---

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SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-Q

(Mark One)

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

For the quarterly period ended: March 31, 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)


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

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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

As
of May 20, 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 March 31, 2002
(unaudited) and December 31, 2001                      |  | 2                            
|                             |  | Condensed Consolidated Statements of Operations (unaudited)
for the three months ended March 31, 2002 and 2001 |  | 3                            
|                             |  | Condensed Consolidated Statements of Cash Flows (unaudited)
for the three months ended March 31, 2002 and 2001 |  | 4                            
|                             |  | Notes to Condensed Consolidated Financial Statements
(unaudited)                                               |  | 5                            
|Item 2.                      |  | Management's Discussion and Analysis of Financial Condition and Results of Operations                          |  | 13                           
|Item 3.                      |  | Qualitative and Quantitative Disclosure about Market Risk                                                      |  | 24                           
|PART II    Other Information |  |                                                                                                               
|Item 4.                      |  | Submissions of Matters to a Vote of Security Holders                                                           |  | 25                           
|Item 6(a).                   |  | Exhibits                                                                                                       |  | 25                           
|Item 6(b).                   |  | Reports on Form 8-K                                                                                            |  | 25                           
|                             |  | Signature                                                                                                      |  | 26                           

1

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

|                                          |                                                                                                                                   | March 31,
2002                             |         | December 31,
2001 |          
|----------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------- | ----------------- | ---------
|
|ASSETS                                    |                                                                                                                                  
|Current Assets                            |                                                                                                                                   |                                            |         |                   |          
|                                          | Cash and cash equivalents                                                                                                         |                                            | $       | 16,268            |          
|                                          | Accounts receivable, net                                                                                                          |                                            |         | 23,509            |          
|                                          | Prepaid expenses                                                                                                                  |                                            |         | 9,165             |          
|                                          | Other                                                                                                                             |                                            |         | 3,503             |          
|                                          |                                                                                                                                   |                                            |         |                   |          
|                                          |                                                                                                                                   | Total current assets                       |         |                   | 52,445   
|Due from Parent                           |                                                                                                                                   |                                            | 1,687   |                   |          
|Property, plant and equipment, net        |                                                                                                                                   |                                            | 30,884  |                   |          
|Intangible and other assets               |                                                                                                                                   |                                            |         |                   |          
|                                          | Goodwill, net                                                                                                                     |                                            |         | 723,328           |          
|                                          | Intangibles and other, net                                                                                                        |                                            |         | 199,886           |          
|                                          |                                                                                                                                   |                                            |         |                   |          
|                                          |                                                                                                                                   | Total intangible and other assets          |         |                   | 923,214  
|                                          |                                                                                                                                   |                                            |         |                   |          
|                                          |                                                                                                                                   | Total assets                               |         | $                 | 1,008,230
|                                          |                                                                                                                                   |                                            |         |                   |          
|LIABILITIES AND STOCKHOLDER'S EQUITY      |                                                                                                                                  
|Current Liabilities                       |                                                                                                                                   |                                            |         |                   |          
|                                          | Current maturities of long-term debt                                                                                              |                                            | $       | 17,000            |          
|                                          | Accounts payable                                                                                                                  |                                            |         | 27,263            |          
|                                          | Accrued liabilities                                                                                                               |                                            |         | 23,627            |          
|                                          | Deferred revenue                                                                                                                  |                                            |         | 24,453            |          
|                                          |                                                                                                                                   |                                            |         |                   |          
|                                          |                                                                                                                                   | Total current liabilities                  |         |                   | 92,343   
|Long-term debt, net of current maturities |                                                                                                                                   |                                            | 637,987 |                   |          
|Deferred income taxes                     |                                                                                                                                   |                                            | 21,497  |                   |          
|Other long-term liabilities               |                                                                                                                                   |                                            | 9,093   |                   |          
|Minority interests                        |                                                                                                                                   |                                            | 14,648  |                   |          
|Commitments and contingencies             |                                                                                                                                   |                                            |         |                   |          
|Stockholder's equity                      |                                                                                                                                   |                                            |         |                   |          
|                                          | Common stock, $.01 par value; 10,000 shares authorized; 100 shares issued and outstanding at March 31, 2002 and December 31, 2001 |                                            |         |                  |          
|                                          | Capital in excess of par                                                                                                          |                                            |         | 310,424           |          
|                                          | Accumulated deficit                                                                                                               |                                            |         | (72,610           | )        
|                                          | Accumulated other comprehensive loss                                                                                              |                                            |         | (5,152            | )        
|                                          |                                                                                                                                   |                                            |         |                   |          
|                                          |                                                                                                                                   | Total stockholder's equity                 |         |                   | 232,662  
|                                          |                                                                                                                                   |                                            |         |                   |          
|                                          |                                                                                                                                   | Total liabilities and stockholder's equity |         | $                 | 1,008,230
|                                          |                                                                                                                                   |                                            |         |                   |          

