**UNITEDSTATES**SECURITIES ANDEXCHANGE COMMISSIONWashington, D.C. 20549

**FORM 10-Q**
| **(Mark One)**                                     |
|----------------------------------------------------|
| **x**                                              | ** ** | **Quarterly Report Pursuant to Section 13 or 15(d)  of the Securities Exchange Act of 1934.** |
| ** **                                         |   |   |
| **For the  quarterly period ended: June 30, 2006** |
| ** **                                         |
| **OR**                                             |
| ** **                                         |
| ** **                                         |   | **Transition Report Pursuant to Section 13 or  15(d) of the Securities Exchange Act of 1934** |
| ** **                                         |   | ** ** |
| **Commission  File Number: 333-61386**             |

** **

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

##### **Delaware**(State or other jurisdiction ofincorporation or organization)

**94-3243499**(I.R.S. EmployerIdentification No.)

**641 Lexington Avenue, New York, NY**(Address of principal executive offices)

**10022**(Zip Code)

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

Indicate by check mark whether the registrant: (1) hasfiled all reports required to be filed by Section 13 or 15(d) of the SecuritiesExchange Act of 1934 during the preceding 12 months (or for such shorter periodthat the registrant was required to file such reports), and (2) has beensubject to such filing requirements for the past 90days.   Yes   x    No  o

Indicate by check mark ifthe registrant is a large accelerated filer, an accelerated filer or a nonaccelerated filer.

Large AcceleratedFiler   o      AcceleratedFiler   o      Non-AcceleratedFiler   x

Indicate by check mark whether the registrant is ashell company (as defined in Rule 12b-2 of the Exchange Act).   Yes   o    No  x

As of August 14, 2006, 100 shares of the registrant’scommon stock were outstanding.

 

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**PART I    FinancialInformation**

**Item 1.    *Financial Statements:***
|                                                       |         | Condensed  Consolidated Balance Sheets (unaudited) at June 30, 2006 and December 31,  2005                          |
|-------------------------------------------------------|--------------|---------------------------------------------------------------------------------------------------------------------|
|                                                  |         |                                                                                                                |
|                                                  |         | Condensed Consolidated Statements of Operations  (unaudited) for the three months ended June 30, 2006 and 2005 |
|                                                  |         |                                                                                                                |
|                                                  |         | Condensed  Consolidated Statements of Operations (unaudited) for the six months ended  June 30, 2006 and 2005       |
|                                                  |         |                                                                                                                |
|                                                  |         | Condensed Consolidated Statements of Cash Flows  (unaudited) for the six months ended June 30, 2006 and 2005        |
|                                                  |         |                                                                                                                |
|                                                  |         | Notes to Condensed Consolidated Financial Statements  (unaudited)                                                   |
|                                                  |         |                                                                                                                |
| **Item 2.**                                           | *** *** | ***Management’s  Discussion and Analysis of Financial Condition and Results of Operations***                   |
| ** **                                            | *** *** | *** ***                                                                                                        |
| **Item 3.**                                           | *** *** | ***Quantitative  and Qualitative Disclosures About Market Risk***                                                   |
| ** **                                            | *** *** | *** ***                                                                                                        |
| **Item 4.**                                           | *** *** | ***Controls and  Procedures***                                                                                      |
|                                                  | *** *** | *** ***                                                                                                        |
| **PART  II    Other Information** |
|                                                  | *** *** |                                                                                                                |
| **Item  6.**                                          | *** *** | ***Exhibits***                                                                                                      |
| ** **                                            | *** *** | *** ***                                                                                                        |
| **SIGNATURES**                                        |

 

 

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**PART I FINANCIAL INFORMATION**

**Advanstar,Inc.Condensed Consolidated Balance Sheets (Unaudited)(In thousands, except share andper share data)**
| ** **                                                          | ** ** | **June 30,** | ** ** | **December 31,** | ** ** |
|---------------------------------------------------------------------|------------|-------------------|------------|-----------------------|------------|
| ** **                                                          | ** ** | **2006**          | ** ** | **2005**              | ** ** |
| **ASSETS**                                                          | ** ** | ** **        | ** ** | ** **            | ** ** |
| Current assets:                                                     |       |              |       |                  |       |
| Cash and cash  equivalents                                          |       | $                 | 51,855     |                  | $          | 46,641 |   |
| Accounts receivable,  net of allowance of $1,026 and $1,076 at      |       |              |       |                  |       |
| June 30, 2006  and December 31, 2005                                |       | 22,861            |       | 24,607                |       |
| Prepaid expenses                                                    |       | 9,988             |       | 7,871                 |       |
| Other                                                               |       | 2,048             |       | 1,965                 |       |
| Total current  assets                                               |       | 86,752            |       | 81,084                |       |
|                                                                |       |              |       |                  |       |
| Due from parent                                                     |       | 859               |       | 804                   |       |
|                                                                |       |              |       |                  |       |
| Property, plant  and equipment, net                                 |       | 21,560            |       | 21,306                |       |
|                                                                |       |              |       |                  |       |
| Intangible and other  assets:                                       |       |              |       |                  |       |
| Goodwill                                                            |       | 596,268           |       | 594,982               |       |
| Intangibles and  other, net                                         |       | 49,295            |       | 63,157                |       |
| Total intangible  and other assets, net                             |       | 645,563           |       | 658,139               |       |
| Non current  assets held for sale                                   |       | 4,620             |       | 4,620                 |       |
|                                                                |       | $                 | 759,354    |                  | $          | 765,953 |   |
|                                                                |       |              |       |                  |       |
| **LIABILITIES  AND STOCKHOLDER’S EQUITY**                      | ** ** | ** **        | ** ** | ** **            | ** ** |
|                                                                |       |              |       |                  |       |
| Current liabilities:                                                |       |              |       |                  |       |
| Current  maturities of long-term debt                               |       | $                 | 101        |                  | $          | 201 |   |
| Accounts payable                                                    |       | 13,814            |       | 12,507                |       |
| Accrued compensation                                                |       | 4,490             |       | 7,236                 |       |
| Other accrued  expenses                                             |       | 35,234            |       | 36,126                |       |
| Deferred revenue                                                    |       | 44,067            |       | 46,472                |       |
| Total current  liabilities                                          |       | 97,706            |       | 102,542               |       |
|                                                                |       |              |       |                  |       |
| Long-term debt,  net of current maturities                          |       | 630,929           |       | 620,391               |       |
| Deferred income  taxes                                              |       | 35,317            |       | 31,500                |       |
| Other long-term  liabilities                                        |       | 3,221             |       | 4,933                 |       |
|                                                                |       |              |       |                  |       |
| Commitments and  contingencies                                      |       |              |       |                  |       |
|                                                                |       |              |       |                  |       |
| Stockholder’s equity:                                          |       |              |       |                  |       |
| Common stock, $.01 par  value, 10,000 shares authorized; 100 shares |       |              |       |                  |       |
| issued and  outstanding at June 30, 2006 and December 31, 2005      |       | —            |       | —                |       |
| Capital in  excess of par value                                     |       | 370,424           |       | 370,424               |       |
| Accumulated  deficit                                                |       | (387,618          | )          | (372,250              | )          |
| Accumulated  other comprehensive income                             |       | 9,375             |       | 8,413                 |       |
| Total  stockholder’s equity                                    |       | (7,819            | )          | 6,587                 |       |
|                                                                |       | $                 | 759,354    |                  | $          | 765,953 |   |

 

The accompanyingnotes are an integral part of these condensed consolidated financialstatements.

2

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**Advanstar,Inc.Condensed Consolidated Statements of Operations (Unaudited)(In thousands)**
| ** **                                                                           | ** ** | **For the**                 | ** ** |
|--------------------------------------------------------------------------------------|------------|----------------------------------|------------|
| ** **                                                                           | ** ** | **Three Months Ended** | ** ** |
| ** **                                                                           | ** ** | **June 30,**                | ** ** |
| ** **                                                                           | ** ** | **2006**                         | ** ** | **2005** | ** ** |
| ** **                                                                           | ** ** | ** **                       | ** ** | ** ** | ** ** |
| Revenue                                                                              |       | $                                | 59,238     |   | $ | 55,990 |   |
|                                                                                 |       |                             |       |   |   |
| Operating expenses:                                                                  |       |                             |       |   |   |
| Cost of  production (excluding depreciation)                                         |       | 11,806                           |       | 11,293 |   |
| Selling,  editorial and circulation (excluding depreciation)                         |       | 27,846                           |       | 26,632 |   |
| General and  administrative (excluding depreciation)                                 |       | 10,388                           |       | 9,969 |   |
| Restructure  charge                                                                  |       | (80                              | )          | 2,015 |   |
| Depreciation and  amortization                                                       |       | 10,030                           |       | 9,519 |   |
| Total operating  expenses                                                            |       | 59,990                           |       | 59,428 |   |
| Operating loss                                                                       |       | (752                             | )          | (3,438 | ) |
|                                                                                 |       |                             |       |   |   |
| Other income (expense):                                                              |       |                             |       |   |   |
| Interest expense                                                                     |       | (20,897                          | )          | (23,809 | ) |
| Interest income                                                                      |       | 498                              |       | 668 |   |
| Loss on  extinguishment of debt                                                      |       | (497                             | )          | (12,581 | ) |
| Other expense,  net                                                                  |       | (4                               | )          | (35 | ) |
| Loss from  continuing operations before income taxes                                 |       | (21,652                          | )          | (39,195 | ) |
| Provision  (benefit) for income taxes                                           |       | 1,871                            |       | (5,730 | ) |
|                                                                                 |       |                             |       |   |   |
| Loss from continuing  operations                                                     |       | (23,523                          | )          | (33,465 | ) |
| (Loss) income  from operations of discontinued businesses, net of taxes (see Note 4) |       | (48                              | )          | 42,624 |   |
| Net (loss) income                                                                    |       | $                                | (23,571    | ) | $ | 9,159 |   |

 

The accompanyingnotes are an integral part of these condensed consolidated financialstatements.

