controls and Procedures                                                                                            |  | 32                           
|PART II    |  | Other Information                                                                                                  |  | 32                           
|Item 4.    |  | Submissions of Matters to a Vote of Security Holders                                                               |  | 32                           
|Item 6(a). |  | Exhibits                                                                                                           |  | 32                           
|Item 6(b). |  | Reports on Form 8-K                                                                                                |  | 32                           
|           |  | Signature                                                                                                          |  | 33                           

1

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ADVANSTAR, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)

|                                          |                                                                                                                                       | September 30,
2002                         |         | December 31,
2001 |        
|----------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------- | ----------------- | -------
|
|ASSETS                                    |                                                                                                                                      
|Current Assets                            |                                                                                                                                       |                                            |         |                   |        
|                                          | Cash and cash equivalents                                                                                                             |                                            | $       | 13,299            |        
|                                          | Accounts receivable, net                                                                                                              |                                            |         | 23,388            |        
|                                          | Prepaid expenses                                                                                                                      |                                            |         | 7,566             |        
|                                          | Other                                                                                                                                 |                                            |         | 7,608             |        
|                                          |                                                                                                                                       |                                            |         |                   |        
|                                          |                                                                                                                                       | Total current assets                       |         |                   | 51,861 
|Due from Parent                           |                                                                                                                                       |                                            |        |                   |        
|Property, plant and equipment, net        |                                                                                                                                       |                                            | 29,005  |                   |        
|Intangible and other assets               |                                                                                                                                       |                                            |         |                   |        
|                                          | Goodwill, net                                                                                                                         |                                            |         | 725,936           |        
|                                          | Intangibles and other, net                                                                                                            |                                            |         | 139,119           |        
|                                          |                                                                                                                                       |                                            |         |                   |        
|                                          |                                                                                                                                       | Total intangible and other assets          |         |                   | 865,055
|                                          |                                                                                                                                       |                                            |         |                   |        
|                                          |                                                                                                                                       | Total assets                               |         | $                 | 945,921
|                                          |                                                                                                                                       |                                            |         |                   |        
|LIABILITIES AND STOCKHOLDER'S EQUITY      |                                                                                                                                      
|Current Liabilities                       |                                                                                                                                       |                                            |         |                   |        
|                                          | Current maturities of long-term debt                                                                                                  |                                            | $       | 17,000            |        
|                                          | Accounts payable                                                                                                                      |                                            |         | 25,881            |        
|                                          | Accrued liabilities                                                                                                                   |                                            |         | 25,574            |        
|                                          | Deferred revenue                                                                                                                      |                                            |         | 25,483            |        
|                                          |                                                                                                                                       |                                            |         |                   |        
|                                          |                                                                                                                                       | Total current liabilities                  |         |                   | 93,938 
|Long-term debt, net of current maturities |                                                                                                                                       |                                            | 632,067 |                   |        
|Deferred income taxes                     |                                                                                                                                       |                                            | 6,687   |                   |        
|Other long-term liabilities               |                                                                                                                                       |                                            | 13,036  |                   |        
|Minority interests                        |                                                                                                                                       |                                            | 15,584  |                   |        
|Commitments and contingencies             |                                                                                                                                       |                                            |         |                   |        
|Stockholder's equity                      |                                                                                                                                       |                                            |         |                   |        
|                                          | Common stock, $.01 par value; 10,000 shares authorized; 100 shares issued and outstanding at September 30, 2002 and December 31, 2001 |                                            |         |                  |        
|                                          | Capital in excess of par                                                                                                              |                                            |         | 310,424           |        
|                                          | Accumulated deficit                                                                                                                   |                                            |         | (113,564          | )      
|                                          | Accumulated other comprehensive loss                                                                                                  |                                            |         | (12,251           | )      
|                                          |                                                                                                                                       |                                            |         |                   |        
|                                          |                                                                                                                                       | Total stockholder's equity                 |         |                   | 184,609
|                                          |                                                                                                                                       |                                            |         |                   |        
|                                          |                                                                                                                                       | Total liabilities and stockholder's equity |         | $                 | 945,921
|                                          |                                                                                                                                       |                                            |         |                   |        

See
notes to condensed consolidated financial statements.

2

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ADVANSTAR, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousandsUnaudited)

|                                                |                                    | Three Months
Ended
September 30,
2002 |        | Three Months
Ended
September 30,
2001 |       
|----------------------------------------------- | ---------------------------------- | ------------------------------------- | ------ | ------------------------------------- | ------
|
|Net revenue                                     |                                    | $                                     | 81,899 |                                       | $     
|                                                |                                    |                                       |        |                                       |       
|Operating expenses:                             |                                    |                                       |        |                                       |       
|                                                | Costs of production                |                                       |        | 15,657                                |       
|                                                | Selling, editorial and circulation |                                       |        | 27,463                                |       
|                                                | General and administrative         |                                       |        | 9,406                                 |       
|                                                | Amortization of intangible assets  |                                       |        | 14,711                                |       
|                                                | Depreciation                       |                                       |        | 3,603                                 |       
|                                                |                                    |                                       |        |                                       |       
|                                                |                                    | Total operating expenses              |        |                                       | 70,840
|                                                |                                    |                                       |        |                                       |       
|Operating income (loss)                         |                                    |                                       | 11,059 |                                       |       
|Other income (expense):                         |                                    |                                       |        |                                       |       
|                                                | Interest expense, net              |                                       |        | (16,724                               | )     
|                                                | Other income (expense), net        |                                       |        | 1,691                                 |       
|                                                |                                    |                                       |        |                                       |       
|Loss before income taxes and minority interests |                                    |                                       | (3,974 | )                                     |       
|Provision (benefit) for income taxes            |                                    |                                       | (75    | )                                     |       
|Minority interests                              |                                    |                                       | (1     | )                                     |       
|                                                |                                    |                                       |        |                                       |       
|Net loss                                        |                                    | $                                     | (3,900 | )                                     | $     
|                                                |                                    |                                       |        |                                       |       

See
notes to condensed consolidated financial statements.

3

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ADVANSTAR, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousandsUnaudited)

|                                                     |                                    | Nine Months
Ended
September 30,
2002 |         | Nine Months
Ended
September 30,
2001 |        
|---------------------------------------------------- | ---------------------------------- | ------------------------------------ | ------- | ------------------------------------ | -------
|
|Net revenue                                          |                                    | $                                    | 255,705 |                                      | $      
|                                                     |                                    |                                      |         |                                      |        
|Operating expenses:                                  |                                    |                                      |         |                                      |        
|                                                     | Costs of production                |                                      |         | 51,671                               |        
|                                                     | Selling, editorial and circulation |                                      |         | 90,963                               |        
|                                                     | General and administrative         |                                      |         | 32,663                               |        
|                                                     | Restructuring charge and other     |                                      |         |                                     |        
|                                                     | Amortization of intangible assets  |                                      |         | 43,701                               |        
|                                                     | Depreciation                       |                                      |         | 8,834                                |        
|                                                     |                                    |                                      |         |                                      |        
|                                                     |                                    | Total operating expenses             |         |                                      | 227,832
|                                                     |                                    |                                      |         |                                      |        
|Operating income                                     |                                    |                                      | 27,873  |                                      |        
|Other income (expense):                              |                                    |                                      |         |                                      |        
|                                                     | Interest expense, net              |                                      |         | (50,004                              | )      
|                                                     | Other income (expense), net        |                                      |         | 3,926                                |        
|                                                     |                                    |                                      |         |                                      |        
|Loss before income taxes and minority interests      |                                    |                                      | (18,205 | )                                    |        
|Provision (benefit) for income taxes                 |                                    |                                      | (417    | )                                    |        
|Minority interests                                   |                                    |                                      | (680    | )                                    |        
|                                                     |                                    |                                      |         |                                      |        
|Loss before extraordinary item and accounting change |                                    |                                      | (18,468 | )                                    |        
|Extraordinary item, net of tax                       |                                    |                                      |        |                                      |        
|Cumulative effect of accounting change, net of tax   |                                    |                                      |        |                                      |        
|                                                     |                                    |                                      |         |                                      |        
|Net loss                                             |                                    | $                                    | (18,468 | )                                    | $      
|                                                     |                                    |                                      |         |                                      |        

See
notes to condensed consolidated financial statements.