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
March 31,
2002 |         | Three Months
Ended
March 31,
2001 |       
|------------------------------------------------------------- | ---------------------------------- | --------------------------------- | ------- | --------------------------------- | ------
|Net revenue                                                   |                                    | $                                 | 109,910 |                                   | $     
|                                                              |                                    |                                   |         |                                   |       
|Operating expenses:                                           |                                    |                                   |         |                                   |       
|                                                              | Costs of production                |                                   |         | 23,231                            |       
|                                                              | Selling, editorial and circulation |                                   |         | 35,195                            |       
|                                                              | General and administrative         |                                   |         | 12,000                            |       
|                                                              | Restructuring charge and other     |                                   |         |                                  |       
|                                                              | Depreciation and amortization      |                                   |         | 17,694                            |       
|                                                              |                                    |                                   |         |                                   |       
|                                                              |                                    | Total operating expenses          |         |                                   | 88,120
|                                                              |                                    |                                   |         |                                   |       
|Operating income                                              |                                    |                                   | 21,790  |                                   |       
|Other income (expense):                                       |                                    |                                   |         |                                   |       
|                                                              | Interest expense, net              |                                   |         | (16,222                           | )     
|                                                              | Other income (expense), net        |                                   |         | 1,042                             |       
|                                                              |                                    |                                   |         |                                   |       
|Income before income taxes and minority interests             |                                    |                                   | 6,610   |                                   |       
|Provision for income taxes                                    |                                    |                                   | 2,298   |                                   |       
|Minority interests                                            |                                    |                                   | (88     | )                                 |       
|                                                              |                                    |                                   |         |                                   |       
|Income (loss) before extraordinary item and accounting change |                                    |                                   | 4,224   |                                   |       
|Extraordinary item, net of tax                                |                                    |                                   |        |                                   |       
|Cumulative effect of accounting change, net of tax            |                                    |                                   |        |                                   |       
|                                                              |                                    |                                   |         |                                   |       
|Net income (loss)                                             |                                    | $                                 | 4,224   |                                   | $     
|                                                              |                                    |                                   |         |                                   |       

See
notes to condensed consolidated financial statements.

3

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

|                                                             |                                                                                                                             | Three Months
Ended
March 31,
2002                             |                                                     | Three Months
Ended
March 31,
2001 |        
|------------------------------------------------------------ | --------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------- | --------------------------------------------------- | --------------------------------- | -------
|Operating Activities                                         |                                                                                                                             |                                                               |                                                     |                                   |        
|                                                             | Net income (loss)                                                                                                           |                                                               | $                                                   | 4,224                             |        
|                                                             | 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                                |                                                     |                                   |       
|                                                             |                                                                                                                             | Unrealized (gain) loss on derivative financial instruments    |                                                     |                                   | (905   
|                                                             |                                                                                                                             | Depreciation and amortization                                 |                                                     |                                   | 17,624 
|                                                             |                                                                                                                             | Non-cash interest                                             |                                                     |                                   | 4,156  
|                                                             |                                                                                                                             | Loss on sales of assets and other                             |                                                     |                                   | 158    
|                                                             |                                                                                                                             | Changes in operating assets and liabilities                   |                                                     |                                   | (35,473
|                                                             |                                                                                                                             |                                                               |                                                     |                                   |        
|                                                             |                                                                                                                             |                                                               | Net cash provided by (used in) operating activities |                                   |        
|                                                             |                                                                                                                             |                                                               |                                                     |                                   |        
|Investing Activities                                         |                                                                                                                             |                                                               |                                                     |                                   |        
|                                                             | Additions to property, plant and equipment                                                                                  |                                                               |                                                     | (1,394                            | )      
|                                                             | Acquisition of publications and trade shows, net of cash acquired                                                           |                                                               |                                                     | (11,744                           | )      
|                                                             | Proceeds from sale of assets and other                                                                                      |                                                               |                                                     | 8                                 |        
|                                                             |                                                                                                                             |                                                               |                                                     |                                   |        
|                                                             |                                                                                                                             | Net cash used in investing activities                         |                                                     |                                   | (13,130
|                                                             |                                                                                                                             |                                                               |                                                     |                                   |        
|Financing Activities                                         |                                                                                                                             |                                                               |                                                     |                                   |        
|                                                             | Net proceeds from revolving credit facility                                                                                 |                                                               |                                                     |                                  |        
|                                                             | Borrowings of long-term debt                                                                                                |                                                               |                                                     | (3,450                            | )      
|                                                             | Payments of long-term debt                                                                                                  |                                                               |                                                     |                                  |        
|                                                             | Long-term debt financing costs                                                                                              |                                                               |                                                     | (1,988                            | )      
|                                                             | Capital contributions                                                                                                       |                                                               |                                                     |                                  |        
|                                                             |                                                                                                                             |                                                               |                                                     |                                   |        
|                                                             |                                                                                                                             |                                                               | Net cash provided by (used in) financing activities |                                   |        
|Effect of exchange rate changes on cash and cash equivalents |                                                                                                                             |                                                               | 255                                                 |                                   |        
|Net (decrease) increase in cash and cash equivalents         |                                                                                                                             |                                                               | (28,529                                             | )                                 |        
|Cash and cash equivalents, beginning of period               |                                                                                                                             |                                                               | 44,797                                              |                                   |        
|                                                             |                                                                                                                             |                                                               |                                                     |                                   |        
|Cash and cash equivalents, end of period                     |                                                                                                                             | $                                                             | 16,268                                              |                                   | $      
|                                                             |                                                                                                                             |                                                               |                                                     |                                   |        

See
notes to condensed consolidated financial statements.