3

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** **

**Advanstar,Inc.Condensed Consolidated Statements of Operations (Unaudited)(In thousands)**

 
| ** **                                                                           | ** ** | **For the**                    | ** ** |
|--------------------------------------------------------------------------------------|------------|--------------------------------|------------|
| ** **                                                                           | ** ** | **Six Months Ended** | ** ** |
| ** **                                                                           | ** ** | **June 30,**              | ** ** |
| ** **                                                                           | ** ** | **2006**                       | ** ** | **2005** | ** ** |
| ** **                                                                           | ** ** | ** **                     | ** ** | ** ** | ** ** |
| Revenue                                                                              |       | $                              | 165,816    |   | $ | 146,562 |   |
|                                                                                 |       |                           |       |   |   |
| Operating expenses:                                                                  |       |                           |       |   |   |
| Cost of  production (excluding depreciation)                                         |       | 33,945                         |       | 27,519 |   |
| Selling,  editorial and circulation (excluding depreciation)                         |       | 60,541                         |       | 56,666 |   |
| General and  administrative (excluding depreciation)                                 |       | 20,550                         |       | 22,905 |   |
| Restructuring  charge                                                                |       | 2,325                          |       | 2,015 |   |
| Depreciation and  amortization                                                       |       | 18,692                         |       | 19,477 |   |
| Total operating  expenses                                                            |       | 136,053                        |       | 128,582 |   |
|                                                                                 |       |                           |       |   |   |
| Operating income                                                                     |       | 29,763                         |       | 17,980 |   |
|                                                                                 |       |                           |       |   |   |
| Other income (expense):                                                              |       |                           |       |   |   |
| Interest expense                                                                     |       | (41,486                        | )          | (47,266 | ) |
| Interest income                                                                      |       | 1,001                          |       | 845 |   |
| Loss on  extinguishment of debt (see Note 5)                                         |       | (497                           | )          | (12,581 | ) |
| Other expense,  net                                                                  |       | (157                           | )          | (18 | ) |
|                                                                                 |       |                           |       |   |   |
| Loss from  continuing operations before income taxes                                 |       | (11,376                        | )          | (41,040 | ) |
|                                                                                 |       |                           |       |   |   |
| Provision  (benefit) for income taxes                                           |       | 3,870                          |       | (3,935 | ) |
|                                                                                 |       |                           |       |   |   |
| Loss from  continuing operations                                                     |       | (15,246                        | )          | (37,105 | ) |
|                                                                                 |       |                           |       |   |   |
| (Loss) income  from operations of discontinued businesses, net of taxes (see Note 4) |       | (122                           | )          | 41,747 |   |
|                                                                                 |       |                           |       |   |   |
| Net (loss)  income                                                                   |       | $                              | (15,368    | ) | $ | 4,642 |   |

 

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

4

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** **

 

**Advanstar,Inc.Condensed Consolidated Statements of Cash Flows (Unaudited)****(In thousands)**
| ** **                                                                  | ** ** | **For the**               | ** ** |
|-----------------------------------------------------------------------------|------------|--------------------------------|------------|
| ** **                                                                  | ** ** | **Six Months Ended** | ** ** |
| ** **                                                                  | ** ** | **June 30,**              | ** ** |
| ** **                                                                  | ** ** | **2006**                       | ** ** | **2005** | ** ** |
|                                                                        |       |                           |       |   |   |
| Operating  activities:                                                      |       |                           |       |   |   |
| Net (loss)  income                                                          |       | $                              | (15,368    | ) | $ | 4,642 |   |
| Adjustments to  reconcile net income to net cash from operating activities: |       |                           |       |   |   |
| Impairment of  intangible assets                                            |       | —                         |       | 2,272 |   |
| Depreciation and  amortization                                              |       | 18,692                         |       | 22,431 |   |
| Write-off of  deferred financing costs                                      |       | 497                            |       | 3,517 |   |
| Gain on  derivative financial instruments                                   |       | —                         |       | (52 | ) |
| Loss on asset  disposal                                                     |       | 176                            |       | — |   |
| Gain on sale of  business and other assets                                  |       | —                         |       | (53,053 | ) |
| Losses of  minority interest holders                                        |       | —                         |       | 566 |   |
| Non-cash  interest expense                                                  |       | 2,155                          |       | 13,575 |   |
| Deferred income  taxes                                                      |       | 3,816                          |       | 10,940 |   |
| Provision for  bad debts                                                    |       | 374                            |       | 471 |   |
| Changes in  operating assets and liabilities                                |       | (7,018                         | )          | (19,005 | ) |
| Net cash  provided by (used in) operating activities                   |       | 3,324                          |       | (13,696 | ) |
|                                                                        |       |                           |       |   |   |
| Investing  activities:                                                      |       |                           |       |   |   |
| Additions to  property, plant and equipment                                 |       | (6,102                         | )          | (2,740 | ) |
| Acquisitions of  intangible assets and other                                |       | (50                            | )          | (476 | ) |
| Proceeds from  sale of business and other assets                            |       | 21                             |       | 166,739 |   |
| Net cash (used  in) provided by investing activities                        |       | (6,131                         | )          | 163,523 |   |
|                                                                        |       |                           |       |   |   |
| Financing  activities:                                                      |       |                           |       |   |   |
| Payments of  long-term debt                                                 |       | (150                           | )          | (152,117 | ) |
| Proceeds from  issuance of long-term debt                                   |       | 10,000                         |       | — |   |
| Payment of  deferred finance costs                                          |       | (1,526                         | )          | (129 | ) |
| Dividends paid  to minority interest holders                                |       | —                         |       | (900 | ) |
| Net cash  provided by (used in) financing activities                        |       | 8,324                          |       | (153,146 | ) |
| Effect of  exchange rate changes on cash                                    |       | (303                           | )          | 384 |   |
|                                                                        |       |                           |       |   |   |
| Net increase  (decrease) in cash and cash equivalents                       |       | 5,214                          |       | (2,935 | ) |
|                                                                        |       |                           |       |   |   |
| Cash and cash  equivalents, beginning of period                             |       | 46,641                         |       | 41,328 |   |
|                                                                        |       |                           |       |   |   |
| Cash and cash  equivalents, end of period                                   |       | $                              | 51,855     |   | $ | 38,393 |   |

 

The accompanyingnotes are an integral part of these condensed consolidated financialstatements.

5

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**Advanstar, Inc.Notes to Condensed Consolidated Financial Statements (Unaudited)**

**1.****                          Basis ofPresentation**

The accompanying unaudited condensed consolidated financialstatements have been prepared by Advanstar, Inc. (“Advanstar”), its whollyowned subsidiary, Advanstar Communications Inc. (“Communications”), andCommunications’ majority owned subsidiaries (collectively, the “Company”) inaccordance with the instructions to Form 10-Q and, therefore, do not includeall the information and footnotes required by generally accepted accountingprinciples for complete financial statements. Management believes that all adjustments, consisting solely of normalrecurring items considered necessary for a fair statement of financial positionand results of operations, have been included. These condensed consolidated financial statements, however, should beread in conjunction with the audited financial statements and the related notesincluded in the Company’s annual report on Form 10-K for the year endedDecember 31, 2005, filed with the Securities and Exchange Commission on March30, 2006.  The results of operations forthe three and six months ended June 30, 2006 are not necessarily indicative ofthe operating results that may be expected for the entire year ending December31, 2006.

**2.**                          Summary of Significant Interim Accounting Policies

**Interim income tax expense**The Companydetermines its quarterly income tax provision based upon an estimated annualeffective income tax rate and discrete items as they occur.  In determiningthe effective income tax rate applicable to interim periods, the Companyexcludes tax jurisdictions where no tax expense or benefit is expected for theentire year.

**3.**                          Goodwill and OtherIntangible Assets

Thechanges in the carrying amount of goodwill by operating segment are as follows(in thousands):

|                                                               | ** ** | **Fashion &** | ** ** | **Life**     | ** ** | ** **      | ** ** | ** ** | ** ** | ** ** | ** ** |
|---------------------------------------------------------------|------------|------------------------|------------|--------------|------------|-----------------|------------|------------|------------|------------|------------|
| ** **                                                    | ** ** | **Licensing**          | ** ** | **Sciences** | ** ** | **Powersports** | ** ** | **Other**  | ** ** | **Total**  | ** ** |
| Balance as of  December 31, 2005                              |       | $                      | 316,554    |         | $          | 188,837         |       | $          | 79,674     |       | $          | 9,917 |   | $ | 594,982 |   |
| Goodwill acquired  or completion of purchase price allocation |       | 9                      |       | —       |       | 41              |       | —     |       | 50         |       |
| Foreign currency  translation                                 |       | —                 |       | —       |       | —          |       | 1,236      |       | 1,236      |       |
| Balance as of  June 30, 2006                                  |       | $                      | 316,563    |         | $          | 188,837         |       | $          | 79,715     |       | $          | 11,153 |   | $ | 596,268 |   |

 

6

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Trade exhibitor andadvertiser lists are amortized on a double-declining balance method over sixyears and five years, respectively, subscriber lists and other intangibleassets are amortized on a straight-line basis over three to ten years, andtrademarks and trade names are amortized on a straight-line basis over twentyyears.  These intangible assets consistof the following (in thousands):

|                                         | ** ** | **June 30,** | ** ** | **December 31,** | ** ** |
|-----------------------------------------|------------|-------------------|------------|-----------------------|------------|
| ** **                              | ** ** | **2006**          | ** ** | **2005**              | ** ** |
| Trade exhibitor  lists                  |       | $                 | 133,203    |                  | $          | 132,936 |   |
| Advertiser lists                        |       | 29,680            |       | 29,680                |       |
| Subscriber lists                        |       | 6,023             |       | 6,023                 |       |
| Trade names and  trademarks             |       | 19,211            |       | 19,211                |       |
| Other intangible  assets                |       | 20,071            |       | 20,275                |       |
| Deferred  financing costs               |       | 19,478            |       | 19,789                |       |
|                                    |       |              |       |                  |       |
|                                    |       | 227,666           |       | 227,914               |       |
| Accumulated  amortization               |       | (178,371          | )          | (164,757              | )          |
|                                    |       |              |       |                  |       |
| Total intangible  and other assets, net |       | $                 | 49,295     |                  | $          | 63,157 |   |

 

Estimated amortizationexpense of identified intangible and other assets for the remaining six monthsof 2006 and for the next five years is as follows (in thousands):

| 2006 |   | $     | 7,754  |   |
|------|--------|-------|--------|--------|
| 2007 |   | 8,372 |   |
| 2008 |   | 5,454 |   |
| 2009 |   | 1,919 |   |
| 2010 |   | 1,570 |   |
| 2011 |   | 1,092 |   |

 

**4.**                          Acquisitions and Divestitures

**Acquisitions**All acquisitions(collectively, the “Acquired Businesses”) have been accounted for using thepurchase method of accounting and, accordingly, the assets acquired andliabilities assumed have been recorded at their fair values as of the dates ofthe acquisitions.  The excess of thepurchase price over the fair value of the assets acquired and liabilitiesassumed has been recorded as goodwill. Results of operations for the Acquired Businesses have been included inthe accompanying condensed consolidated financial statements since theirrespective dates of acquisition.  TheAcquired Businesses have been consummated to expand the Company’s show andpublication presence within its existing market sector and to maximizemarketing and customer service infrastructure and expertise.