4

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ADVANSTAR, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousandsUnaudited)

|                                                             |                                                                                                                             | Nine Months
Ended
September 30,
2002                          |                                                     | Nine Months
Ended
September 30,
2001 |        
|------------------------------------------------------------ | --------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------- | --------------------------------------------------- | ------------------------------------ | -------
|
|Operating Activities                                         |                                                                                                                             |                                                               |                                                     |                                      |        
|                                                             | Net loss                                                                                                                    |                                                               | $                                                   | (18,468                              | )      
|                                                             | Adjustments to reconcile net income (loss) to net cash provided by operating activities, excluding effects of acquisitions: |                                                               |                                                     |                                      |        
|                                                             |                                                                                                                             | Extraordinary itemearly extinguishment of debt, net of taxes |                                                     |                                      |       
|                                                             |                                                                                                                             | Restructuring charge and other                                |                                                     |                                      |       
|                                                             |                                                                                                                             | Deferred income taxes                                         |                                                     |                                      | (3,070 
|                                                             |                                                                                                                             | Unrealized (gain) loss on derivative financial instruments    |                                                     |                                      | (967   
|                                                             |                                                                                                                             | Depreciation and amortization                                 |                                                     |                                      | 52,535 
|                                                             |                                                                                                                             | Non-cash interest                                             |                                                     |                                      | 13,196 
|                                                             |                                                                                                                             | Loss on sales of assets and other                             |                                                     |                                      | 718    
|                                                             |                                                                                                                             | Changes in operating assets and liabilities                   |                                                     |                                      | (32,852
|                                                             |                                                                                                                             |                                                               |                                                     |                                      |        
|                                                             |                                                                                                                             |                                                               | Net cash provided by (used in) operating activities |                                      |        
|                                                             |                                                                                                                             |                                                               |                                                     |                                      |        
|Investing Activities                                         |                                                                                                                             |                                                               |                                                     |                                      |        
|                                                             | Additions to property, plant and equipment                                                                                  |                                                               |                                                     | (5,833                               | )      
|                                                             | Acquisition of publications and trade shows, net of cash acquired                                                           |                                                               |                                                     | (14,327                              | )      
|                                                             | Proceeds from sale of assets and other                                                                                      |                                                               |                                                     | 21                                   |        
|                                                             |                                                                                                                             |                                                               |                                                     |                                      |        
|                                                             |                                                                                                                             | Net cash used in investing activities                         |                                                     |                                      | (20,139
|                                                             |                                                                                                                             |                                                               |                                                     |                                      |        
|Financing Activities                                         |                                                                                                                             |                                                               |                                                     |                                      |        
|                                                             | Net proceeds from revolving credit facility                                                                                 |                                                               |                                                     | (5,000                               | )      
|                                                             | Borrowings of long-term debt                                                                                                |                                                               |                                                     | (11,950                              | )      
|                                                             | Payments of long-term debt                                                                                                  |                                                               |                                                     |                                     |        
|                                                             | Long-term debt financing costs                                                                                              |                                                               |                                                     | (2,047                               | )      
|                                                             | Dividends paid to minority interest holders                                                                                 |                                                               |                                                     | (503                                 | )      
|                                                             | Capital contributions                                                                                                       |                                                               |                                                     |                                     |        
|                                                             |                                                                                                                             |                                                               |                                                     |                                      |        
|                                                             |                                                                                                                             | Net cash provided by (used in) financing activities           |                                                     |                                      | (19,500
|Effect of exchange rate changes on cash and cash equivalents |                                                                                                                             |                                                               | (2,951                                              | )                                    |        
|Net (decrease) increase in cash and cash equivalents         |                                                                                                                             |                                                               | (31,498                                             | )                                    |        
|Cash and cash equivalents, beginning of period               |                                                                                                                             |                                                               | 44,797                                              |                                      |        
|                                                             |                                                                                                                             |                                                               |                                                     |                                      |        
|Cash and cash equivalents, end of period                     |                                                                                                                             | $                                                             | 13,299                                              |                                      | $      
|                                                             |                                                                                                                             |                                                               |                                                     |                                      |        

See
notes to condensed consolidated financial statements.

5

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1.    Basis of Presentation

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

Reclassifications

Certain reclassifications have been made to amounts reported in prior periods in order to conform to the current period presentation.

2.    Restatement of Financial Information Relating to Intangible Assets

The Company has determined that the method of amortization of certain intangible assets acquired in the acquisition of the Company consisting of intangible assets
related to trade exhibitor lists and advertiser lists, should reflect the pattern in which the economic benefit would be realized. Accordingly, amortization of the affected intangible assets which was
recognized on a straight-line basis in 2001 and an accelerated basis in 2002 was adjusted to reflect accelerated methods which correspond to the Company's projections of future cash flows
directly related to these intangible assets.

6

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A
summary of the restatement of previously issued financial information is as follows:

|(in thousands)                                               |  | As Previously
Reported |         | As
Restated |  
|------------------------------------------------------------ |  | ---------------------- | ------- | ----------- | -
|Balance sheet at December 31, 2001                           |  |                        |         |             |  
|Intangible and other assets, net of accumulated amortization |  | $                      | 203,752 |             | $
|Deferred income tax liability                                |  |                        | 21,497  |             |  
|Minority interests                                           |  |                        | 14,640  |             |  
|Accumulated deficit                                          |  |                        | (76,834 | )           |  
|Accumulated other comprehensive loss                         |  |                        | (5,956  | )           |  
|Total stockholder's equity                                   |  |                        | 227,634 |             |  
|Statement of Operations                                      |  |                        |         |             |  
|Year ended December 31, 2001                                 |  |                        |         |             |  
|Amortization of intangible assets                            |  |                        | 56,581  |             |  
|Operating income (loss)                                      |  |                        | 4,676   |             |  
|Loss before income taxes and minority interests              |  |                        | (63,391 | )           |  
|Provision (benefit) for income taxes                         |  |                        | (11,987 | )           |  
|Minority interests                                           |  |                        | (186    | )           |  
|Loss before extraordinary item and accounting change         |  |                        | (51,590 | )           |  
|Net loss                                                     |  |                        | (54,698 | )           |  
|Statement of Operations                                      |  |                        |         |             |  
|Three Months Ended September 30, 2001                        |  |                        |         |             |  
|Amortization of intangible assets                            |  |                        | 15,761  |             |  
|Operating income (loss)                                      |  |                        | 7,921   |             |  
|Loss before income taxes and minority interests              |  |                        | (9,152  | )           |  
|Provision (benefit) for income taxes                         |  |                        | 32      |             |  
|Minority interests                                           |  |                        | 392     |             |  
|Net loss                                                     |  |                        | (8,792  | )           |  
|Statement of Operations                                      |  |                        |         |             |  
|Nine Months Ended September 30, 2001                         |  |                        |         |             |  
|Amortization of intangible assets                            |  |                        | 43,718  |             |  
|Operating income                                             |  |                        | 18,932  |             |  
|Loss before income taxes and minority interests              |  |                        | (30,578 | )           |  
|Provision (benefit) for income taxes                         |  |                        | (1,839  | )           |  
|Minority interests                                           |  |                        | (374    | )           |  
|Loss before extraordinary item and accounting change         |  |                        | (29,113 | )           |  
|Net loss                                                     |  |                        | (32,221 | )           |  

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

In
addition, during 2001 the Company made a reclassification of $1.8 million out of goodwill into other intangible assets related to an adjustment to the purchase price
allocation.

3.    Goodwill and Intangible Assets

Effective January 1, 2002, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 142, "Goodwill and Other Intangible Assets."
Under SFAS No. 142, goodwill and intangible assets with indefinite lives are no longer amortized. However, the Company is required to perform an initial impairment review of goodwill in 2002
and an annual impairment review thereafter,

7

---

or more frequently if impairment indicators arise. Identified intangible assets that are not deemed to have indefinite lives will continue to be amortized over their useful lives, but with no maximum
life.

During
the second quarter 2002, the Company completed an initial assessment of goodwill impairment. The assessment indicated that there is the potential for a goodwill impairment charge
related to our trade show segment, which has an aggregate net book value of goodwill of approximately $528.9 million. Preliminary valuations show that the carrying value of our trade show
segment is in excess of its fair value by approximately $11.6 million. Consequently, there is the possibility for a material, non-cash impairment charge in the fourth quarter of
2002. Once final measurement of the goodwill impairment has been completed, the charge will be recorded as the cumulative effect of an accounting change as of January 1, 2002. The Company
expects to complete the impairment measurement process in the fourth quarter of 2002.