4

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ADVANSTAR, INC.  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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, 2001. The results of operations for the
three month period ended March 31, 2002 are not necessarily indicative of the operating results that may be expected for the entire year ending December 31, 2002.

2.    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, or more frequently if impairment indicators arise. Separable intangible assets that are not deemed to have indefinite lives will continue to be amortized
over their useful lives, but with no maximum life. The Company expects to complete its initial impariment review of goodwill during the second quarter of 2002 and has not yet determined the impact of
adopting the impairment review provisions of SFAS No. 142.

Upon
adoption of SFAS No. 142, the Company discontinued the amortization of goodwill and accelerated amortization of trade exhibitor and advertiser lists to match the related
expected benefit of these assets. The Company recorded $6.3 million of additional amortization as a result of changing from straight line amortization to accelerated amortization on these
assets. 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
March 31,
2002

Three Months
Ended
March 31,
2001Reported income (loss) before extraordinary item and accounting change

$
4,224

$
(2,257
)Add: goodwill amortization, net of tax





5,298Adjusted income before extraordinary item and accounting change

$
4,224

$
3,041Reported net income

$
4,224

$
(5,365
)Add: goodwill amortization, net of tax





5,298Adjusted net income

$
4,224

$
67


5

---

The
changes in the carrying amount of goodwill for the three months ended March 31, 2002, by operating segment, are as follows (in thousands):

Trade Shows
and
Conferences

Trade
Publications

Marketing
Services

TotalsBalance as of December 31, 2001

$
558,272

$
132,433

$
30,452

$
721,157Goodwill acquired during the period


4,494


(1,853
)

(470
)

2,171Balance as of March 31, 2002

$
562,766

$
130,580

$
29,982

$
723,328


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 $11.7 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.

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

March 31,
2002

December 31,
2001Trade exhibitor lists

$
166,722

$
160,318Advertiser lists


34,950


33,302Subscriber lists


23,190


22,339Other intangible assets


2,714


1,758Other assets


23,427


21,440251,003


239,157Accumulated amortization


(51,117
)

(35,415
)Total intangible and other assets, net

$
199,886

$
203,742


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

2002

$
54,2882003


42,0532004


28,3012005


21,7112006


16,803


3.    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

6

---

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 the cumulative effect of an accounting change of a reduction in income of approximately
$0.6 million, net of tax, and a reduction to other comprehensive income of approximately $0.2 million, net of tax.

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

Interest Rate Risk

Variable rate debt instruments are subject to interest rate risk. The Company has entered into interest rate collar agreements with remaining maturities of up to
twenty three 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 and cap agreements is recognized in current earnings. For the periods ended March 31, 2002 and 2001, the Company recorded a gain (loss) of
$0.1 million and $(1.6) million related to ineffective portion of the of interest rate collar agreements. These amounts are included in other income on the Company's consolidated statement of
operations.

Foreign Currency Risk

Certain forecasted transactions are exposed to foreign currency risk. Foreign currencies hedged are the Euro, the 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
March 31, 2002, the Company had foreign exchange derivative contracts to sell with a notional amount totalling $6.2 million and to buy totalling $1.1 million. The
estimated fair value of the foreign exchange contracts based upon market quotes was a net asset of $0.2 million at March 31, 2002. For the periods ended March 31, 2002 and 2001,
the Company recorded a gain (loss) of $0.8 million and $0.5 million related to the change in fair value of the foreign exchange contracts. These amounts are included in other income on the
Company's consolidated statement of operations.

7

---

Accumulated Other Comprehensive Income (Loss)

The following table summarizes the effects of FAS 133 on the Company's accumulated other comprehensive income as of March 31, 2002 (in thousands):

Interest Rate
Collar
Agreements

Foreign
Exchange
Contracts

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

$
(4,189
)
$
5

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


1,218


(5
)

1,213Mark to market of hedge contracts


176





176Accumulated other comprehensive income (loss) balance at March 31, 2002

$
(2,795
)
$


$
(2,795
)


The
fair value of the Company's derivatives was a net liability position of $4.5 million and $7.7 million at March 31, 2002 and December 31, 2001,
respectively, of which $4.3 million and $6.6 million is included in other accrued liabilities at March 31, 2002 and December 31, 2001, respectively, and $0.2 million
and $1.1 million is included in other non-current liabilities at March 31, 2002 and December 31, 2001, respectively, in the accompanying consolidated balance sheets.