On September 12, 2005,the Company purchased an off-road consumer event business from Petersen EventsCorporation (“Off-Road Expo”) for $2.2 million in cash.  In addition, the Company may pay additionalcontingent cash consideration to the former shareholders based on the 2006operating revenue from the acquired business. Any contingent consideration paid will be recorded as goodwill whenearned by the former shareholder.

7

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On August 23, 2005, theCompany purchased a fashion industry tradeshow business and related productsfrom the owner of POOL Tradeshow (‘‘POOL’’) for $3.0 million in cash.  In addition, the Company may pay additionalcontingent cash consideration to the former owner based on the 2007 and 2008operating results from the acquired business and the owner’s continuedemployment with the Company.  Anycontingent consideration paid will be recorded as compensation expense whenearned by the former owner (see Note 13 for subsequent event).

On August 19, 2005, theCompany purchased Project Global Tradeshow, Inc. (‘‘Project”), a producer oftradeshows serving the fashion industry, for $9.9 million in cash, subject to aworking capital adjustment, which will be completed in 2006.  The Company does not believe the finalallocation of purchase price will be materially different from preliminaryestimates. In addition, the Company may pay additional contingent cashconsideration to the former shareholders based on the 2007 and 2008 operatingresults of the acquired business and their continued employment with theCompany.  Any contingent considerationpaid will be recorded as compensation expense when earned by the formershareholders.

In the second quarter of2005, the Company completed two other acquisitions of consumer tradeshowbusinesses with an aggregate purchase price of $0.5 million in cash.

TheCompany has recognized contingent consideration for the Acquired Businesses ascompensation expense in the condensed consolidated statements of operations asfollows (in thousands):

|                               | ** ** | **Three Months Ended** | ** ** | **Six Months Ended** | ** ** |
|-------------------------------|------------|----------------------------------|------------|--------------------------------|------------|
| ** **                    | ** ** | **June 30,**                | ** ** | **June 30,**              | ** ** |
| ** **                    | ** ** | **2006**                         | ** ** | **2005**                       | ** ** | **2006** | ** ** | **2005** | ** ** |
| IVT contingent  consideration |       | $                                | —     |                           | $          | 320 |   | $ | — |   | $ | 620 |   |
|                               |            |                                  |            |                                |            |  |  |  |  |  |  |  |  |

 

Thechange in the balance of accrued contingent consideration in the accompanyingcondensed consolidated balance sheet included as part of other accrued expensesis as follows (in thousands):

|                                         | ** ** | **Total** | ** ** |
|-----------------------------------------|------------|-----------|------------|
| Balance at  December 31, 2005 |       | $         | 1,336      |   |
| Contingent consideration                |       | —    |       |
| Payments to former shareholders         |       | (448      | )          |
|                                    |       |      |       |
| Balance at June  30, 2006               |       | $         | 888        |   |

 

The pro forma operatingresults of the Acquired Businesses for thethree and six months ended June 30, 2005 discussed above are immaterialto the Company’s consolidated results of operations.

**Divestitures**The operatingresults, related income taxes, and any gains or losses of the followingdivestitures (collectively, the “Disposed Businesses”) have been reported in discontinuedoperations in the condensed consolidated statements of operations for the threeand six months ended June 30, 2006 and 2005. ** ******Interest expense was not allocated to any of theCompany’s discontinued operations.****

8

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*Arenacross*In December 2005, the Company sold its ArenacrossChampionship Series business (“Arenacross”) for a total selling price of $0.2million. The Company recorded a $0.4 million loss on the sale.  Arenacross had no revenue in the three or sixmonths ended June 30, 2005.

*EastCoast Fashion Tradeshow Acquired from Larkin-Pluznik-Larkin, LLC*In the secondquarter of 2005, the Company discontinued the remaining East Coast Fashiontradeshow business acquired in the 1999 Larkin transaction (“East Coast Fashion”)and recognized a $2.3 million impairment, which was the carrying value of therelated intangibles.  East Coast Fashionhad $0.9 million of revenue in the three and six months ended June 30, 2005.

*PortfolioGroup*On May 23, 2005,the Company and certain affiliates (Communications, Advanstar ExpositionsCanada Limited and Advanstar.com) completed the sale of virtually all itsbusiness assets and liabilities associated with its tradeshows and conferences,trade publications and direct marketing products serving informationtechnology, communications, travel, beauty, home entertainment, and portfoliomarkets, including the shares of the Company’s Hong Kong subsidiaries.  The shares of the Company’s Braziliansubsidiary were sold to the same buyer in July 2005 after obtaining finalregulatory approval. Collectively, all of the above properties are referred toas “the Portfolio Group.” The sale price for these assets and shares was $185.0million in cash, less selling expenses and working capital adjustments of $11.2million.  The Company recorded a gain of$52.9 million on the sale of these assets.

Revenue of the Portfolio Group, included indiscontinued operations in the condensed consolidated statements of operations,was $25.5 million and $49.0 million for the three and six months ended June 30,2005.

**Assets Held for Sale**In the second quarter of 2005, the Company committed to aplan to sell its Cleveland office building and land (“the Cleveland Office”).The Company ceased depreciation of these assets, effective second quarter of2005. As of June 30, 2006 and December 31, 2005, the Company reported thisbuilding and land as assets held for sale in the condensed consolidated balancesheet.

The financial results ofthe Disposed Businesses included in discontinued operations in the accompanyingcondensed consolidated statements of operations are as follows (in thousands):

|                                                           | ** ** | **Three Months Ended** | ** ** | **Six Months Ended** | ** ** |
|-----------------------------------------------------------|------------|----------------------------------|------------|--------------------------------|------------|
| ** **                                                | ** ** | **June 30,**                | ** ** | **June 30,**              | ** ** |
| ** **                                                | ** ** | **2006**                         | ** ** | **2005**                       | ** ** | **2006** | ** ** | **2005** | ** ** |
| (Loss) income  before income taxes                        |       | $                                | (48        | )                              | $          | 57,153 |   | $ | (167 | ) | $ | 58,575 |   |
| Income tax  provision (benefit)                           |       | —                           |       | 14,609                         |       | (45 | ) | 16,262 |   |
| Minority  interests                                       |       | —                           |       | 80                             |       | — |   | (566 | ) |
|                                                      |       |                             |       |                           |       |   |   |   |   |
| (Loss) income from  operations of discontinued businesses |       | $                                | (48        | )                              | $          | 42,624 |   | $ | (122 | ) | $ | 41,747 |   |

 

The Company allocated$121.8 million of goodwill to the Portfolio Group and included the allocatedgoodwill in its calculation of gain on disposal in the second quarter of 2005.

9

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Goodwill allocated to thePortfolio Group was based on its relative fair value to the entire reportingunit prior to disposal.

**5.**                          Debt

**Creditfacility**Communicationsis party to a credit facility (the “Credit Facility”) with a group of financialinstitutions acting as lenders. On May 24, 2006, Communications amended andrestated its existing credit facility. The amended Credit Facility reduced therevolving loan from $60.0 million to $50.0 million, added a $10.0 million TermLoan, modified or eliminated certain restrictive covenants and extended thematurity date from April 2007 to May 2009 for the entire Credit Facility.  The Credit Facility is guaranteed by theCompany’s parent, Advanstar Holdings Corp., the Company and Communications’domestic subsidiaries and is collateralized by first priority liens onsubstantially all of the assets of the Communications and the guarantors.  As a result of the amendment and restatementof the Credit Facility, Communications expensed unamortized deferred financecosts of $0.5 million and capitalized additional deferred finance costs of $1.5million.

The Credit Facilitycontains restrictive covenants, including limitations on certain assetdispositions, dividends, investments and other restricted payments.  Failure to comply with thecovenants could cause an event of default under the Credit Facility.  As of June 30, 2006, Communications had $2.1 million of unusedletters of credit, which reduced borrowings available under the Credit Facilityto $47.9 million.

Prior to June 2005, theCredit Facility consisted of (i) $25.0 million of term B loans dueOctober 11, 2008, and (ii) $60.0 million of revolving loanavailability through April 11, 2007. In June 2005, Communications repaid the outstanding term B loans withproceeds from the sale of the Portfolio Group (see Note 4).

**Seniorsecured notes**Communications’ Senior Secured Notes initially consisted of $130.0million of Second Priority Senior Secured Floating Rate Notes due 2008, whichrequire quarterly amortization equal to 0.25% of the principal amount thereof(the “floating rate notes”), and $300.0 million of 10.75% Second Priority SeniorSecured Notes due 2010 (the “fixed rate notes”).  Interest on the floating rate notes ispayable at a rate equal to three-month LIBOR, which is reset quarterly, plus7.5%.

The floating rate notesand fixed rate notes prior to the transaction described below, were fully andunconditionally guaranteed on a senior basis, jointly and severally, byCommunications’ wholly owned domestic subsidiaries and collateralized by second priorityliens on substantially all the collateral pledged against borrowings underCommunications’ Credit Facility (other than the capital stock of certain of itssubsidiaries and assets of its parent companies, including the Company).   The financial covenants underthe notes include limitations, among other things, on Communications’ abilityto make payments, incur debt incurrence, pay dividends, and make otherrestricted payments.