Upon
adoption of SFAS No. 142, the Company discontinued the amortization of goodwill. The following table represents a reconciliation of income before extraordinary item and
accounting change and net income adjusted for the exclusion of goodwill amortization, net of tax (in thousands):

Three Months
Ended
September 30,
2002

Three Months
Ended
September 30,
2001

Nine Months
Ended
September 30,
2002

Nine Months
Ended
September 30,
2001(Restated)



(Restated)Reported loss before extraordinary item and accounting change

$
(3,900
)
$
(13,121
)
$
(18,468
)
$
(37,610
)Add: goodwill amortization, net of tax





5,685





17,055Adjusted loss before extraordinary item and accounting change

$
(3,900
)
$
(7436
)
$
(18,468
)
$
(20,555
)Reported net loss

$
(3,900
)
$
(13,121
)
$
(18,468
)
$
(40,718
)Add: goodwill amortization, net of tax





5,685





17,055Adjusted net loss

$
(3,900
)
$
(7,436
)
$
(18,468
)
$
(23,663
)


The
changes in the carrying amount of goodwill for the nine months ended September 30, 2002, by operating segment, are as follows (in thousands):

Trade Shows
and
Conferences

Trade
Publications

Marketing
Services

TotalsBalance as of December 31, 2001

$
557,109

$
131,932

$
30,345

$
719,386Goodwill acquired during the period (final purchase price allocations completed)


7,586


(697
)

(339
)

6,550Balance as of September 30, 2002

$
564,695

$
131,235

$
30,006

$
725,936


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

8

---

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

September 30,
2002

December 31,
2001(Restated)Trade exhibitor lists

$
161,410

$
160,318Advertiser lists


34,530


33,302Subscriber lists


23,423


22,339Other intangible assets


6,071


3,529Other assets


23,541


21,440248,975


240,928Accumulated amortization


(109,856
)

(64,819
)Total intangible and other assets, net

$
139,119

$
176,109


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

2002

$
60,7812003


42,1092004


25,4082005


17,5192006


12,328


4.    Derivative Financial Instruments

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

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

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

Interest Rate Risk

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

9

---

Foreign Currency Risk

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

At
September 30, 2002, the Company had foreign exchange derivative contracts to sell with a notional amount totalling $0.7 million and to buy totalling $0.5 million.
The estimated fair value of the foreign exchange contracts based upon market quotes was a net liability of $0.1 million at September 30, 2002.

Accumulated Other Comprehensive Income (Loss)

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

Interest Rate
Collar
Agreements

Foreign
Exchange
Contracts

TotalAccumulated other comprehensive income (loss) balance at December 31, 2001

$
(4,189
)
$
5

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


5,574


(5
)

5,569Mark to market of hedge contracts


(5,750
)




(5,750
)Accumulated other comprehensive income (loss) balance at September 30, 2002

$
(4,365
)
$


$
(4,365
)


The
fair value of the Company's derivatives was a net liability position of $6.9 million and $7.7 million at September 30, 2002 and December 31, 2001,
respectively, of which $4.7 million and $6.6 million is included in accrued liabilities at September 30, 2002 and December 31, 2001, respectively, and $2.2 million
and $1.1 million is included in other long-term liabilities at September 30, 2002 and December 31, 2001, respectively, in the accompanying condensed consolidated
balance sheets.

10

---

Statement of Operations

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

Interest Rate
Collar
Agreements

Foreign
Exchange
Contracts

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

$
80

$
60

$
140Total statement of operations impact before taxes

$
80

$
60

$
140Three months ended September 30, 2001 Other income (expense)

$
(674
)
$
(221
)
$
(895
)Total statement of operations impact before taxes

$
(674
)
$
(221
)
$
(895
)


Interest Rate
Collar
Agreements

Foreign
Exchange
Contracts

TotalNine months ended September 30, 2002Other income (expense)

$
368

$
599

$
967Total statement of operations impact before taxes

$
368

$
599

$
967Nine months ended September 30, 2001 Other income (expense)

$
(423
)
$
409

$
(14
)Total statement of operations impact before taxes

$
(423
)
$
409

$
(14
)


5.    Restructuring Charge and Other

In March 2001, the Company announced plans to more tightly focus the activities of its wholly owned subsidiary Advanstar.com, Inc. (Advanstar.com).
These plans will have the effect of more closely integrating many of the sales, marketing, technology and operating functions of Advanstar.com with its wholly owned subsidiary Advanstar
Communications Inc. (Communications) and its core activities in publishing, tradeshows and marketing services. These actions resulted in a first quarter 2001 restructuring charge of
$3.5 million, a second quarter 2001restructuring charge of $0.3 million and a fourth quarter 2001restructuring charge of $5.6 million. These charges included total severance
related payments of approximately $0.7 million, facility closure costs of approximately $6.6 million, asset impairments of approximately $1.3 million and approximately
$0.8 million of other contractual commitments. This decision by the Company resulted in a reduction in work force of 62 employees and the closing of two offices. These restructuring activities
were completed by the end of 2001, except for facility lease costs, which continue through June 2010. The asset impairment consisted of leasehold improvements from a facility the Company
vacated. All restructuring charges with the exception of the leasehold improvements have been paid in cash. During the three and nine months ended September 30, 2002 the Company paid
$0.1 million and $0.2 million, respectively, related to facility lease costs. The balance of the accrual at September 30, 2002 was $6.4 million, which principally
represents remaining facility lease costs, of which approximately $0.6 million is included in accrued liabilities and approximately $5.8 million is included in other
long-term liabilities in the accompanying condensed consolidated balance sheet at September 30, 2002.

11

---

6. Debt

Credit Facility

The senior credit facility (the Credit Facility) consists of (i) $415 million of term loans payable in quarterly installments beginning
March 31, 2001 and continuing through October 11, 2007 and (ii) $80 million of revolving loan availability. As of September 30, 2002, the Company had approximately
$48.4 million of borrowings available under the Credit Facility, subject to customary conditions. The Credit Facility contains a number of covenants that, among other things, require the
Company to maintain certain financial ratios, including leverage and fixed charge coverage ratios, as defined. Failure of the Company to comply with any of these covenants may cause an event of
default under the Credit Facility.

Borrowings
under the Credit Facility are collateralized by substantially all of the Company's assets. In addition, as of September 30, 2002, the Company has interest rate
protection agreements for a notional amount of $150 million that effectively guarantee that the Company's interest rate on $150 million of the Company's Credit Facility will not exceed
10.17 percent, nor be less than 9.00 percent. The net interest paid or received is included in interest expense. At September 30, 2002, the estimated fair value of the interest
rate protection agreements was a net liability position to the Company of approximately $6.9 million.

Senior Subordinated Debt and Discount Notes

On October 11, 2000, in connection with the acquisition of the Company, the Company issued 15 percent senior discount notes due October 2011
(the Discount Notes) with a principal amount at maturity of $103.2 million and warrants to purchase shares of common stock of Holdings for consideration of $50.0 million, to DLJ
Investment Partners. The notes bear interest at 15 percent, payable semiannually beginning October 2005, and have an implied yield to maturity of approximately 17.2 percent. The
Discount Notes are redeemable at the Company's option at specified premiums through 2007 and at par thereafter. The Discount Notes may also be redeemed at a premium upon a qualifying change of control
of the Company.

On
January 9, 2001, in connection with the acquisition of the Company, the 9.25 percent senior subordinated notes due in 2008 (the Notes) were tendered at an offer price in
cash equal to 101 percent of the aggregate principal amount, plus accrued interest. The Company financed the repurchase of the Notes with bridge financing. The premium paid on the tender of the
Notes of approximately $1.0 million, net of related tax benefits, is reflected as an extraordinary item in the accompanying 2001 consolidated statement of operations.

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

Concurrent
with the issuance of the Replacement Notes, Advanstar issued units comprised of 15 percent Discount Notes with an aggregate principal amount at maturity of
approximately $68.6 million and warrants to purchase shares of common stock of Holdings for consideration of approximately $34.8 million of which approximately $5.6 million was
paid to Holdings pursuant to the

12

---

issuance of the warrants. Holdings contributed the proceeds (approximately $5.6 million) from the warrants to the Company. The notes bear interest at 15 percent, payable semiannually
beginning October 2005, and have an implied yield to maturity of 17.2 percent. The Discount Notes are redeemable at the Company's option at specified premiums through 2007 and at par
thereafter. The Discount Notes may also be redeemed at a premium upon a qualifying change of control of the Company. Neither Communications 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, including
Communications. The credit facility and the senior subordinated notes impose substantial restrictions on our subsidiaries' ability to pay dividends.