Statement of Operations

The following table summarizes the effects of FAS 133 on the Company's statement of operations for the periods ended March 31, 2002 and
March 31, 2001 (in thousands):

Interest Rate
Collar
Agreements

Foreign
Exchange
Contracts

TotalThree months ended March 31, 2002Other income (expense)

$
126

$
776

$
902Total statement of operations impact before taxes

$
126

$
776

$
902Three months ended March 31, 2001Other income (expense)

$
(1,594
)
$
483

$
(1,111
)Total statement of operations impact before taxes

$
(1,594
)
$
483

$
(1,111
)


4.    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

8

---

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 first
quarter of 2002 the Company paid
$0.2 million related to facility lease costs. The balance of the accrual at March 31, 2002 was $6.4 million, which principally represents remaining facility lease costs and is
included in other long-term liabilities in the Company's consolidated balance sheet at March 31, 2002.

5.    Debt

Credit Facility

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

Borrowings
under the Credit Facility are secured by substantially all of the Company's assets. In addition, as of March 31, 2002, the Company has interest rate protection
agreements for a notional amount of $250 million that effectively guarantee that the Company's interest rate on $250 million of the Company's Credit Facility will not exceed
12.25 percent, nor be less than 8.25 percent. The net interest paid or received is included in interest expense. At March 31, 2002, the estimated fair value of the interest rate
protection agreements was a net liability position to the Company of approximately $4.6 million. As of March 31, 2002, the Company had approximately $42.9 million of borrowings
available under the Credit Facility, subject to customary conditions.

Senior Subordinated Debt and Discount Notes

On October 11, 2000, in connection with the Acquisition, the Company issued 15 percent senior discount notes due October 2011 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 notes are redeemable at the Company's
option at specified premiums through 2007 and at par thereafter. The 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, 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.

9

---

On February 21, 2001, the Company's wholly owned subsidiary, Advanstar Communications Inc. (Communications) issued $160.0 million of unsecured, 12 percent
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 senior discount notes (the Discount Notes) with an aggregate principal amount
at maturity of approximately $68.6 million and warrants to purchase shares of common stock of Holdings for consideration of approximately $34.8 million of which approximately
$5.6 million was paid to Holdings pursuant to the 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.

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 $3.5 million and $2.5 million for the three months ended March 31, 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):

March 31,
2002

December 31,
2001Term loan A, interest at LIBOR plus 3.25%; 5.10% at March 31, 2002, due quarterly through April 11, 2007

$
86,250

$
89,200Term loan B, interest at LIBOR plus 3.75%; 5.60% March 31, 2002, due quarterly through October 11, 2007


280,800


280,800Revolving credit loan, interest at LIBOR plus 3.25%; 5.10% at March 31, 2002, due April 11, 2007


34,000


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


160,000


160,000Senior discount notes at 15.00%, due October 11, 2011, net of discount


88,437


84,923Acquisition note payable, interest at 5.50%, due monthly through 2004


5,500


6,000654,987


654,923LessCurrent maturities


(17,000
)

(16,200
)$
637,987

$
638,723


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

10

---

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 March 31, 2002.

6.    Comprehensive Income

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

Three Months
Ended
March 31,
2002

Three Months
Ended
March 31,
2001Net income

$
6,250

$
2,274Change in cumulative translation adjustment


(585
)

(2,198
)Change in unrealized losses on derivative financial Instruments, net of taxes


1,389


(574
)Comprehensive income (loss)

$
7,054

$
(498
)


7.    Segment Information

|                                  |  | Trade Shows
and
Conferences |         | Trade
Publications |   | Marketing
Services |  | Corporate
and
Other |        | Totals
|--------------------------------- |  | --------------------------- | ------- | ------------------ | - | ------------------ |  | ------------------- | ------ | ------
|
|Three months ended March 31, 2002 |  |                             |         |                    |   |                    |  |                     |        |       
|Revenues                          |  | $                           | 76,465  |                    | $ | 28,674             |  | $                   | 3,576  |       
|Operating income                  |  |                             | 42,745  |                    |   | 5,741              |  |                     | 1,589  |       
|Segment assets                    |  |                             | 683,073 |                    |   | 177,368            |  |                     | 28,222 |       
|Three months ended March 31, 2001 |  |                             |         |                    |   |                    |  |                     |        |       
|Revenues                          |  | $                           | 89,564  |                    | $ | 34,640             |  | $                   | 4,170  |       
|Operating income                  |  |                             | 48,205  |                    |   | 7,224              |  |                     | 1,856  |       
|Segment assets                    |  |                             | 272,065 |                    |   | 571,017            |  |                     | 2,219  |       

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

Three Months
Ended
March 31,
2002

Three Months
Ended
March 31,
2001Total segment operating income

$
21,790

$
20,512Interest expense


(16,222
)

(17,168
)Other income (expense), net


1,042


(953
)Consolidated income before taxes and minority interests

$
6,610

$
2,391


11

---

8.    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.