In June 2005, Communications used a portion of the proceeds from thePortfolio Group sale to repurchase $8.7 million of the fixed rate notes at aprice equal to 100% of the principal amount plus accrued interest.  Communications also consummated a tenderoffer in June 2005 for the floating rate notes and repurchased $117.8 millionof the floating rate notes at a price equal to $1,073 per $1,000 principal amounttendered plus accrued and unpaid interest to the date of settlement.  In the second quarter of 2005, Communicationsrecognized a$12.6 million loss on extinguishment of debt related to the repurchase, including $8.6 million intender offer premium and consent fees, a write-off

10

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of $3.5 million inunamortized deferred financing costs, and $0.5 million in legal fees andexpenses.

In connection with the tender offer, Communications and the trustee entered into asupplemental indenture that eliminated substantially all of the restrictive andreporting covenants, certain events of default and certain other provisionswith respect to the floating rate notes and released the floating rate notes’lien on the collateral under the indenture. The fixed rate notes remain collateralized by the collateral and subjectto the restrictive covenants in the indenture.

On June 23, 2006,Communications issued a notice of redemption to redeem all of its remaining$9.8 million of outstanding floating rate notes at par.  The redemption will occur on August 15, 2006.

**Seniorsubordinated debt**Communications’$160.0 million unsecured, 12% senior subordinated notes due 2011 (the “SeniorSubordinated Notes”) bear interest payable semiannually on February 15 andAugust 15 of each year.  The SeniorSubordinated Notes are fully and unconditionally guaranteed on a seniorsubordinated basis, jointly and severally, by Communications’ wholly owneddomestic subsidiaries.  The covenantsunder the Senior Subordinated Notes include limitations on certain assetdispositions, payments, debt incurrence, dividends and other restrictedpayments.

**Discountnotes**The Company’ssenior discount notes due October 2011 (the “Discount Notes”) with aprincipal amount at maturity of $171.8 million bear interest at 15%,payable semiannually beginning October 2005, and have an implied yield tomaturity of approximately 17.2%.  Thenotes are redeemable at the Company’s option at specified premiums through 2007and at par thereafter.  The notes mayalso be redeemed at a premium upon a qualifying change of control of theCompany.

The Discount Notes arenot guaranteed by the Company’s subsidiaries and require cash interest paymentsstarting in April 2006. The Discount Notes contain restrictive covenants that,among other things, limit the Company’s ability and that of its subsidiaries toincur debt, pay dividends and make investments. Since the Company is a holding company and its subsidiaries serve as itsonly source of cash flow, its ability to pay interest on these notes will bedependent upon the receipt of dividends from its subsidiaries.  The Credit Facility, the Senior Secured Notesand the Senior Subordinated Notes impose substantial restrictions on theCompany’s subsidiaries’ ability to pay dividends to the Company.

The restricted paymentscovenants in Communications’ Senior Secured Notes indenture and SeniorSubordinated Notes indenture provide that Communications can pay dividends onlyif its leverage ratio (as defined) is 6.0 to 1.0 or better and only from “abasket” as defined as the amount by which its cumulative EBITDA (as defined)since January 1, 2001 exceeds 150% of Communications’ cumulative interestexpense in that period plus certain other items, including proceeds from equityofferings.  The Company cannot assure you Communications’ results willallow it to make future distributions in light of these restrictions.  Failure topay interest on these notes will be a default under the notes and also resultin a default under Communications’ Credit Facility, which could have a materialadverse effect on the Company’s financial position, results of operations, andcash flows and/or could impact the Company’s ability to continue to operatewithout an amendment or restructuring of its credit facility and thenotes. Notwithstanding the leverage ratio limitation on restricted payments,Communications can make restricted payments in an aggregate amount ofup to $20 million to the Company, none of which has been used as of June 30,2006.  On March 14, 2006, Communications declared and paid a dividend of $12.9million to the Company to be used for the

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Company’sApril 2006 interest payment on the Discount Notes.  Debt service on the discount notes will be $38.7million during the next 18 months ending December 31, 2007.  The Company expects Communications’ resultswill allow Communications to continue to make dividend payments to it forpurposes of debt service.

Accretionof the debt discount on the Discount Notes was $0.3 million and $6.2 million during the three monthsended June 30, 2006 and 2005 and was $0.7 million and $11.9 million during the six months endedJune 30, 2006 and 2005.  These amountsare included in interest expense in the respective accompanying condensedconsolidated statements of operations.

Long-term debt consists of the following (inthousands):

|                                                                                                                                                                        | ** ** | **June 30,** | ** ** | **December 31,** | ** ** |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------|------------|-----------------------|------------|
| ** **                                                                                                                                                             | ** ** | **2006**          | ** ** | **2005**              | ** ** |
| Revolving credit  loan, interest at LIBOR plus 2.5%; due May 2009                                                                                                      |       | $                 | —     |                  | $          | — |   |
| Term loan,  interest at LIBOR plus 2.5%; 7.83% at June 30, 2006 due May 2009                                                                                           |       | 10,000            |       |                  |       |
| Second priority  senior secured floating rate notes, interest at LIBOR plus 7.5%; 12.83% at  June 30, 2006, due 2008                                                   |       | 9,822             |       | 9,872                 |       |
| 10.75% Second  priority senior secured notes, due 2010, plus   unamortized premium of $606 and $680 at June 30, 2006 and December 31,  2005, respectively         |       | 291,942           |       | 292,015               |       |
| Senior  subordinated notes, interest at 12.00%, due 2011                                                                                                               |       | 160,000           |       | 160,000               |       |
| Senior discount  notes, interest at 15.00%, due October 2011, net of unamortized discount of  $12,525 and $13,187 at June 30, 2006 and December 31, 2005, respectively |       | 159,266           |       | 158,605               |       |
| Acquisition note  payable, due June 2006                                                                                                                               |       | —            |       | 100                   |       |
|                                                                                                                                                                   |       | 631,030           |       | 620,592               |       |
| Less current  maturities                                                                                                                                               |       | (101              | )          | (201                  | )          |
|                                                                                                                                                                   |       | $                 | 630,929    |                  | $          | 620,391 |   |

** **

**6.**                          Comprehensive Income

The table below presentscomprehensive income, defined as changes in the equity of the Company excludingchanges resulting from investments by and distributions to shareholders (inthousands):

|                                                                  | ** ** | **Three Months Ended** | ** ** | **Six Months Ended** | ** ** |
|------------------------------------------------------------------|------------|----------------------------------|------------|--------------------------------|------------|
| ** **                                                       | ** ** | **June 30,**                | ** ** | **June 30,**              | ** ** |
| ** **                                                       | ** ** | **2006**                         | ** ** | **2005**                       | ** ** | **2006** | ** ** | **2005** | ** ** |
| Net (loss)  income                                               |       | $                                | (23,571    | )                              | $          | 9,159 |   | $ | (15,368 | ) | $ | 4,642 |   |
| Change in  cumulative translation adjustment                     |       | 768                              |       | 535                            |       | 962 |   | 77 |   |
| Change in  unrealized losses on derivative financial instruments |       | —                           |       | (25                            | )          | — |   | (51 | ) |
| Comprehensive (loss)  income                                     |       | $                                | (22,803    | )                              | $          | 9,669 |   | $ | (14,406 | ) | $ | 4,668 |   |

 

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**7.**                          Segments

The Company follows theprovisions of SFAS No. 131, “Disclosures about Segments of an Enterpriseand Related Information.” During the first quarter of 2006, the Companyundertook a strategic change in the monitoring and management of the businessto better reflect management’s focus and commitment to its threeindustry-focused segments: Fashion & Licensing, Life Sciences, andPowersports.  This change was prompted asa result of a substantial change in the business organization following the divestitureof the Portfolio Group (see Note 4).  TheCompany has included its non reportable operating segments in Other.  In the Company’s most recently filed annualreport on Form 10-K for the year ended December 31, 2005, the Company’sreportable segments were by product type rather than by market sector ascurrently is being reported.  The Companyhas restated its segment information for the three and six months ended June30, 2005 into the new reportable segments.

The Company evaluates theperformance of, and allocates resources to, its segments based on contributionmargin — defined as revenue less cost of production; selling,editorial and circulation; and certain allocated general and administrativecosts, which is anon-GAAP measure.   The accounting policiesof the reportable segments are the same as those described in the summary ofsignificant accounting policies.  Thereare no inter-segment sales or transfers. Assets are not allocated to segments and therefore have not beenpresented.  Revenue and contributionmargins of the Company’s reportable segments are as follows(in thousands):

|                         | ** ** | **Three Months Ended** | ** ** | **Six Months Ended** | ** ** |
|-------------------------|------------|----------------------------------|------------|--------------------------------|------------|
| ** **              | ** ** | **June 30,**                | ** ** | **June 30,**              | ** ** |
| ** **              | ** ** | **2006**                         | ** ** | **2005**                       | ** ** | **2006** | ** ** | **2005** | ** ** |
| Revenue                 |       |                             |       |                           |       |   |   |   |   |
| Fashion & Licensing |       | $                                | 10,952     |                           | $          | 10,074 |   | $ | 59,046 |   | $ | 46,970 |   |
| Life Sciences           |       | 40,002                           |       | 38,977                         |       | 75,122 |   | 71,679 |   |
| Powersports             |       | 5,514                            |       | 4,435                          |       | 26,660 |   | 23,060 |   |
| Other                   |       | 2,770                            |       | 2,504                          |       | 4,988 |   | 4,853 |   |
| Total                   |       | $                                | 59,238     |                           | $          | 55,990 |   | $ | 165,816 |   | $ | 146,562 |   |
|                    |       |                             |       |                           |       |   |   |   |   |
| Contribution  margin    |       |                             |       |                           |       |   |   |   |   |
| Fashion & Licensing |       | $                                | 4,999      |                           | $          | 4,286 |   | $ | 33,917 |   | $ | 27,872 |   |
| Life Sciences           |       | 13,428                           |       | 12,488                         |       | 23,580 |   | 21,660 |   |
| Powersports             |       | (115                             | )          | (1,043                         | )          | 10,410 |   | 8,114 |   |
| Other                   |       | 173                              |       | 1,199                          |       | 1,170 |   | 2,458 |   |

 