The
Company used the proceeds from issuance of the Replacement Notes and the Discount Notes to repay and terminate the bridge financing and to repay approximately $45.0 million of
term loan borrowings under the Credit Facility. Concurrent with the issuance of the Discount Notes, DLJ Investment Partners, an affiliate of DLJMB, exchanged its senior discount notes issued as part
of the DLJ Acquisition for like units.

Accretion
of debt discount on the Discount Notes was approximately $3.8 million and $3.3 million for the three months ended September 30, 2002 and 2001,
respectively, and approximately $11.1 million and
$8.9 million for the nine months ended September 30, 2002 and 2001, respectively. These amounts are included in interest expense in the accompanying condensed consolidated statements of
operations.

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

|                                                                                                             |  | September 30,
2002 |         | December 31,
2001 |  
|------------------------------------------------------------------------------------------------------------ |  | ------------------ | ------- | ----------------- | -
|Term loan A, interest at LIBOR plus 3.25%; 5.07% at September 30, 2002, due quarterly through April 11, 2007 |  | $                  | 78,750  |                   | $
|Term loan B, interest at LIBOR plus 4.00%; 5.82% September 30, 2002, due quarterly through October 11, 2008  |  |                    | 280,800 |                   |  
|Revolving credit loan, interest at LIBOR plus 3.25%; 5.07% at September 30, 2002, due April 11, 2007         |  |                    | 29,000  |                   |  
|Senior subordinated notes at 12.00%, due 2011                                                                |  |                    | 160,000 |                   |  
|Senior discount notes at 15.00%, due October 11, 2011, net of discount                                       |  |                    | 96,017  |                   |  
|Acquisition note payable, interest at 5.50%, due monthly through 2004                                        |  |                    | 4,500   |                   |  
|                                                                                                             |  |                    |         |                   |  
|                                                                                                             |  |                    | 649,067 |                   |  
|Less- Current maturities                                                                                     |  |                    | (17,000 | )                 |  
|                                                                                                             |  |                    |         |                   |  
|                                                                                                             |  | $                  | 632,067 |                   | $
|                                                                                                             |  |                    |         |                   |  

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

13

---

7. Comprehensive Income

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

|                                                                              |  | Three Months
Ended
September 30,
2002 |         | Three Months
Ended
September 30,
2001 |  
|----------------------------------------------------------------------------- |  | ------------------------------------- | ------- | ------------------------------------- | -
|
|Net income (loss)                                                             |  | $                                     | (3,900  | )                                     | $
|Change in cumulative translation adjustment                                   |  |                                       | (4,986  | )                                     |  
|Change in unrealized losses on derivative financial Instruments, net of taxes |  |                                       | (1,202  | )                                     |  
|                                                                              |  |                                       |         |                                       |  
|Comprehensive loss                                                            |  | $                                     | (10,088 | )                                     | $
|                                                                              |  |                                       |         |                                       |  

|                                                                              |  | Nine Months
Ended
September 30,
2002 |         | Nine Months
Ended
September 30,
2001 |  
|----------------------------------------------------------------------------- |  | ------------------------------------ | ------- | ------------------------------------ | -
|
|Net income (loss)                                                             |  | $                                    | (18,468 | )                                    | $
|Change in cumulative translation adjustment                                   |  |                                      | (6,078  | )                                    |  
|Change in unrealized losses on derivative financial Instruments, net of taxes |  |                                      | (181    | )                                    |  
|                                                                              |  |                                      |         |                                      |  
|Comprehensive loss                                                            |  | $                                    | (24,727 | )                                    | $
|                                                                              |  |                                      |         |                                      |  

14

---

8. Segment Information

|                                                            |  | Trade Shows
and
Conferences |         | Trade
Publications |   | Marketing
Services |  | Corporate
and Other |        | Totals
|----------------------------------------------------------- |  | --------------------------- | ------- | ------------------ | - | ------------------ |  | ------------------- | ------ | ------
|
|Three months ended September 30, 2002                       |  |                             |         |                    |   |                    |  |                     |        |       
|Revenues                                                    |  | $                           | 46,988  |                    | $ | 30,567             |  | $                   | 3,651  |       
|Contribution margin                                         |  |                             | 28,120  |                    |   | 8,304              |  |                     | 1,464  |       
|Segment assets                                              |  |                             | 666,799 |                    |   | 176,173            |  |                     | 31,837 |       
|Three months ended September 30, 2001 (RestatedSee Note 2) |  |                             |         |                    |   |                    |  |                     |        |       
|Revenues                                                    |  | $                           | 42,797  |                    | $ | 33,757             |  | $                   | 3,780  |       
|Contribution margin                                         |  |                             | 26,473  |                    |   | 7,581              |  |                     | 1,904  |       
|Segment assets                                              |  |                             | 664,662 |                    |   | 190,396            |  |                     | 30,305 |       

|                                                           |  | Trade Shows
and
Conferences |         | Trade
Publications |   | Marketing
Services |  | Corporate
and Other |        | Totals
|---------------------------------------------------------- |  | --------------------------- | ------- | ------------------ | - | ------------------ |  | ------------------- | ------ | ------
|
|Nine months ended September 30, 2002                       |  |                             |         |                    |   |                    |  |                     |        |       
|Revenues                                                   |  | $                           | 145,387 |                    | $ | 96,290             |  | $                   | 11,322 |       
|Contribution margin                                        |  |                             | 78,907  |                    |   | 26,739             |  |                     | 5,032  |       
|Segment assets                                             |  |                             | 666,799 |                    |   | 176,173            |  |                     | 31,837 |       
|Nine months ended September 30, 2001 (RestatedSee Note 2) |  |                             |         |                    |   |                    |  |                     |        |       
|Revenues                                                   |  | $                           | 162,471 |                    | $ | 109,130            |  | $                   | 12,426 |       
|Contribution margin                                        |  |                             | 81,783  |                    |   | 26,921             |  |                     | 6,169  |       
|Segment assets                                             |  |                             | 664,662 |                    |   | 190,396            |  |                     | 30,305 |       

Contribution
margin is defined as net revenue less cost of production and selling, editorial and circulation costs.

15

---

The
reconciliation of total segment gross profit to consolidated pre-tax income (loss) is as follows (in thousands):

|                                                      |  | Three Months
Ended
September 30,
2002 |         | Three Months
Ended
September 30,
2001 |  
|----------------------------------------------------- |  | ------------------------------------- | ------- | ------------------------------------- | -
|
|Total segment contribution margin                     |  | $                                     | 38,779  |                                       | $
|General and administrative                            |  |                                       | (9,406  | )                                     |  
|Depreciation and amortization                         |  |                                       | (18,314 | )                                     |  
|Interest expense                                      |  |                                       | (16,724 | )                                     |  
|Other income (expense), net                           |  |                                       | 1,691   |                                       |  
|                                                      |  |                                       |         |                                       |  
|Consolidated loss before taxes and minority interests |  | $                                     | (3,974  | )                                     | $
|                                                      |  |                                       |         |                                       |  

|                                                      |  | Nine Months
Ended
September 30,
2002 |         | Nine Months
Ended
September 30,
2001 |  
|----------------------------------------------------- |  | ------------------------------------ | ------- | ------------------------------------ | -
|
|Total segment contribution margin                     |  | $                                    | 113,071 |                                      | $
|General and administrative                            |  |                                      | (32,663 | )                                    |  
|Restructuring charge and other                        |  |                                      |        |                                      |  
|Depreciation and amortization                         |  |                                      | (52,535 | )                                    |  
|Interest expense                                      |  |                                      | (50,004 | )                                    |  
|Other income (expense), net                           |  |                                      | 3,926   |                                      |  
|                                                      |  |                                      |         |                                      |  
|Consolidated loss before taxes and minority interests |  | $                                    | (18,205 | )                                    | $
|                                                      |  |                                      |         |                                      |  

9. Related-Party Transactions

Financial Advisory Fees and Agreements

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

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

10. New Accounting Pronouncements

In August 2001, the Financial Accounting Standards Board (FASB) issued Financial Accounting Standards No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets" (SFAS No. 144). This statement addresses financial accounting and reporting for the impairment or disposal of long-

16

---

lived assets. FAS 144 retains and expands upon the fundamental provisions of existing guidance related to the recognition and measurement of the impairment of long-lived assets to be held and
used and the measurement of long-lived assets to be disposed of by sale. Generally, the provisions of SFAS No. 144 are effective for financial statements issued for fiscal years beginning after
December 15, 2001. The Company has adopted SFAS No. 144 on January 1, 2002. The adoption of SFAS No. 144 did not impact the results of operations or financial position of
the Company for the three or nine month period ended September 30, 2002.