9.    New Accounting Pronouncements

In August 2001, the Financial Accounting Standards Board (FASB) issued Financial Accounting Standards No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets" (FAS 144). This statement addresses financial accounting and reporting for the impairment or disposal of long-lived assets. FAS 144
retains and expands upon the fundamental provisions of existing guidance related to the recognition and measurement of the impairment of long-lived assets to be held and used and the
measurement of long-lived assets to be disposed of by sale. Generally, the provisions of FAS 144 are effective for financial statements issued for fiscal years beginning after
December 15, 2001. The Company has adopted FAS 144 on January 1, 2002. The adoption of FAS 144 did not impact the results of operations or financial position of the Company
for the period ended March 31, 2002.

12

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

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

General

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

We
report our business in three segments:



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 70% of total revenue in each of the three month periods ended March 31, 2002 and 2001, respectively. Trade publications
accounted for approximately 26% of total revenue in each of the three month periods ended March 31, 2002 and 2001, respectively, while marketing services accounted for approximately 4% of total
revenue in each of the three month periods ended March 31, 2002 and 2001. Our revenue reaches its highest levels during the first and third quarters of the year due to the timing of the MAGIC
trade shows and our other large trade shows and conferences. In comparing results between years, we may experience fluctuations in quarterly revenue based on the movement of trade show dates from one
quarter to another because trade show and conference revenue is recognized when a particular went 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.

13

---



Our business and results of operations for the quarter ended March 31, 2002 were significantly impacted by the downturn in the U.S. economy, particularly
in our Information Technology & Communications cluster and Travel & Hospitality cluster. The events of September 11th also impacted our results, including cancellations and
reductions in ad pages, particularly in our travel industry publications.

In
response to the decline in revenues throughout 2001 and into 2002, we implemented early and aggressive cost management actions, including the layoff of approximately 236 staff,
reductions in travel and other operating costs, and reorganization of certain support functions and processes. We also more tightly focused the activities of our subsidiary, Advanstar.com, including
plans to more closely integrate
many of the sales, marketing, technology and operating functions with our subsidiary, Advanstar Communications Inc., and its core activities in publishing, tradeshows and marketing services.
These plans resulted in a restructuring charge of $9.4 million throughout 2001, of which $3.5 million was taken in the first quarter of 2001.

The
persistence of the general economic slowdown in the U.S. and the uncertainties relating to the ongoing impact from the events of September 11 will likely result in continued
weakness in overall marketing and advertising expenditures by our customers throughout most of 2002. As a result, we expect our revenues and EBITDA to reflect this overall weakness. However, we
believe that our balanced portfolio between trade shows and publications and our diversification across many industry sectors may mitigate the overall impact from continued weakness in general
economic conditions and reduce potential volatility of any one sector.

As
a result of the decline in our operating results in 2001 and the anticipated decline in our operating results through the first half of 2002, we believe that we would have failed to
satisfy certain of the financial covenants contained in our Credit Facility as of March 31, 2002. Accordingly, we sought and obtained an amendment to the Credit Facility in March 2002
which provided for certain revisions to our quarterly financial covenants in 2002 and 2003. Although there can be no assurance, we believe that we will be able to comply with the amended financial
covenants contained in the Credit Facility.



Acquisitions and Joint Ventures



14

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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.

The Acquisition

As a result of the acquisition of our Company by the DLJ Merchant Banking funds (the Acquisition) in October, 2000, we have, and will continue to have,
significantly higher indebtedness and interest expense than reflected in our previous historical results of operations. In addition, the Acquisition was accounted for under the purchase method of
accounting. Under the purchase method, the purchase price is allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their respective fair values, with
the remainder being allocated to goodwill. Accordingly, the increase in basis of our assets resulted in non-cash depreciation and amortization charges in 2001 that were significantly
higher than that reflected in our previous historical financial information.

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 repayment of the 9.25% senior subordinated notes and the write-off of deferred financing fees related to the bridge facility. The 9.25% senior subordinated notes were
refinanced with the proceeds of the 12.00% senior subordinated notes and the concurrent offering of additional senior discount notes. See Notes to our Consolidated Financial Statements included within
this annual report for further details.



Trade Shows and Conferences

The trade shows and conferences segment derives revenue principally from the sale of exhibit space and conference attendance fees generated at its events. In
2001, approximately 83% of our trade shows and conferences revenue was from the sale of exhibit space. Events are generally held on an annual basis in major metropolitan or convention areas such as
New York City or Las Vegas. At many of our trade shows, a portion of exhibit space is reserved and partial payment is received as much as a year in advance. The sale of exhibit space is affected by
the on-going quality and quantity of attendance, venue selection and availability, industry life cycle and general market conditions. Revenue and related direct event expenses are
recognized in the month in which the event is held. Cash is collected in advance of an event and is recorded on our balance sheet as deferred revenue.

Trade Publications

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

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

15

---

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.