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The reconciliation oftotal segment contribution margin to consolidated income from continuingoperations before income taxes is as follows (in thousands):

|                                                                              | ** ** | **Three Months Ended** | ** ** | **Six Months Ended** | ** ** |
|------------------------------------------------------------------------------|------------|----------------------------------|------------|--------------------------------|------------|
| ** **                                                                   | ** ** | **June 30,**                | ** ** | **June 30,**              | ** ** |
| ** **                                                                   | ** ** | **2006**                         | ** ** | **2005**                       | ** ** | **2006** | ** ** | **2005** | ** ** |
| Total segment  contribution margin                                           |       | $                                | 18,485     |                           | $          | 16,930 |   | $ | 69,077 |   | $ | 60,104 |   |
| General and administrative expense not  allocated to segment operations |       | (9,287                           | )          | (8,834                         | )          | (18,297 | ) | (20,632 | ) |
| Restructuring  charge                                                        |       | 80                               |       | (2,015                         | )          | (2,325 | ) | (2,015 | ) |
| Depreciation and  amortization                                               |       | (10,030                          | )          | (9,519                         | )          | (18,692 | ) | (19,477 | ) |
| Other expense  (primarily interest)                                          |       | (20,900                          | )          | (35,757                        | )          | (41,139 | ) | (59,020 | ) |
| Loss from continuing operations before income taxes                          |       | $                                | (21,652    | )                              | $          | (39,195 | ) | $ | (11,376 | ) | $ | (41,040 | ) |

 

**8.**                          RestructuringActivity

Relatedto the sale of the Portfolio Group (see Note 4), in May 2005, the Companyceased use of certain leased office space in New York, NY, Milford, CT, andSanta Ana, CA.  In the third quarter of 2005, the Companyvacated additional leased office space in Milford, CT and Chicago, IL. These activitiesresulted in charges to the Company’s operations during 2005.  In thefirst quarter of 2006, the Company vacated additional leased office space inNew York, NY, and revised its estimate of expected future sublease income forthis space, resulting in additional charges during the first quarter of 2006. These charges consist of the discountedremaining future minimum lease payments due under non-cancelable leases, net ofestimated future sublease income. These lease commitments expire at variousdates through 2010.

EffectiveJune 2006, the Company entered into a lease modification and surrenderagreement for approximately 60% of its vacated office space in New York,NY.  Under the terms of the agreement,the Company will pay the landlord $2.8 million in cash, the lease covering thesurrendered space will be terminated and it will have no further future leaseobligations for the portion of the space surrendered.  In June 2006 the Company adjusted its accrualfor this space based upon the terms of the agreement and recorded a gain of$0.1 million.

During2005 the Company notified 120 employees that they would be severed from theCompany in connection with the sale of the Portfolio Group and thereorganization of the Company’s operating and support department management team. As of June 30, 2006, 117 of these employees have been terminated.  Severance payments are expected to continuethrough 2007.

Restructuring charges incurredare as follows (in thousands):

|                                                | ** ** | **Three Months Ended** | ** ** | **Six Months Ended** | ** ** |
|------------------------------------------------|------------|----------------------------------|------------|--------------------------------|------------|
| ** **                                     | ** ** | **June 30,**                | ** ** | **June 30,**              | ** ** |
| ** **                                     | ** ** | **2006**                         | ** ** | **2005**                       | ** ** | **2006** | ** ** | **2005** | ** ** |
|                                           |       |                             |       |                           |       |   |   |   |   |
| Facility exit  costs                           |       | $                                | (82        | )                              | $          | 794 |   | $ | 2,339 |   | $ | 794 |   |
| Employee severance and other termination costs |       | 2                                |       | 1,221                          |       | (14 | ) | 1,221 |   |
| Restructuring  charge                          |       | $                                | (80        | )                              | $          | 2,015 |   | $ | 2,325 |   | $ | 2,015 |   |

 

14

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Thesummary of the Company’s change in restructuring accruals is as follows (inthousands):

|                                         | ** ** | **Facility Exit  Costs** | ** ** | **Employee  Severance** | ** ** | **Total** | ** ** |
|-----------------------------------------|------------|-------------------------------|------------|-------------------------|------------|-----------|------------|
| Balance at  December 31, 2005 |       | $                             | 3,412      |                    | $          | 807       |       | $ | 4,219 |   |
| Restructuring  charge                   |       | 2,339                         |       | (14                     | )          | 2,325     |       |
| Utilized-cash                           |       | (1,299                        | )          | (687                    | )          | (1,986    | )          |
| Utilized-non-cash                       |       | —                        |       | —                  |       | —    |       |
| Balance at June 30,  2006               |       | $                             | 4,452      |                    | $          | 106       |       | $ | 4,558 |   |

 

Therestructuring accrual balance in the accompanying condensed consolidatedbalance sheet is $4.6 million and $4.2 million at June 30, 2006 and December31, 2005, of which $3.7 million and $2.1 million is in other accrued expensesat June 30, 2006 and December 31, 2005, and $0.9 million and $2.1 million is inother long term liabilities at June 30, 2006 and December 31, 2005.

**9.**                          Stock Based Compensation

OnJanuary 1, 2006, the Company adopted Statementsof Financial Accounting Standards No. 123R, *Share-BasedPayment* (“SFAS 123R”).  UnderSFAS 123R, the Company’s share based awards meet the definition of liabilityawards.  As allowed under the provisions of this statement forentities not meeting the public company definition, the Company adopted theintrinsic value method of accounting for its liability awards.  Accordingly, compensation expense and arelated liability is recorded only if the value of the Company’s sharesunderlying its share based awards are greater than the awards’ exercise priceas of the end of the applicable reporting period.  As of June 30, 2006, the Company’s managementhas determined that the fair value of its common stock underlying its sharebased payment awards is less than the exercise price of all its options.  Accordingly, no liability or expense has beenrecorded during the three or six months ended June 30, 2006.  The Company had no options exercised or cashsettlement transactions during the three or six months ended June 30, 2006relating to its stock option plan.

Priorto January 1, 2006, the Company accounted for its stock options and awards to employees under theprovisions of Accounting Principles Board (“APB”) Opinion No. 25, *Accounting for Stock Issued to Employees*, and relatedinterpretations.  No compensation expensewas recorded in the condensed consolidated statement of operations for thethree and six months ended June 30, 2005.

On October 12, 2000,Advanstar Holdings Inc. (“Holdings”), the parent company of Advanstar, Inc.,adopted the 2000 Management Incentive Plan (“the Plan”).  A maximum of 4,072,789 shares of Holdings areauthorized for grant to participants under the Plan.  Options are granted by Holdings’ board ofdirectors at an exercise price of not less than the fair value of Holdingscommon stock at the date of grant and vest over a maximum of nine years.   Shares available for grant under the Plantotaled 297,789 at June 30, 2006.

15

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A summary of stock option activity under the Plan isas follows:

|                                        | ** ** | ** **      | ** ** | **Weighted** | ** ** |
|----------------------------------------|------------|-----------------|------------|--------------|------------|
| ** **                             | ** ** | ** **      | ** ** | **Average**  | ** ** |
|                                   | ** ** | **Options**     | ** ** | **Exercise** | ** ** |
| * *                               | ** ** | **Outstanding** | ** ** | **Price**    | ** ** |
| Outstanding at  December 31, 2005 |       | 3,965,000       |       | $            | 10.00      |   |
| Cancelled                              |       | (190,000        | )          | 10.00        |       |
| Outstanding at  June 30, 2006          |       | 3,775,000       |       | $            | 10.00      |   |

 

At June 30, 2006, theoutstanding stock options had a weighted average remaining contractual life of4.8 years and an exercise price of $10.00 per option.  Of the options outstanding at June 30, 2006,2,661,040 were exercisable.

**10.**                   Related-Party Transactions

**Financial Advisory Fees and Agreements**In May 2005, theCompany paid a consulting fee of $1.5 million to Credit Suisse Securities(USA), LLC (“CSS (USA)”), an affiliate of Credit Suisse Corporation (“CS Corp.”),an affiliate of the DLJ Merchant Banking funds, related to the sale of thePortfolio Group (see Note 4).

InJune 2005, theCompany repurchased $7.1 million of Communications’ fixed rate notes at par,and $4.6 million of Communications’ floating rate notes at a price equal to107.3% of principal, from CSS (USA) pursuant to Communications’ tender offer(see Note 5).

**11.**                   Recently Issued Accounting Pronouncements

In July 2006 theFinancial Accounting Standards Board (“FASB”) issued Interpretation No. 48 (“FIN48”) *Accounting for Uncertainty in Income Taxes — aninterpretation of FASB Statement No. 109*.  FIN 48 prescribes arecognition threshold and measurement process for the financial statementrecognition and measurement of a tax position taken or expected to be taken ina tax return.  Additionally, FIN 48 provides guidance on thederecognition, classification, accounting in interim periods and disclosurerequirements for uncertain tax positions.  The accounting provisions ofFIN 48 will be effective for the Company beginning January 1, 2007.  TheCompany is in the process of determining the effect, if any, that the adoptionof FIN 48 will have on its consolidated financial statements.

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**12.**                   Subsequent Events

*DividendPayment*

In July 2006, the Company’sparent, Advanstar Holdings Corp., entered into a stock purchase agreement withthe Company’s former Chief Executive Officer, Robert L. Krakoff.  Pursuant to the agreement, Advanstar HoldingsCorp. agreed to repurchase all of the shares of its common stock held by Mr.Krakoff for $9.00 per share. Simultaneously with the execution of the stock purchase agreement,Advanstar Holdings Corp. entered into a cancellation of stock options agreementwhereby Mr. Krakoff surrendered all of his stock options.  The Company declared and paid a $3.3 milliondividend to its parent for purposes of funding this transaction.

*TerminationAgreemen*

InJuly 2006, the Company and the former owner of POOL entered into an agreementto terminate the former owner’s employment with the Company and settle alltheir respective rights and obligations under the POOL asset purchase agreementand an employment agreement entered into in connection with the POOLacquisition.  The agreement provides foran initial payment of $1.5 million to the former owner in July 2006 and anadditional payment of $0.5 million in 2007 as final payment under theagreement.  This consideration will be recorded as compensation expense inthe third quarter of 2006.  The POOL purchase agreement originally providedfor additional contingent cash consideration to be paid to the former ownerbased on the 2007 and 2008 operating results of POOL and required the owner’scontinued employment with the Company.  These future contingent purchaseprice and employment-related payments were canceled as part of the agreement.