In
May 2002, the FASB issued Financial Accounting Standards No. 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and
Technical Corrections" (SFAS No. 145). SFAS No. 145 rescinds FASB Statement No. 4, "Reporting Gains and Losses from Extinguishment of
Debt",and an amendment of that Statement, FASB Statement No. 64, "Extinguishments of Debt Made to Satisfy Sinking-Fund
Requirements". SFAS No. 145 also rescinds FASB Statement No. 44, "Accounting for Intangible Assets of Motor Carriers". SFAS No. 145 amends FASB Statement No. 13,
"Accounting for Leases", to eliminate an inconsistency between the required accounting for sale-leaseback transactions and the required accounting for certain lease modifications that have
economic effects that are similar to sale-leaseback transactions. SFAS No. 145 also amends other existing authoritative pronouncements to make various technical corrections, clarify
meanings, or describe their applicability under changed conditions. SFAS No. 145 is generally effective for fiscal years beginning after May 15, 2002. The Company has not adopted SFAS
No. 145. The adoption of SFAS No. 145 is not expected to have a significant impact of the results of operations or financial position of the Company, but in accordance with the
transition provisions will result in the Company's fiscal 2001 extraordinary item being reclassified in the statement of operations.

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

17

---



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

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

General

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

We
report our business in three segments:



In
addition to our trade shows, trade publications and marketing services, we deliver our integrated B-to-B marketing communications products and services to our
customers using the internet, which we conduct through our separate subsidiary, Advanstar.com. For discussion purposes, we have included our internet activity in with our marketing services segment.

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

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

18

---



Our business and results of operations in 2002 have been significantly impacted by the recession in the U.S. economy, particularly in our Information
Technology & Communications trade shows and publications and our Travel & Hospitality publications. The events of September 11, 2001 also impacted our results in 2002 particularly
our trade shows, including cancellations and reductions in attendance at certain of our events. We are seeing early indications of stabilization in advertising in many of our markets, except for
continuing downward pressure in our technology and travel markets. For the third quarter, advertising revenue and pages increased 0.9% and 2.6%, respectively, over the same period last year across all
our sectors other than our travel and technology markets. Despite these early indications, the economic outlook in the publishing sector continues to be challenging, and forward visibility on our
advertising revenue and pages is limited, due to the concerns of our customers related
to the overall business environment. Our trade show segment continues to be negatively impacted by the economic recession, particularly in our technology sectors, with reductions in booth space and
attendance compared to the same period last year. We expect any improvement in the performance of our trade show segment to lag behind any general economic recovery as it lagged the downturn in the
economy going into recession beginning in late 2000.

In
response to the decline in revenues throughout 2001 and into 2002, we implemented early and aggressive cost management actions, including the layoff of staff, reductions in travel and
other operating costs, and reorganization of certain support functions and processes. Between January 2001 and September 2002 we reduced our overall headcount by 297 or 19.2% across all
functions in our company. Through these cost initiatives, we were able to mitigate the effect of the decline in revenue on our operating results for the third quarter and the first nine months of
2002.

The
persistence of the general economic slowdown in the U.S. will likely result in continued weakness in overall marketing and advertising expenditures by our customers into 2003. As a
result, we expect our revenues and EBITDA to reflect this overall weakness. However, we believe that our balanced portfolio between trade shows and publications and our diversification of these
products across many industry sectors may mitigate the overall impact from continued weakness in general economic conditions and reduce potential volatility of any one sector.



Acquisitions

Our
business strategy includes the consummation of strategic acquisitions. In connection with this strategy, we completed the following acquisitions:



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

19

---

Refinancing related to the DLJ Acquisition

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



Trade Shows and Conferences

Our trade shows and conferences derive revenue principally from the sale of exhibit space and conference attendance fees generated at the events. For the nine
months ended September 30, 2002, approximately 86% of our trade shows and conferences revenue was from the sale of exhibit space. Events are generally held on an annual basis in major
metropolitan or convention areas such as New York City or Las Vegas. At some of our trade shows, a portion of exhibit space is reserved and partial payment is received as much as a year in advance.
The sale of exhibit space is affected by the on-going quality and quantity of attendance, venue selection and availability, industry life cycle and general market conditions. Revenue and
related direct event expenses are recognized in the month in which the event is held. Cash is collected in advance of an event and is recorded on our balance sheet as deferred revenue.

Trade Publications

Our trade publications derive revenue principally from the sale of advertising in its business-to-business magazines. Additionally,
certain publications derive revenue from paid subscriptions and custom publishing. Paid subscriptions comprise less than 5% of total publishing revenue. Most publications are produced monthly with
advertising sold both on an annual schedule and single insertion basis. The sale of advertising is affected by new product releases, circulation quality, readership and general market conditions.
Advertising revenue is recognized on the publication issue date, and subscription revenue, if any, is recognized over the subscription period, typically one year.

Marketing Services

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

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



Trade Shows and Conferences

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

20

---

Trade Publications

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

Marketing Services

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

Significant Accounting Policies and Estimates

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

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



On
January 1, 2002, Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" (FAS 142) became effective for the Company and as a
result, we ceased amortizing

21

---

approximately $721.2 million of goodwill. We had recorded approximately $28.0 million of amortization on these amounts during 2001. In lieu of amortization, we are required to perform
an initial impairment review of our goodwill in 2002 and an annual impairment review thereafter.

During
the second quarter 2002, the Company completed an initial assessment of goodwill impairment. The assessment has indicated that there is the potential for a goodwill impairment
charge related to our trade show segment, which has an aggregate net book value of goodwill of approximately $528.9 million. Preliminary valuations show that the carrying value of our trade
show segment is in excess of its fair value by approximately $11.6 million. Consequently, there is the possibility for a material, non-cash impairment charge in the fourth quarter
of 2002. Once final measurement of the goodwill impairment has been completed, the charge will be recorded as the cumulative effect of an accounting change as of January 1, 2002. We expect to
complete the impairment measurement process in the fourth quarter of 2002.

Restatement of Financial Information Relating to Intangible Assets

We have determined that the method of amortization of certain intangible assets acquired in the acquisition of our company consisting of intangible assets related
to trade exhibitor lists and advertiser lists, should reflect the pattern in which the economic benefit would be realized. Accordingly, amortization of the affected intangible assets which was
recognized on a straight-line basis in 2001 and an accelerated basis in 2002 was adjusted to reflect accelerated methods which correspond to our projections of future cash flows directly
related to these intangible assets.

While
the adjustments to previously reported financial statements increase our net loss for the year ended December 31, 2001, these adjustments have no impact on net revenue or
cash flows for any period, do not impact measurements of EBITDA (defined below) and have no impact on the financial ratio covenants in our debt instruments. We intend to amend our prior filings on
Form 10-Q for the quarters ended March 31, 2002 and June 30, 2002 as well as our Form 10-K for the year ended December 31, 2001 to reflect
the restatement of our results of operations for 2001. See Note 2 in the Notes to our Condensed Consolidated Financial Statements for a summary of the restatement of certain previously issued
financial information relating to intangible assets.