Trade Shows and Conferences

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

Trade Publications

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

Marketing Services

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

Significant Accounting Policies and Estimates

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

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



16

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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.

17

---



To calculate EBITDA for the three months ended March 31, 2002 and 2001, we reduced operating income by $(0.1) million and $(0.3) million, respectively, to reflect minority
interest.

|                                                              |                              | Three Months
Ended
March 31,
2002    |        | Three Months
Ended
March 31,
2001 |        
|------------------------------------------------------------- | ---------------------------- | ------------------------------------ | ------ | --------------------------------- | -------
|
|Net revenue:                                                  |                              |                                      |        |                                   |        
|                                                              | Trade shows and conferences  |                                      | $      | 76,465                            |        
|                                                              | Publications                 |                                      |        | 28,674                            |        
|                                                              | Marketing services and other |                                      |        | 4,771                             |        
|                                                              |                              |                                      |        |                                   |        
|                                                              |                              | Total net revenues                   |        |                                   | 109,910
|Cost or production and selling:                               |                              |                                      |        |                                   |        
|                                                              | Trade shows and conferences  |                                      |        | 33,720                            |        
|                                                              | Publications                 |                                      |        | 22,933                            |        
|                                                              | Marketing services and other |                                      |        | 1,773                             |        
|                                                              |                              |                                      |        |                                   |        
|                                                              |                              | Total cost of production and selling |        |                                   | 58,426 
|General and administrative expenses                           |                              |                                      | 12,000 |                                   |        
|Restructuring charge and other                                |                              |                                      |       |                                   |        
|Depreciation and amortization                                 |                              |                                      | 17,694 |                                   |        
|                                                              |                              |                                      |        |                                   |        
|                                                              |                              | Operating income                     |        |                                   | 21,790 
|Other income (expense):                                       |                              |                                      |        |                                   |        
|                                                              | Interest expense, net        |                                      |        | (16,222                           | )      
|                                                              | Other income (expense)       |                                      |        | 1,042                             |        
|Provision for income taxes                                    |                              |                                      | 2,298  |                                   |        
|Minority interests                                            |                              |                                      | (88    | )                                 |        
|                                                              |                              |                                      |        |                                   |        
|Income (loss) before extraordinary item and accounting change |                              | $                                    | 4,224  |                                   | $      
|                                                              |                              |                                      |        |                                   |        
|EBITDA                                                        |                              | $                                    | 39,383 |                                   | $      

Results of Operations

Three Months Ended March 31, 2002 Compared to the Three Months Ended March 31, 2001

Revenue

Total revenue decreased $19.4 million, or 15.0%, to $109.9 million in the first quarter of 2002 from $129.3 million for the first quarter of
2001.

Revenue
from trade shows and conferences decreased $13.1 million, or 14.6%, to $76.5 million for the first quarter of 2002 from $89.6 million in the first quarter of
2001. This decrease was primarily attributable to a decline in certain of our trade shows, a shift in the timing of when events take place and the discontinuation of an event in our technology market,
partially offset by the acquisition of AIIM International Exposition and Conference. The downturn in the U.S. economy continued to impact revenue in our trade shows as did the residual effect from the
events of September 11th by adding to our customers' concern over its ongoing impact on their marketing efforts. Revenue for the quarter was also impacted by a net shift in the
timing of five trade shows, three of which were held in the first quarter of 2001, but moved to the second quarter of 2002, another event was held in the first quarter of 2001 but the 2002 event was
held in December 2001, while the remaining trade show was held in the second quarter of 2002, but moved to the first quarter of 2002. Adjusting first quarter 2001 results for all such
movements, first quarter 2002 trade show revenue decreased by $6.2 million, or 7.5%.

18

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Revenue
from publications and marketing services decreased $6.3 million, or 15.7%, to $33.4 million for the first quarter of 2002 from $39.7 million in 2001. This
decrease was attributable to the overall slowdown in the economy and the resulting reduction in marketing spending by our customers as they adjust to slowing growth in their respective industry
sectors. The decline was heavily weighted to our travel and technology markets, which together decreased approximately 37.1% while the balance of our portfolio declined approximately 7.1%. Advertising
pages decreased approximately 11.5% across our portfolio while advertising revenue per page decreased approximately 6.7% in the first quarter of 2002. 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. We also
discontinued publication of certain magazines published in 2001. These declines were offset by revenue from our acquisitions ofMotor Age, Auto Body Repair
NewsandCentre d'Appelsmagazines in 2001.

Cost of Production and Selling

Cost of production and selling expenses decreased $13.6 million, or 18.8%, to $58.4 million for the first quarter of 2002 from $72.0 million
for the comparable period of 2001.

Expenses
of trade shows and conferences decreased $7.7 million, or 18.5%, to $33.7 million for the first quarter of 2002 from $41.4 million in 2001. This decrease
was primarily due to cost savings associated
with continuing and discontinued events and costs associated with the movement of events between quarters, partially offset by new costs related to our acquisition of the AIIM International Exposition
and Conference. Adjusting first quarter 2001 results for movements of events between quarters, trade show and conference expenses in 2001 decreased by $4.6 million, or 11.9%.