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**Item 2.   *Management’s Discussionand Analysis of Financial Condition and Results of Operations***

This quarterly report on Form 10-Q containsforward-looking statements made pursuant to the safe harbor provisions of thePrivate Securities Litigation Reform Act of 1995.  Investors are cautioned not to place unduereliance on these forward-looking statements, including statements about plansand objectives of management, potential acquisitions, market growth andopportunity.  These forward-lookingstatements are neither promises nor guarantees and involve risks anduncertainties that could cause actual results to differ materially from thoseindicated by such forward-looking statements. You should not expect that these forward-looking statements will beupdated or supplemented as a result of changing circumstances or otherwise, andwe disavow and disclaim any obligation to do so.  Important cautionary statements and riskfactors that would affect actual results are discussed in the our periodicreports and registration statements filed with the Securities and ExchangeCommission, including those under the caption entitled “Risk Factors” in our2005 annual report on Form 10-K filed with the Securities and ExchangeCommission on March 30, 2006.

**Overview**

We are an integrated media company providing marketaccess media and services for both business-to-business andbusiness-to-consumer firms targeting customers primarily in the US.  Our products and services are targeted tospecific industry sectors through shows and conferences, controlled circulationtrade, business, professional and consumer magazines as well as electronicmedia.  Wealso provide a broad range of other direct marketing products, includingclassified advertising, direct mail services, reprints, database marketing,guides, reference books and electronic based products.  Our electronic based products include webadvertising, e-newsletters, education and webinars.

During the first quarter of 2006, we undertook astrategic change in the monitoring and management of our business to betterreflect our focus and commitment to our three industry-focused segments.  This change was prompted as a result of asubstantial change in our business organization following the divestiture ofthe Portfolio Group. See “Presentation of Financial Information—Acquisitionsand Divestitures.”

We report ourbusiness in these three industry focused segments:

·                    Fashion &Licensing, which serves the men’s, women’s, children’s and product sourcingsectors of the apparel industry as well as the merchandise licensing industrythrough industry tradeshows, conferences and on-line showrooms; publishingtargeted magazines and directories; and offering a broad range of marketingsupport services;

·                    Life Sciences,which serves the healthcare, dental, veterinary, pharmaceutical, and sciencefields through publishing primary and specialty care magazines and professionaljournals; organizing conferences and other events; developing continuing medical education (“CME”) products; and thecreation of a wide variety of custom marketing projects; and

·                    Powersports,which serves the motorcycle, off-road and automotive aftermarket industriesthrough publishing trade and consumer magazines and shows and electronicproducts.

In addition to our three segments described above, wecombine our European, market development and e-media operations into “Other.”

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Unless otherwise noted, disclosures herein relate onlyto our continuing operations. For further information on discontinuedproperties, see “Presentation of Financial Information—Acquisitions andDivestitures.”

Fashion & Licensing accounted for 36% and 32% oftotal revenue for the six months ended June 30, 2006 and 2005.  Life Sciences accounted for 45% and 49% oftotal revenue for the six months ended June 30, 2006 and 2005.  Powersports accounted for 16% of totalrevenue for the six months ended June 30, 2006 and 2005, while Other operationsaccounted for 3% of total revenue for the six months ended June 30, 2006 and2005.  Our revenue reaches its highestlevels during the first and third quarters of the year due to the timing of theMAGIC Marketplace tradeshows and our other large tradeshows andconferences.  Because show and conferencerevenue is recognized when a particular event is held, we may experiencefluctuations in quarterly revenue based on the movement of show dates from onequarter to another.

**Trends andDevelopments**

Results for the first half of 2006 reflect the impactof our strategy put in place in 2005 to focus our portfolio on industry sectorswhere we can leverage our strong market positions, customer relationships andmanagement teams.  We continue to developnew revenue streams through a variety of growth initiatives across all segmentsand are constantly striving to improve operating efficiency.

In addition to the expansion and development of newcategories and trend areas in MAGIC, the recent acquisitions of POOL andProject have been integrated into the overall MAGIC Marketplace and contributedto the expansion of our fashion offerings to our exhibitors and attendeesduring the first half of the year.

The recent launches in Powersports in the off-roadmarket continue to develop, including *DIRTsports* and *Off-Road Business* magazines, Off-Road Impact tradeshow andthe Off-Road Expo consumer event acquired in October 2005.

In Life Sciences our healthcare projects businesscontinues to develop through the strengthening of our sales efforts andeffectively addressing our pharmaceutical customers’ needs to comply withtighter regulations relating to the management and delivery of educationalprojects.  We continued our growthinitiatives including the launch of five new publications and conferences andthe development of several new webinars and other electronic media.

In the first quarter of 2006 we established adedicated electronic media group to focus on developing opportunities forelectronic products to meet our customers’ evolving marketing and informationrequirements.  We anticipate acceleratingour growth in electronic media as we move through the balance of the year.

On May 24, 2006, Communications amended and restatedits existing credit facility. The amended Credit Facility reduced the revolvingloan from $60.0 million to $50.0 million, added a $10.0 million Term Loan, modified or eliminated certain restrictivecovenants and extended the maturity date from April 2007 to May 2009 for theentire Credit Facility.** **See “Liquidity and CapitalResources—Credit facility amendment and restatement.”

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**Presentationof Financial Information**

*Acquisitions anddivestitures*

We continue tolook for opportunities to execute our strategy of building significant productpositions in targeted markets, through both the acquisition and sale ofidentified assets.  Dispositionscompleted in 2005 are as follows:

·                    On December31, 2005, we sold our Arenacross Championship Series (“Arenacross”) for a totalselling price of $0.2 million. We recorded a loss on the sale of $0.4 millionin December 2005.** **Arenacrosshad no revenue in the three or six months ended June 30, 2005.** **Arenacross had a$0.1 million contribution loss in the three and six months ended June 30, 2005.

·                    In the secondquarter of 2005, we discontinued the remaining East Coast Fashion tradeshowbusiness acquired in 1999 from Larin-Pluznik-Larkin, LLC. (the “East CoastFashion Group”) as part of our new strategy. We recorded a $2.3 million impairment charge for the remainingintangible assets of this business in 2005. East Coast Fashion Group had $0.9million of revenue in the three and six months ended June 30, 2005.  Contribution margin for the three and sixmonths ended June 30, 2005 was $0.2 million and $0.1 million.

·                    On May 23,2005, we, our parent company and certain affiliates (Advanstar ExpositionsCanada Limited and Advanstar.com) completed the sale of our business assets andliabilities associated with our tradeshows and conferences, trade publicationsand direct marketing products servicing the information, technology,telecommunications, travel, beauty, home entertainment, and portfolio markets,including the shares of our Hong Kong subsidiaries.  The shares of our Brazilian subsidiary weresold in July 2005 after receipt of final regulatory approval. Collectively,these assets and shares are referred to as the “Portfolio Group.” The sale pricefor the Portfolio Group was $185.0 million less $11.2 million in workingcapital adjustments and expenses.  Werecorded a gain on the sale of $52.9 million. Revenue for the three and six months ended June 30, 2005 was $25.5million and $49.0 million.  Contributionmargin for the three and six months ended June 30, 2005 was $10.3 million and$14.9 million.

The financialresults of the businesses included in discontinued operations in theaccompanying condensed consolidated statements of operations are as follows (inthousands):
| ** **                                                | ** ** | **Three Months Ended  June 30** | ** ** | **Six Months Ended  June 30** | ** ** |
|-----------------------------------------------------------|------------|------------------------------------------------|------------|----------------------------------------------|------------|
| ** **                                                | ** ** | **2006**                                       | ** ** | **2005**                                     | ** ** | **2005** | ** ** | **2005** | ** ** |
| (Loss) income  before income taxes                        |       | $                                              | (48        | )                                            | $          | 57,153 |   | $ | (167 | ) | $ | 58,575 |   |
| Income tax  provision (benefit)                           |       | —                                         |       | 14,609                                       |       | (45 | ) | 16,262 |   |
| Minority interests                                        |       | —                                         |       | 80                                           |       | — |   | (566 | ) |
| (Loss) income  from operations of discontinued businesses |       | $                                              | (48        | )                                            | $          | 42,624 |   | $ | (122 | ) | $ | 41,747 |   |

 

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In 2005, we completed five acquisitions.

·                  OnSeptember 12, 2005, we purchased an off-road consumer event business fromPetersen Events Corporation (“Off-Road Expo”) for $2.2 million in cash.  In addition, we may pay additional contingentcash consideration to the former shareholders based on the 2006 operatingrevenue from the acquired business.

·                  OnAugust 23, 2005, we purchased two fashion industry tradeshows and relatedproducts from the owner of the POOL Tradeshow (‘‘POOL”) for $3.0 million incash.  In July 2006, we and the former owner of POOLentered into an agreement to terminate the former owner’s employment with usand settle all their respective rights and obligations under the POOL assetpurchase agreement and an employment agreement entered into in connection withthe POOL acquisition.  The agreementprovides for an initial payment of $1.5 million to the former owner in July 2006and an additional payment of $0.5 million in 2007 as final payment under theagreement.  This consideration will be recorded as compensation expense inthe third quarter of 2006.  The POOL purchase agreement originallyprovided for additional contingent cash consideration to be paid to the formerowner based on the 2007 and 2008 operating results of POOL and required theowner’s continued employment with us.  These future contingent purchaseprice and employment-related payments were canceled as part of the agreement.

·                  On August 19, 2005, we purchased ProjectGlobal Tradeshow, Inc. (‘‘Project”), a producer of tradeshows for the fashionindustry, for $9.9 million in cash, subject to a working capital adjustment,which will be completed in 2006.  Inaddition, we may pay additional contingent cash consideration to the formershareholders based on the 2007 and 2008 operating results of the acquiredbusiness and their continued employment with us.  The purchase price working capital adjustmenthas yet to be finalized. We do not believe the final allocation of purchaseprice will be materially different from preliminary estimates.

·                  In 2005, we completed two otheracquisitions of consumer shows with an aggregate purchase price of $0.5 millionin cash.