Selected Financial Data

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

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

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To calculate EBITDA for the nine months ended September 30, 2002 and 2001, we adjusted operating income by $(1.0) million, respectively, to reflect minority interest. The
adjustment for the three month period ended September 30, 2002 and 2001 was not material.

|                                                     |                              | Three Months
Ended
September 30,     |        | Nine Months
Ended
September 30, |       
|---------------------------------------------------- | ---------------------------- | ------------------------------------ | ------ | ------------------------------- | ------
|
|
|Net revenue:                                         |                              |                                      |        |                                 |       
|                                                     | Trade shows and conferences  |                                      | $      | 46,988                          |       
|                                                     | Publications                 |                                      |        | 30,567                          |       
|                                                     | Marketing services and other |                                      |        | 4,344                           |       
|                                                     |                              |                                      |        |                                 |       
|                                                     |                              | Total net revenues                   |        |                                 | 81,899
|Cost of production and selling:                      |                              |                                      |        |                                 |       
|                                                     | Trade shows and conferences  |                                      |        | 18,868                          |       
|                                                     | Publications                 |                                      |        | 22,263                          |       
|                                                     | Marketing services and other |                                      |        | 1,989                           |       
|                                                     |                              |                                      |        |                                 |       
|                                                     |                              | Total cost of production and selling |        |                                 | 43,120
|General and administrative expenses                  |                              |                                      | 9,406  |                                 |       
|Restructuring charge                                 |                              |                                      |       |                                 |       
|Depreciation and amortization                        |                              |                                      | 18,314 |                                 |       
|                                                     |                              |                                      |        |                                 |       
|                                                     |                              | Operating income (loss)              |        |                                 | 11,059
|Other income (expense):                              |                              |                                      |        |                                 |       
|                                                     | Interest expense, net        |                                      |        | (16,724                         | )     
|                                                     | Other income (expense)       |                                      |        | 1,691                           |       
|Provision (benefit) for income taxes                 |                              |                                      | (75    | )                               |       
|Minority interests                                   |                              |                                      | (1     | )                               |       
|                                                     |                              |                                      |        |                                 |       
|Loss before extraordinary item and accounting change |                              | $                                    | (3,900 | )                               | $     
|                                                     |                              |                                      |        |                                 |       
|EBITDA                                               |                              | $                                    | 29,333 |                                 | $     
|                                                     |                              |                                      |        |                                 |       

Results of Operations

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

Net Revenue

Total net revenue increased $0.4 million, or 0.5%, to $81.9 million in the third quarter of 2002 from $81.5 million for the third quarter of
2001.

Net
revenue from trade shows and conferences increased $4.2 million, or 9.7%, to $47.0 million for the third quarter of 2002 from $42.8 million in the third quarter
of 2001. This increase was primarily attributable to a shift in the timing of when events take place and the launch of several conferences, partially offset by the continued effect of the economic
downturn on our 2002 events, particularly in our technology and fashion sectors. Revenue from our fallMAGICevent, our largest trade show held in the
third quarter, declined approximately 7.5% from the third quarter last year, which was held before the events of September 11, 2001. Revenue for the fall MAGICevent, however, increased 3.3% over
the spring 2002MAGICevent and attendance increased
approximately 8.4% over attendance at the spring MAGIC event. The downturn in the U.S. economy continued to impact revenue in our trade shows due to our customers' concern over its ongoing impact on
their marketing efforts. Revenue for
the quarter was impacted by a net shift in the timing of six trade shows. One was held in the first quarter of 2001, but moved to the third quarter of 2002 and five events were held in the fourth
quarter

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of 2001, but moved to the third quarter of 2002. Adjusting the third quarter 2001 for timing shifts, third quarter 2002 trade show revenue declined by $5.6 million or 10.6%.

Net
revenue from publications, marketing services and other declined $3.8 million, or 9.7%, to $34.9 million for the third quarter of 2002 from $38.7 million in
2001. Advertising pages decreased approximately 9.4% across our portfolio but the decline was concentrated heavily in our technology and travel sectors, which continue to slump due to the condition of
the technology markets and the disruptions in the travel industry which began on September 11 and which continues to be impacted by poor economic conditions for the hospitality industry. These
declines were partially offset by revenue from several product launches in the pharmaceutical and health care sectors and several acquisitions in the motor vehicle sector. Excluding our travel and
technology sectors, advertising pages increased 2.6% with related revenue growing 0.9%. Despite early indications of stability in the publishing sector, the economic outlook continues to be
challenging, and forward visibility on our advertising revenue and pages is limited, due to the concerns of our customers related to the overall business environment.

Cost of Production and Selling

Cost of production and selling expenses decreased $2.2 million, or 4.9%, to $43.1 million for the third quarter of 2002 from $45.3 million
for the comparable period of 2001.

Expenses
of trade shows and conferences increased $2.5 million, or 15.4%, to $18.8 million for the third quarter of 2002 from $16.3 million in 2001. This increase
was primarily due to the shift in the timing of when events take place and additional investment in ourMAGICtrade shows, partially offset by the
discontinuation of several events in our technology sector and aggressive cost management on staff and discretionary direct trade show costs. During the quarter we also received an insurance recovery
of $2.4 million related to losses resulting from the events of September 11. Adjusting third quarter 2001 results for movements of events between quarters, trade show and conference
expenses in 2002 declined $3.1 million.

Expenses
of publication, marketing services and other declined $4.7 million, or 16.4%, to $24.3 million in the third quarter of 2002 from $29.0 million in the third
quarter of 2001. This decline was due primarily to savings attributable to our ongoing cost reduction programs and a 13.9% reduction in paper costs. The third quarter of 2002 also reflects the full
period effect of the restructuring and re-focusing of our internet activities. These cost savings were partially offset by increased costs related to publications acquired in 2002.

General and Administrative Expenses

General and administrative expenses decreased $0.2 million, or 1.6%, to $9.4 million in the third quarter of 2002 from $9.6 million in the
third quarter of 2001. This decrease was primarily related to the result of our restructuring of our internet activities resulting in staff reductions of approximately 48.0% and significant reductions
in other operating costs of Advanstar.com. These cost savings were partially offset by the effect of a change in timing of certain bonus compensation accruals as a result of declining revenue in 2001
compared to 2002.

Depreciation and Amortization

Depreciation and amortization expense decreased $9.2 million to $18.3 million in the third quarter of 2002 from $27.5 million in the third
quarter of 2001 primarily due to the adoption in January 2002 of SFAS No. 142, "Goodwill and Other Intangible Assets", and the effect of the declining balance method of accelerated
amortization on our exhibitor and advertiser lists. Upon adoption of SFAS No. 142 we discontinued the amortization of goodwill. Excluding goodwill amortization recorded during the third quarter
of 2001, depreciation and amortization for the third quarter of 2002 decreased $2.9 million.

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Interest Expense, Net

Net interest expense decreased $0.1 million to $16.7 million in the third quarter of 2002 from $16.8 million in the third quarter of 2001 due
to a decrease in our weighted average interest rate, partially offset by increased accretion of approximately $0.6 million on our 15% senior discount notes.

Approximately
$165.0 million of our total debt is at a fixed rate through coupon rates on our senior subordinated notes with an additional $150.0 million covered by our
interest rate protection agreements. While we do not anticipate a significant change in interest rates in the near term, a 100 basis point increase in interest rates on variable rate debt would have
resulted in an increase in interest expense for the quarter of $1.0 million.

Other Income (Expense)

Other income increased $2.0 million in the third quarter of 2002 to $1.7 million from an expense of $0.3 million in the third quarter of
2001. We recognized a non-cash gain of approximately $0.1 million in
the third quarter of 2002 related to our foreign currency and interest rate hedging activities, compared to a non-cash loss of approximately $0.9 million in the comparable period of
2001. During the third quarter of 2002 we also recognized a non-cash foreign exchange gain of $1.4 million, compared to $0.4 million in the third quarter of 2001.

Provision (Benefit) for Income Taxes

Advanstar recorded tax benefit of approximately $0.1 million during the three-month period ended September 30, 2002 compared to a tax benefit of
$4.5 million for the same period in 2001. Tax benefit recorded in the third quarter of 2002 is the result of reducing the 2002 effective tax benefit rate and establishing a valuation allowance
against deferred tax assets.

EBITDA

EBITDA increased $2.7 million, or 10.2%, to $29.3 million in the third quarter of 2002 from $26.6 million in the third quarter of 2001. The
increase was due primarily to the restructuring of our internet activities, a shift in the timing of when events take place, the insurance recovery received during the quarter and the effect of our
on-going cost reduction programs. Adjusting third quarter results for the net shift in the timing of trade shows, 2002 EBITDA declined by $1.1 million or 3.9%.

Nine Months Ended September 30, 2002 Compared to the Nine Months Ended September 30, 2001

Net Revenue

Total net revenue declined $31.4 million, or 10.9%, to $255.7 million in the first nine months of 2002 from $287.1 million for the first nine
months of 2001.

Net
revenue from trade shows and conferences declined $17.1 million, or 10.5%, to $145.4 million for the first nine months of 2002 from $162.5 million in the same
period of 2001. This decrease was attributable to declines in our technology sector which continues to suffer from the overall technology market slump; we held three fewer events in our iEB internet
group in the U.S., Europe and Brazil; and our fashion sector, which was impacted by the effects of September 11 on our springMAGICevent along
with a difficult apparel retail business environment and by a continuing lagging economy on our FallMAGICevent. Year-to-date
revenue from ourMAGICevents declined 10.3% from last year. The fallMAGICevent increased revenue 3.3%
over the springMAGICevent. These declines were partially
offset by revenue from ourAIIMacquisition. Revenue for the nine months ended September 30, 2002 was also impacted by a shift in the timing of
five trade shows held 2001 but not scheduled in the first nine months of 2002. Adjusting nine months 2001 results for this movement, trade show revenue for the first nine months of 2002 declined
$24.0 million or 14.2%.