Expenses
of publication and marketing services decreased $5.9 million, or 19.3%, to $24.7 million in the first quarter of 2002 from $30.6 million in the first
quarter of 2001. This decrease was due primarily to savings attributable to our ongoing cost reduction programs and discontinued publications, partially offset by additional cost attributable to our
acquisitions ofMotor Age, Auto Body Repair NewsandCentre d'Appelsmagazines in 2001. We also more
tightly focused the activities of our subsidiary, Advanstar.com in the first half of 2001, including more closely integrating many of the sales, marketing, technology and operating functions with our
subsidiary, Advanstar Communications Inc., and its core activities in publishing and marketing services. The first quarter of 2002 includes the full period effect of these cost saving
initiatives.

General and Administrative Expenses

General and administrative expenses decreased $3.5 million, or 22.4%, to $12.0 million in the first quarter of 2002 from $15.5 million in the
first quarter of 2001. This decrease is primarily attributable to our ongoing cost and headcount reduction programs. In response to the decline in revenues throughout 2001 and into 2002, we
implemented early and aggressive cost management actions, including the layoff of approximately 236 staff, reductions in travel and other operating costs, and reorganization of certain support
functions and processes.

Restructuring Charge and other

In the first quarter of 2001 the Company recorded a restructuring charge of $3.5 million related to its internet activities, including severance related
payments of $0.6 million and facility closure costs of approximately $0.9 million, asset impairments of $1.3 million and $0.7 million of other contractual commitments.

19

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Depreciation and Amortization

Depreciation and amortization expense decreased $0.1 million to $17.7 million in the first quarter of 2002 from $17.8 million in the first
quarter of 2001 primarily due to the adoption in January 2002 of SFAS No. 142, "Goodwill and Other Intangible Assets." Upon adoption we discontinued the
amortization of goodwill and accelerated amortization of certain of our identified intangible assets. Excluding goodwill amortization recorded in the first quarter of 2001, depreciation and
amortization expense increased $6.9 million due to the accelerated amortization of certain identified intangible assets and the amortization of approximately $137.6 million of identified
intangible assets that were reclassified from goodwill subsequent to the first quarter of 2001 as we completed our purchase price allocation related to the Acquisition.

Interest Expense

Net interest expense decreased $1.0 million, or 5.5%, to $16.2 million in the first quarter of 2002 from $17.2 million in the first quarter
of 2001 due to a decrease in our weighted average interest rate, partially offset by the additional indebtedness necessary to fund the Acquisition. In February 2001, we replaced our then
outstanding $150.0 million 9.25% senior subordinated notes with $160.0 million 12.00% senior subordinated notes, and issued an additional $68.6 million our 15.0% senior discount
notes.

Other Income (Expense)

Other income (expense) increased $2.0 million to $1.0 million in the first quarter of 2002 from $(1.0) million in the first quarter of 2001. We
reported a non-cash gain of approximately $0.9 million in the first quarter of 2002 related to our foreign currency and interest rate hedging activities, compared to a
non-cash loss of approximately $1.1 million in the comparable period of 2001.

Income Taxes

The provision for income taxes decreased $2.2 million to $2.3 million in the first quarter of 2002 from $4.5 million in 2001. This decrease
is primarily due to a decrease in our effective rate to 35.2% in 2002. For book purposes we no longer amortize non-deductible goodwill as a result of the adoption in January of SFAS
No. 142, "Goodwill and Other Intangible Assets."

EBITDA

EBITDA increased $1.4 million, or 3.6%, to $39.4 million in the first quarter of 2002 from $38.0 million in the first quarter of 2001. The
increase was primarily due to the significant reduction in the level of our internet activities in 2002, the restructuring charge taken in the first quarter of 2001 and reductions in general and
administrative expense. These were partially offset by a general economic downturn in our trade show and publishing segments and the effect of a net shift in the timing of five trade shows.
Adjusting first quarter 2001 for the movement of trade shows from one quarter to another, EBITDA in the first quarter of 2002 increased by $5.2 million, or 15.3% from the first quarter of 2001.

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

20

---

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 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 March 31, 2002, we had total indebtedness of $655.0 million and approximately $42.9 million of borrowings available under our credit
facility, subject to customary conditions.

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% senior subordinated 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 3.75% over LIBOR and 2.50% 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.