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

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**SelectedFinancial Data**

The following table sets forth selected statements ofoperations and other financial data. 
| ** **                                                              | ** ** | **For the**                 | ** ** | **For the**               | ** ** |
|-------------------------------------------------------------------------|------------|----------------------------------|------------|--------------------------------|------------|
| ** **                                                              | ** ** | **Three Months Ended** | ** ** | **Six Months Ended** | ** ** |
| ** **                                                              | ** ** | **June 30,**                | ** ** | **June 30,**              | ** ** |
| ** **                                                              | ** ** | **2006**                         | ** ** | **2005**                       | ** ** | **2006** | ** ** | **2005** | ** ** |
| ** **                                                              | ** ** | **(in thousands)**          | ** ** | **(in thousands)**        | ** ** |
| **Income  Statement Data:**                                             |       |                             |       |                           |       |   |   |   |   |
| Revenue                                                                 |       |                             |       |                           |       |   |   |   |   |
| Fashion & Licensing                                                 |       | $                                | 10,952     |                           | $          | 10,074 |   | $ | 59,046 |   | $ | 46,970 |   |
| Life Sciences                                                           |       | 40,002                           |       | 38,977                         |       | 75,122 |   | 71,679 |   |
| Powersports                                                             |       | 5,514                            |       | 4,435                          |       | 26,660 |   | 23,060 |   |
| Other                                                                   |       | 2,770                            |       | 2,504                          |       | 4,988 |   | 4,853 |   |
|                                                                    |       |                             |       |                           |       |   |   |   |   |
| Total revenue                                                           |       | 59,238                           |       | 55,990                         |       | 165,816 |   | 146,562 |   |
|                                                                    |       |                             |       |                           |       |   |   |   |   |
| Cost of production,  selling, editorial and circulation                 |       |                             |       |                           |       |   |   |   |   |
| Fashion & Licensing                                                 |       | 5,877                            |       | 5,735                          |       | 24,969 |   | 18,991 |   |
| Life Sciences                                                           |       | 25,888                           |       | 25,656                         |       | 50,076 |   | 48,346 |   |
| Powersports                                                             |       | 5,290                            |       | 5,229                          |       | 15,623 |   | 14,453 |   |
| Other                                                                   |       | 2,597                            |       | 1,305                          |       | 3,818 |   | 2,395 |   |
|                                                                    |       |                             |       |                           |       |   |   |   |   |
| Total cost of production and selling                                    |       | 39,652                           |       | 37,925                         |       | 94,486 |   | 84,185 |   |
|                                                                    |       |                             |       |                           |       |   |   |   |   |
| General and  administrative expenses                                    |       | 10,388                           |       | 9,969                          |       | 20,550 |   | 22,905 |   |
| Restructuring  charge                                                   |       | (80                              | )          | 2,015                          |       | 2,325 |   | 2,015 |   |
| Depreciation and  amortization                                          |       | 10,030                           |       | 9,519                          |       | 18,692 |   | 19,477 |   |
|                                                                    |       |                             |       |                           |       |   |   |   |   |
| Operating (loss)  income                                                |       | (752                             | )          | (3,438                         | )          | 29,763 |   | 17,980 |   |
| Other income  (expense):                                                |       |                             |       |                           |       |   |   |   |   |
| Interest expense                                                        |       | (20,897                          | )          | (23,809                        | )          | (41,486 | ) | (47,266 | ) |
| Interest income                                                         |       | 498                              |       | 668                            |       | 1,001 |   | 845 |   |
| Loss on extinguishment of debt                                          |       | (497                             | )          | (12,581                        | )          | (497 | ) | (12,581 | ) |
| Other expense, net                                                      |       | (4                               | )          | (35                            | )          | (157 | ) | (18 | ) |
|                                                                    |       |                             |       |                           |       |   |   |   |   |
| Loss from  continuing operations before income taxes                    |       | (21,652                          | )          | (39,195                        | )          | (11,376 | ) | (41,040 | ) |
| Provision  (benefit) for income taxes                                   |       | 1,871                            |       | (5,730                         | )          | 3,870 |   | (3,935 | ) |
|                                                                    |       |                             |       |                           |       |   |   |   |   |
| Loss from  continuing operations                                        |       | (23,523                          | )          | (33,465                        | )          | (15,246 | ) | (37,105 | ) |
|                                                                    |       |                             |       |                           |       |   |   |   |   |
| (Loss) income  from operations of discontinued businesses, net of taxes |       | (48                              | )          | 42,624                         |       | (122 | ) | 41,747 |   |
|                                                                    |       |                             |       |                           |       |   |   |   |   |
| Net (loss)  income                                                      |       | $                                | (23,571    | )                              | $          | 9,159 |   | $ | (15,368 | ) | $ | 4,642 |   |

 

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**Results ofOperations**

THREE MONTHS ENDED JUNE 30, 2006 COMPARED TO THETHREE MONTHS ENDED JUNE 30, 2005

*Revenue*

Revenue in the second quarter of 2006 increased 5.8%to $59.2 million from $56.0 million in the second quarter of 2005.

Revenue from Fashion and Licensing of $11.0 millionincreased 8.7% or $0.9 million from $10.1 million in the secondquarter of 2005.  Revenue from theLicensing International show grew 6% or $0.5 million from a 5% increase insquare feet, while *License!*magazine revenue increased 18% or $0.3 million due largely to a 15%increase in advertising pages.

Revenue from Life Sciences of $40.0 millionincreased 2.6% or $1.0 million from $39.0 million in the second quarter of 2005.  Ad page growth in the Life Science markets inthe second quarter of 2006 was flat compared with the same quarter last yearand our titles reflected this softness. The increase in revenue was due to strong performances of severalpublications including *DVM Newsmagazine*,*Dental Lab Products*, *Formulary*, *Contemporary Pediatrics*and the launches of new conferences and publications.  Theserevenue gains were partially offset by a decline in revenue from our IVTpharmaceutical conferences, the effect of the sale of *PharmaceuticalDiscovery* late in 2005 and softness in some of our primary care andnursing publications.

Revenue from Powersports of $5.5 millionincreased 24.3% or $1.1 million from $4.4 million in the secondquarter of 2005.  This increase was driven primarily by strong growth in ouroff-road properties including the launch of Off-Road Expo in Salt LakeCity.  Ad pages in the Powersportspublications increased 26.0% and revenue grew $0.9 million or 20.1% due togrowth in our off-road publications, *DIRTsports*and *Off-Road Business*, now in the second year of their launchcycle, along with strong performances from *Dealernews* and *Motor Age.*

Revenue from our Other operations in the second quarter of 2006 was $2.8 millioncompared to $2.5 million reported in second quarter of 2005.

*Cost ofproduction, selling, editorial  andcirculation costs*

Cost of production, selling, editorial and circulationexpenses in the second quarter of 2006 increased 4.6% to $39.7 millionfrom $37.9 million in the second quarter of 2005.

Fashion & Licensing expenses in the second quarterof 2006 increased by 2.5%, or $0.2 million, to $5.9 million from $5.7 millionin the second quarter of 2005, primarily related to costs required to supportthe increased size of our Licensing International show.

Life Sciences expenses in the second quarter of 2006increased by 0.9%, or $0.2 million, to $25.9 million from $25.7 millionin the second quarter of 2005.  Launchcosts for new conferences and publications were $1.4 million in thequarter, offset by reductions of $0.3 million in costs related to the soldpublication *Pharmaceutical Discovery* and $1.1 millionin costs due to improved operating efficiencies from the restructuring programimplemented at the end of the second quarter of 2005.

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Powersports expenses inthe second quarter of 2006 increased by 1.2%, or $0.1 million, to $5.3 millionfrom $5.2 million in the second quarter of 2005 due primarily to increaseddirect costs for the automotive and off-road publications in support of theirincreased revenue and development.

Expenses of Other operations in the second quarter of2006 were $2.6 million, compared to $1.3 million in the secondquarter of 2005.  This increase isprimarily due to the renegotiation of certain tradeshow vendor agreements,investments in the development of our e-media product offerings and launchcosts for *Ophthalmology Times Europe*.

*General and administrativeexpenses*

General andadministrative costs increased 4.2% to $10.4 million in the second quarterof 2006 from $10.0 million in the second quarter of 2005 due principallyto increases in legal costs related to outstanding legal claims.  These costs were partially offset by $0.2 millionof cost savings related to office restructuring actions taken in 2005, adecline of $0.2 million in Sarbanes-Oxley consulting services and a $0.3 millionemployee compensation accrual related to the IVT acquisition recorded in 2005which did not recur in 2006.

*Restructuringcharge*

In May 2005, we ceased use ofcertain leased office space in New York, NY, Milford, CT, and Santa Ana, CArelated to the sale of the Portfolio Group (see Note 4 of the notes to ourconsolidated financial statements).  In thethird quarter of 2005, we vacated additional leased office space in Milford, CTand Chicago, IL. These activitiesresulted in charges to our operations during 2005.  In the first quarter of 2006, we vacated additionalleased office space in New York, NY, and revised our estimate of expectedfuture sublease income for this space,resulting in additional charges in the first quarter of 2006. These charges consist of the discountedremaining future minimum lease payments due under non-cancelable leases, net ofestimated future sublease income. These lease commitments expire at variousdates through 2010.

Effective June 2006, we enteredinto a lease modification and surrender agreement for approximately 60% of ourvacated office space in New York, NY. Under the terms of the agreement, we will pay the landlord $2.8 millionin cash, the lease covering the surrendered space will be terminated and wewill have no further future lease obligations for the portion of the spacesurrendered.  In June 2006 we adjustedour accrual for this space based upon the terms of the agreement and recorded again of $0.1 million.

During 2005 the Company notified120 employees that they would be severed from the Company in connection withthe sale of the Portfolio Group and the reorganization of the Company’soperating and support department management team.  As of June 30, 2006, 117 of these employeeshave been terminated.  Severance paymentsare expected to continue through 2007.