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Net
revenue from publications, marketing services and other declined $14.3 million, or 11.5%, to $110.3 million for the first nine months of 2002 from $124.6 million
in 2001. Advertising pages for the first nine months of 2002 declined approximately 8.1% across our portfolio. The page decline was heavily concentrated in our technology and travel sectors.
Advertising pages increased 0.8% across all sectors other than technology and travel. These declines were partially offset by revenue from several product launches in the pharmaceutical and health
care sectors and several acquisitions in the motor vehicle sector.

Cost of Production and Selling

Cost of production and selling expenses declined $29.7 million, or 17.2%, to $142.6 million for the first nine months of 2002 from
$172.3 million for the comparable period of 2001.

Expenses
of trade shows and conferences declined $14.2 million, or 17.6%, to $66.5 million for the first nine months of 2002 from $80.7 million in 2001. This
decrease was due to cost savings related to holding fewer events, primarily in our technology sector, including three events in our iEB internet group and aggressive cost management activities
affecting direct trade show related costs and staffing. These cost savings were partially offset by increased costs related to ourAIIMacquisition, the
launch of several events and the shift in the timing of when events take place. During the third quarter we also received an insurance recovery of $2.4 million related to 2001 event
interruption losses resulting from the events of September 11. Adjusting nine months 2001 results for movements of events between quarters, trade show and conference expenses in 2002 declined
$18.3 million or 21.6%.

Expenses
of publication, marketing services and other declined $15.4 million, or 16.8%, to $76.2 million in the first nine months of 2002 from $91.6 million in 2001.
This decrease was due primarily to savings attributable to our ongoing cost reduction programs, the restructuring and re-focusing of our internet activities and a reduction in paper costs,
partially offset by increased costs related to acquired publications in our motor vehicle sector and product launches. Printing and postage pricing remained stable during the period with paper costs
declining approximately 15.0% since January 2002 due to excess industry capacity and low demand. We expect paper prices to experience upward pressure over the next 12 months as economic
recovery increases global demand.

General and Administrative Expenses

General and administrative expenses declined $6.8 million, or 17.3%, to $32.7 million in the first nine months of 2002 from $39.5 million in
the comparable period of 2001. This decrease is primarily attributable to our ongoing cost and headcount reduction programs. In response to the decline in revenues throughout 2001 and into 2002, we
implemented early and aggressive cost management actions, including staff reductions of approximately 8.6%, reductions in travel and other operating costs, reorganization of certain support functions
and processes and a restructuring of our internet activities resulting in staff reduction of approximately 62.2% and significant reductions in other operating costs of Advanstar.com.

Restructuring Charge and other

In the first nine months of 2001 we recorded a restructuring charge of $3.8 million related to our plans to more tightly focus our internet activities,
including severance related payments of $0.7 million, facility closure costs of approximately $1.0 million, asset impairments of $1.3 million and $0.8 million of other
contractual commitments. These restructuring activities were completed by the end of 2001, except for facility lease costs, which continue through June 2010.

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Depreciation and Amortization

Depreciation and amortization expense decreased $19.0 million to $52.5 million in the first nine months of 2002 from $71.5 million in the
first nine months of 2001 primarily due to the adoption in January 2002 of SFAS No. 142, "Goodwill and Other Intangible Assets", and the effect of the declining balance method of
accelerated amortization on our exhibitor and advertiser lists, partially offset by additional amortization related to acquisitions. Upon adoption of SFAS No. 142 we discontinued the
amortization of goodwill. Excluding goodwill amortization recorded during the nine months ended September 30, 2001, depreciation and amortization for the nine months ended September 30,
2002 increased $1.3 million.

Interest Expense, Net

Net interest expense decreased $0.7 million to $50.0 million in the first nine months of 2002 from $50.7 million in 2001 due to a decrease in
our weighted average interest rate, partially offset by the additional indebtedness necessary to fund the DLJ Acquisition in October 2000 increased accretion of approximately
$2.2 million on our 15% senior discount notes. In February 2001, we replaced our then
outstanding $150.0 million 9.25% senior subordinated notes with $160.0 million 12.00% senior subordinated notes, and issued an additional $68.6 million our 15.0% senior discount
notes.

Approximately
$165.0 million of our total debt is at a fixed rate through coupon rates on our senior subordinated notes with an additional $150.0 million covered by our
interest rate protection agreements. While we do not anticipate a significant change in interest rates in the near term, a 100 basis point increase in interest rates on variable rate debt would have
resulted in an increase in interest expense of $2.9 million.

Other Income (Expense)

Other income increased $2.7 million to $3.9 million in the first nine months of 2002 from $1.2 million in 2001. We recognized a
non-cash gain of approximately $1.0 million in the first nine months of 2002 related to our foreign currency and interest rate hedging activities. We also recognized a
non-cash foreign exchange gain of approximately $2.6 million in 2002 compared to a gain of approximately $0.8 million in 2001.

Provision (Benefit) for Income Taxes

Advanstar recorded tax benefit of approximately $0.4 million during the nine-month period ended September 30, 2002 compared to a tax
benefit of $12.3 million for the same period in 2001. Tax benefit recorded in the first three quarters of 2002 is the result of reducing the 2002 effective tax benefit rate and establishing a
valuation allowance against deferred tax assets.

EBITDA

EBITDA increased $9.0 million, or 12.7%, to $79.5 million in the first nine months of 2002 from $70.5 million in 2001. The increase was
primarily due the significant reduction in the level of our internet activities in 2002, the restructuring charge taken in 2001, savings in our corporate overhead structure as part of an
on-going cost reduction program and the insurance recovery received in the third quarter of 2002. We continue to aggressively manage and reduce costs in response to declines in revenue and
increase our EBITDA margins which are 31.1% for the first nine months of 2002 compared to 24.6% for the same period last year. Adjusting first nine months 2001 results for the shift in the timing of
trade shows, 2002 EBITDA increased by $6.0 million or 8.2%.

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Liquidity and Capital Resources

The following discussion presents our liquidity and capital resources on a consolidated basis, including our subsidiaries.

We
are a holding company and have no direct material operations. Our principal assets are our ownership of Advanstar Communications Inc., and Advanstar.com, and our only material
liabilities are the senior discount notes and our guarantee of the Advanstar Communications Inc. credit facility. Our principal liquidity needs are for debt service on the senior discount notes
and investments in Advanstar.com, which currently does not generate positive cash flow.

Since
the DLJ Acquisition, our principal source of cash is dividends from Advanstar Communications Inc. The credit facility and senior subordinated notes described below are
obligations of Advanstar Communications Inc. and impose limitations on its ability to pay dividends to us. We believe that Advanstar Communications' debt instruments will permit it to supply us
with sufficient cash to meet the cash needs referred to above for the next several years. However, if that is not the case, we would not be able to satisfy those needs, because we have no other source
of cash other than dividends from Advanstar Communications. We would then be required to secure alternate financing, which may not be available on acceptable terms, or at all.

Advanstar
Communications principal cash needs are for debt service, capital expenditures and strategic acquisitions, as well as to provide us with cash to finance our cash needs. Its
principal sources of liquidity will be cash flow from operations and borrowings under its credit facility.

Debt service.

As of September 30, 2002, we had total indebtedness of $649.1 million and approximately $48.4 million of borrowings available under our
revolving credit facility, subject to customary conditions. We repaid $5.0 million on the revolving credit facility during the second quarter of 2002.

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

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

28

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In
March of 2002, we sought and obtained an amendment to the Credit Facility which provided for certain revisions to our quarterly financial covenants in 2002 and 2003..As of
September 30, 2002 we were in compliance with these covenants.

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

Senior discount notes.As part of the financing for the Acquisition, we issued senior discount notes due October 2011
(the Discount Notes) with a principal amount at maturity of $103.2 million. Concurrently with the closing of the offering of the Replacement Notes, we sold additional Discount Notes due
October 2011 with an additional aggregate principal amount at maturity of $68.6 million. These Discount Notes do not require cash interest payments until 2006 and contain covenants and
events of default that, among other things, limit our ability and that of our subsidiaries to incur debt, pay dividends and make investments. As of September 30, 2002 we were in compliance with
these covenants. However, we are a holding company and our ability to pay interest on these Discount Notes will be dependent upon the receipt of dividends from our subsidiaries. The credit facility
and the Replacement Notes impose substantial restrictions on our subsidiaries' ability to pay dividends.