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

Senior subordinated notes.Advanstar Communications' 12.00% senior subordinated notes mature in 2011 and are guaranteed by
each of Advanstar Communications' existing and future domestic

21

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restricted subsidiaries. Interest on the notes is payable semi-annually in cash. The notes contain covenants and events of default that, among other things, limit our ability to incur
debt, pay dividends and make investments. As of March 31, 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
with a principal amount at maturity of $103.2 million. Concurrently with the closing of the offering of the 12.00% senior subordinated notes, we sold additional senior discount notes due
October 2011 with an additional aggregate principal amount at maturity of $68.6 million. These notes do not require cash interest payments until 2006 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 March 31, 2002 we were in compliance with these
covenants. However, we are a holding company and our ability to pay interest on these notes will be dependent upon the receipt of
dividends from our subsidiaries. The credit facility and the senior subordinated 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 PeriodContractual ObligationLess Than 1 Year

1 to 3 Years

Over 3 YearsIndebtedness (excluding interest)

$
17.0

$
53.3

$
668.1Operating leases


6.9


15.9


18.3Total

$
23.9

$
69.2

$
686.4


Our
contingent obligations are primarily composed of $3.1 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 quarter of 2002 were approximately $1.4 million. We anticipate
that we will spend between $7.0 and $8.0 million on capital expenditures in 2002, primarily for expenditures related to our desktop computers and management information systems. Based on
current estimates, management believes that the amount of capital expenditures permitted to be made under the credit facility will be adequate to grow our business according to our business strategy
and to maintain the properties and business of our continuing operations.

Acquisitions and investments.We have provided funding to Advanstar.com, our subsidiary, to support its operations. We
provided funding of approximately $0.9 million in the first quarter of 2002 and anticipate that we will provide approximately $1.5 million of additional funding in 2002. Our debt
instruments limit
the total amount we can invest in Advanstar.com. Based on current estimates, we anticipate that we will be able to make these investments within those limitations.

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



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

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operations are expected to maintain very low or negative working capital balances, excluding cash and current maturities of long-term debt. 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.

From
time to time, we will continue to explore additional financing methods and other means to lower our cost of capital, which could include stock issuance or debt financing and the
application of the proceeds therefrom to the repayment of bank debt or other indebtedness.

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

Cash flows from operating activities.Net cash provided by operations decreased $12.4 million to a use of cash of
$10.2 million in 2002 from a source of cash of $2.2 million in 2001. The decrease was primarily due to an increase in working capital items and cash interest expense due to the timing of
interest payments on our 12% senior subordinated notes, partially offset by a significant reduction in operating expenditures of Advanstar.com.

Cash flows used in investing activities.Net cash used in investing activities increased $4.8 million to
$13.1 million in 2002, from $8.3 million in 2001. This increase was principally due increased investments in acquisitions during the period, partially offset by reduced capital
expenditures and intercompany transactions.

Cash flows from financing activities.Net cash used by financing activities increased $13.1 million to
$5.4 million in 2002, from a source of cash of $7.7 million in 2001. This increase was principally due to payments on long-term debt and financing costs related to the
amendment to our senior credit agreement during the 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 senior 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" (FAS 144). This statement addresses financial accounting and reporting for the impairment or disposal of long-lived assets. FAS 144
retains and expands upon the fundamental provisions of existing guidance related to the recognition and measurement of the impairment of long-lived assets to be held and used and the
measurement of long-lived assets to be disposed of by sale. Generally, the provisions of FAS 144 are effective for financial statements issued for fiscal years beginning after
December 15, 2001. The Company has adopted FAS 144 on January 1, 2002. The adoption of FAS 144 did not impact the results of operations or financial position of the Company
for the period ended March 31, 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" (FAS 145). FAS 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". FAS 145 also rescinds FASB Statement
No. 44, "Accounting for Intangible Assets of Motor Carriers". FAS 145 amends FASB

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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. FAS 145 also amends other existing authoritative pronouncements to make various
technical corrections, clarify meanings, or describe their applicability under changed conditions. FAS 145 is generally effective for fiscal years beginning after May 15, 2002. The
Company has not adopted FAS 145. The adoption of FAS 145 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 March 31,
2002, we had fixed rate debt of $253.9 million and variable rate debt of $401.1 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 $4.0 million, 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 senior subordinated notes to be fixed-rate borrowings. We have entered into agreements to cap the interest rate on $250.0 million of borrowings under our
credit facility, which would have the effect of reducing the impact of interest rate increases on our earnings and cash flows.

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

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

Our
strategy for management of currency risk relies primarily upon conducting our operations in a country's respective currency and may, from time to time, involve currency derivatives,
primarily forward exchange contracts, to reduce our exposure to currency fluctuations. As of March 31, 2002, there were open foreign exchange derivative contracts to sell with a notional amount
totaling $6.2 million and to buy with a notional amount totaling $1.1 million. The estimated fair value of the foreign exchange contracts based upon market quotes was a net asset of
approximately $0.2 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 $0.5 million. Actual results may differ.

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PART II    Other Information

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

None

Item 6.Exhibits and Reports on Form 8-K

Item 6(a).Exhibits

None

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

A
report on Form 8-K was filed by the Company on April 18, 2002 to report an event under Item 4Changes in Registrant's Certifying Accountant. No
financial statements were filed with such report.

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SIGNATURES

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

|             |  | ADVANSTAR, INC.
|------------ |  | ---------------
|May 20, 2002 |  | By:            

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