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

|                                  |       | Payment due by Period
|--------------------------------- | ----- | ---------------------
|
|Indebtedness (excluding interest) |       | $                    
|Operating leases                  |       |                      
|                                  |       |                      
|                                  | Total |                      
|                                  |       |                      

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

Capital expenditures.Capital expenditures in the first half of 2002 were approximately $5.8 million compared to
$10.7 million in the same period last year. We anticipate that we will spend between $7.0 and $8.0 million on capital expenditures in 2002, primarily for expenditures related to our
desktop computers and management information systems. Based on current estimates, management believes that the amount of capital expenditures permitted to be made under the credit facility will be
adequate to grow our business according to our business strategy and to maintain the properties and business of our continuing operations.

Acquisitions and investments.We have provided funding to Advanstar.com, our subsidiary, to support its operations. We
provided funding of approximately $1.9 million in the first nine months of 2002 and anticipate that we will provide approximately $0.6 million of additional funding in 2002. Our debt
instruments limit the total amount we can invest in Advanstar.com. Based on current estimates, we anticipate that we will be able to make these investments within those limitations.

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

29

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covenants in our debt instruments. Consistent with our longstanding strategy, we continue to pursue potential acquisitions of complementary businesses.



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

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

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

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

Cash flows from operating activities.Net cash provided by operations increased $9.9 million to $11.1 million
in 2002 from $1.2 million in 2001. The increase was primarily due to cash savings associated with the re-focusing and restructuring of our internet activities and a reduction in
taxes paid of $3.0 million related to a federal tax refund received in 2002, partially offset by an increase in cash interest expense of $2.8 million and a reduction in our working
capital deficit.

Cash flows used in investing activities.Net cash used in investing activities declined $5.2 million to
$20.1 million in 2002, from $25.3 million in 2001. This decline was principally due to reduced capital
expenditures as a result of our restructuring and re-focusing of our internet activities and on-going cost reduction program.

Cash flows from financing activities.Net cash used by financing activities increased $44.7 million to
$19.5 million in 2002, from a source of cash of $25.2 million in 2001. This increase was principally due to approximately $17.0 million of payments on our long-term
debt and financing costs related to the amendment to our senior credit agreement during the first quarter. In 2001 we refinanced our 9.25% senior subordinated notes (as more fully discussed above),
issued an additional $68.6 million in exchange for proceeds of $35.0 million of our Discount Notes and made additional borrowings under our operating line of credit.

New Accounting Pronouncements

In August 2001, the Financial Accounting Standards Board (FASB) issued Financial Accounting Standards No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets" (SFAS No. 144). This statement addresses financial accounting and reporting for the impairment or disposal of long-lived assets.
FAS 144 retains and expands upon the fundamental provisions of existing guidance related to the recognition and measurement of the impairment of long-lived assets to be held and
used

30

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and the measurement of long-lived assets to be disposed of by sale. Generally, the provisions of SFAS No. 144 are effective for financial statements issued for fiscal years
beginning after December 15, 2001. The Company has adopted SFAS No. 144 on January 1, 2002. The adoption of SFAS No. 144 did not impact the results of operations or
financial position of the Company for the three or nine month period ended September 30, 2002.

In
May 2002, the FASB issued Financial Accounting Standards No. 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and
Technical Corrections" (SFAS No. 145). SFAS No. 145 rescinds FASB Statement No. 4, "Reporting Gains and Losses from Extinguishment of
Debt",and an amendment of that Statement, FASB Statement No. 64, "Extinguishments of Debt Made to Satisfy Sinking-Fund
Requirements". SFAS No. 145 also rescinds FASB Statement No. 44, "Accounting for Intangible Assets of Motor Carriers". SFAS No. 145 amends FASB Statement No. 13,
"Accounting for Leases", to eliminate an inconsistency between the required accounting for sale-leaseback transactions and the required accounting for certain lease modifications that have
economic effects that are similar to sale-leaseback transactions. SFAS No. 145 also amends other existing authoritative pronouncements to make various technical corrections, clarify
meanings, or describe their applicability under changed conditions. SFAS No. 145 is generally effective for fiscal years beginning after May 15, 2002. The Company has not adopted SFAS
No. 145. The adoption of SFAS No. 145 is not expected to have a significant impact of the results of operations or financial position of the Company, but in accordance with the
transition provisions will result in the Company's fiscal 2001 extraordinary item being reclassified in the statement of operations.

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

Item 3. Qualitative and Quantitative Disclosure about Market Risk

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

Interest Rates.We rely significantly on variable rate and fixed rate debt in our capital structure. At September 30,
2002, we had fixed rate debt of $260.5 million and variable rate debt of $388.6 million. The pre-tax earnings and cash flows impact for the next year resulting from a 100
basis point increase in interest rates on variable rate debt would be a reduction of pre-tax earnings of $2.9 million for the nine months ended September 30, 2002, holding
other variables constant and excluding the impact of our interest rate protection agreements. Under the credit facility, we are required to enter into interest rate protection agreements that have the
effect of causing at least half of the outstanding term loan borrowings and Replacement Notes to be fixed-rate borrowings. We have entered into agreements to cap the interest rate on
$150.0 million of borrowings under our credit facility, which would have the effect of reducing the impact of interest rate increases on our earnings and cash flows.

Currencies.Outside of the United States, we maintain assets and operations in Europe, South America and Asia. The results of
operations and financial position of our foreign operations are principally measured in their respective currency and translated into U.S. dollars. As a result, exposure to foreign currency gains and
losses exists. The reported income of these subsidiaries will be higher or

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lower depending on a weakening or strengthening of the U.S. dollar against the respective foreign currency. Our subsidiaries and affiliates also purchase and sell products and services in various
currencies. As a result, we may be exposed to cost increases relative to the local currencies in the markets in which we sell.

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

Our
strategy for management of currency risk relies primarily upon conducting our operations in a country's respective currency and may, from time to time, involve currency derivatives,
primarily forward exchange contracts, to reduce our exposure to currency fluctuations. As of September 30, 2002, there were open foreign exchange derivative contracts to sell with a notional
amount totaling $0.7 million and to buy with a notional amount totaling $0.5 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 $0.2 million. Actual results may differ.

Item 4. Controls and Procedures



The
Company's principal executive officer and principal financial officer have evaluated the Company's disclosure controls and procedures as of a date within 90 days before the
filing date of this quarterly report. Based on this evaluation, they concluded that, as of the evaluation date, the disclosure controls and procedures were adequate and effective and designed to
ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this
quarterly report is being prepared.



There
have been no significant changes in our internal controls or, to our knowledge, in other factors that could significantly affect these controls subsequent to the evaluation of the
internal controls, including any corrective actions with regard to significant deficiencies and material weaknesses.

PART II    Other Information

Item 4. Submissions of Matters to a Vote of Security Holders.

None

Item 6. Exhibits and Reports on Form 8-K

Item 6(a). Exhibits

99.1CEO's
Certificate Pursuant to §906 of the Sarbanes-Oxley Act of 2002.

99.2CFO's
Certificate Pursuant to §906 of the Sarbanes-Oxley Act of 2002.

Item 6(b). Reports on Form 8-K

None

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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, INC.NOVEMBER 14, 2002

/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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CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Robert L. Krakoff, certify that:



|By:                     |  | /s/ROBERT L. KRAKOFFRobert L. Krakoff
Chief Executive Officer |  | 
|----------------------- |  | ------------------------------------------------------------- |  | 
|                        |  |                                                               |  | 
|Date: November 14, 2002 |  |                                                              

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CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, David W. Montgomery, certify that:



|By:                     |  | /s/DAVID W. MONTGOMERYDavid W. Montgomery
Chief Financial Officer |  | 
|----------------------- |  | ----------------------------------------------------------------- |  | 
|                        |  |                                                                   |  | 
|Date: November 14, 2002 |  |                                                                  

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Exhibit Index

|Exhibit No. |  | Document                                                             
|----------- |  | ---------------------------------------------------------------------
|99.1        |  | CEO's Certificate Pursuant to §906 of the Sarbanes-Oxley Act of 2002.
|99.2        |  | CFO's Certificate Pursuant to §906 of the Sarbanes-Oxley Act of 2002.

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