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Pre-tax restructuring chargesincurred are as follows (in thousands):

|                                                 | ** ** | **Three Months Ended  June 30,** | ** ** | **Six Months Ended  June 30,** | ** ** |
|-------------------------------------------------|------------|-------------------------------------------------|------------|-----------------------------------------------|------------|
| ** **                                      | ** ** | **2006**                                        | ** ** | **2005**                                      | ** ** | **2006** | ** ** | **2005** | ** ** |
| Facility exit  costs                            |       | (82                                             | )          | $                                             | 794        |   | $ | 2,339 |   | $ | 794 |   |
| Employee  severance and other termination costs |       | 2                                               |       | 1,221                                         |       | (14 | ) | 1,221 |   |
| Restructuring charge                            |       | $                                               | (80        | )                                             | $          | 2,015 |   | $ | 2,325 |   | $ | 2,015 |   |
|                                                 |            |                                                 |            |                                               |            |  |  |  |  |  |  |  |  |

 

*Depreciationand amortization expense*

Depreciation and amortization expense increased $0.5 millionto $10.0 million in the second quarter of 2006 from $9.5 million inthe second quarter of 2005 primarily due to additional amortization expenserelated to the businesses acquired in 2005 and accelerated depreciation forleaseholds in leased office space vacated in 2006, partially offset by thereduction in amortization attributable to the effect of the double decliningbalance method of accelerated amortization on our exhibitor and advertiserlists.

*Interest expense*

Interest expense in the second quarter of 2006 declined $2.9 million,or 12.2%, to $20.9 million from $23.8 million in the second quarterof 2005.  The reduction is primarily dueto the repayment of $20.4 million of Communications’ term loans, $8.7 millionof Communications’ fixed rate notes, and $117.8 million of Communications’floating rate notes in the second quarter of 2005 with the proceeds from thesale of the Portfolio Group. See “—Liquidity andCapital Resources—*Second Priority Securedand Floating Rate Notes Repayment*.”

At June 30, 2006, $611.2 million,or 97%, of our total debt is at a fixed rate with the remaining 3% of our debtsubject to interest rate fluctuations.

*Provision(benefit) for income taxes*

The provision for income taxes before discontinuedoperations was a provision of $1.9 million in the second quarter of 2006compared to a benefit of $5.7 million in the second quarter of 2005.  For both 2006 and 2005, the provision/benefitincludes income taxes in certain foreign jurisdictions and a deferred taxprovision related to the basis of goodwill for tax purposes being less than thecarrying value of goodwill for financial reporting purposes.  The second quarter 2005 tax benefit reflectsthe tax benefit provided by losses from continuing operations to the extentthat such losses offset the income from discontinued operations. This taxbenefit is offset by a tax provision included in discontinued operationsresulting from the operating income and gain attributable to the sale of thePortfolio Group business. We recorded no income tax benefit related to the netoperating losses we generated during 2006 or 2005 because we have established avaluation allowance to offset any related tax benefits due to uncertainty aboutrealization of these benefits.

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*Discontinuedoperations*

In December 2005, we sold our Arenacross ChampionshipSeries for a total selling price of $0.2 million. The loss on the sale of$0.4 million was recorded in December 2005.

In the second quarter of 2005, the Companydiscontinued the remaining East Coast Fashion tradeshow business acquired inthe 1999 Larkin transaction and recognized a $2.3 million impairmentcharge for the remaining carrying value of the intangible assets of thisbusiness.

In May and July 2005, Advanstar sold certainbusinesses to Questex for net cash of $173.8 million.  A gain of $52.9 million on the sale ofthese assets was recorded in 2005.

See further information regarding discontinuedoperations in “—Presentation of Financial Information—Acquisitions andDivestitures.”

SIX MONTHS ENDED JUNE 30, 2006 COMPARED TO THE SIXMONTHS ENDED JUNE 30, 2005

*Revenue*

Revenue in the first six months of 2006 increased13.1% to $165.8 million from $146.6 million in the first six monthsof 2005.

Fashion and Licensing revenue of $59.0 millionincreased 25.7% or $12.0 million from $47.0 million in the first sixmonths of 2005.  Revenue from our spring2006 MAGIC Marketplace increased $8.2 million or 22.6% over 2005. Totalexhibit space increased by 17.2% to 1,051,000 square feet. Additional growthcame from increases in yields as well as growth in sponsorship and turnkeybooth package programs.  The August 2005acquisitions of POOL and Project expanded our presence in the contemporary andboutique fashion markets.  The POOL andProject events, which were integrated into MAGIC Marketplace in Las Vegas,along with the Project New York event, contributed $9.2 million of revenueand 192,000 of square feet in the first quarter of 2006.  Revenue in the first six months of 2006 alsobenefited from a successful Licensing International event held in New York and11.2% growth in revenue in *License!*magazine.

Life Sciences revenue of $75.1 million increased4.8% or $3.4 million from $71.7 million in the first six months of2005.  Revenue from healthcare customprojects increased $1.8 million or 32.4% from the first six months of 2005primarily due to more focused selling efforts and our ability to meet the newpharmaceutical regulatory rules governing the management and delivery of manyof these projects. Revenue also increased $2.2 million due to five new publication and conference launches.  These revenue gains were partially offset bya decline of $0.7 million or 21.5%from our IVT Pharmaceutical manufacturing conferences.   Ad pages and revenue across our Life Sciencepublications were essentially flat in the first six months of 2006 comparedwith the same period last year with strong performance in our specialtyhealthcare, pharmaceutical and dental publications offset by softness in someof our primary healthcare and veterinary publications.

Powersports revenue of $26.7 million increased15.6% or $3.6 million from $23.1 million in the first six months of2005.  The International Motorcycle Showevents and Dealer Expo experienced an increase in square feet of 6% and revenueof 10% in 2006.  In the off-road marketwe held a strong second year Off-Road Impact Expo trade event and launchedOff-Road Expo—Salt Lake City, a consumer off-road event.  Ad pages and ad revenue for Powersportspublications grew 26% and 24%, respectively, due to new

26

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products and increased advertising from Asianaftermarket parts manufacturers and the continued development of our off-roadpublications, *DIRTsports* and *Off-Road Business*.

Revenue from our Other operations in the first six months of 2006 was$5.0 million, compared to $4.9 million reported in first six monthsof 2005.

*Cost ofproduction, selling, editorial and circulation*

Cost of production, selling, editorial and circulationexpenses in the first six months of 2006 increased 12.2% to $94.5 millionfrom $84.2 million in the first six months of 2005 due to acquisitions andgrowth in revenue across segments.

Expenses of Fashion & Licensing in the first sixmonths of 2006 increased by 31.5%, or $6.0 million, to $25.0 millionfrom $19.0 million in the first six months of 2005, primarily due to $5.2 millionin costs related to the POOL and Project shows.

Expenses of Life Sciences in the first six months of2006 increased by 3.6%, or $1.8 million, to $50.1 million from $48.3 millionin the first six months of 2005.  Theincrease is due to $1.9 million in product launch costs for five newconferences and publications, a $1.5 million increase in healthcarespecial projects costs related to the growth in the number and revenue ofdelivered projects, offset by reductions of $0.6 million in costs relatedto the sold publication *Pharmaceutical Discovery*and $1.0 million in costs due to improved operating efficiencies from therestructuring program implemented at the end of the second quarter of 2005.

Expenses of Powersports in the first six months of2006 increased by 8.1%, or $1.1 million, to $15.6 million from $14.5 millionin the first six months of 2005. Expenses increased primarily due to increased direct costs for theautomotive and off-road publications in support of their increased revenue anddevelopment and from the launch of our Off-Road Expo—Salt Lake event, partiallyoffset by lower operating costs at our Dealer Expo event in Indianapolis.

Expenses of our Other operations in the first six months of 2006 was$3.8 million, compared to $2.4 million in first six months of2005.  This increase is primarily due tothe renegotiation of certain tradeshow vendor agreements, investments in thedevelopment of our e-media product offerings and launch costs for *Ophthalmology Times Europe*.

*General andadministrative expenses*

General and administrative costs decreased 10.3% to$20.6 million in the first six months of 2006 from $22.9 million inthe first six months of 2005.  Costsdeclined primarily due to $0.8 million of cost savings related to officerestructuring actions taken in 2005 and a decline of $0.6 million inaudit, tax and Sarbanes-Oxley consulting services.  Expense reductions also consisted of certainfirst half 2005 costs which did not recur in 2006, including $0.6 millionof strategic consulting fees for the Life Sciences segment and a $0.6 millionemployee compensation accrual related to the IVT acquisition.  These savings were partially offset byincreases in legal costs related to outstanding legal claims.

*Restructuringcharge*

See information regarding restructuring activities in “—Resultsof Operations—Three Months Ended June 30, 2006 compared to the three monthsended June 30, 2005-Restructuring charge.”

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*Depreciation andamortization expense*

Depreciation and amortization expense declined $0.8 millionto $18.7 million in the first six months of 2006 from $19.5 millionin the first six months of 2005 primarily due to the effect of the doubledeclining balance method of accelerated amortization on our exhibitor andadvertiser lists, partially offset by accelerated depreciation for leaseholdsin leased office space vacated in 2006 and additional amortization expenserelated to the businesses acquired in 2005.

*Interest expense*

Interest expense in the first six months of 2006declined $5.8 million, or 12.2%, to $41.5 million from $47.3 millionin the first six months of 2005 primarily due to the repayment of $20.4 millionof Communications’ term loans, $8.7 million of Communications’ fixed ratenotes, and $117.8 million of Communications’ floating rate notes in thesecond quarter of 2005 with the proceeds from the sale of the Portfolio Group. See “—Liquidity and Capital Resources—*Second Priority Secured and Floating Rate Notes Repayment*.”

Communications incurred $12.6 million in costsrelated to the repurchase of a part of Communications’ fixed and floating ratesenior secured debt in the first half of 2005, discussed above.  These costs include $8.6 million intender offer premium and consent fees, $3.5 million in unamortizeddeferred financing costs, and $0.5 million in legal fees and expenses.

*Provision(benefit) for income taxes*

The provision for income taxes before discontinuedoperations was a provision of $3.9 million in the six months of 2006compared to a benefit of $3.9 million in the six months of 2005.  For both 2006 and 2005, the provision/benefitincludes income taxes in certain foreign jurisdictions and a deferred taxprovision related to the basis of goodwill for tax purposes being less than thecarrying value of goodwill for financial reporting purposes.  The second quarter 2005 tax benefit reflectsthe tax benefit provided by losses from continuing operations to the extentthat such losses offset the income from discontinued operations. This taxbenefit is offset by a tax provision included in discontinued operationsresulting from the operating income and gain attributable to the sale of thePortfolio Group business. We recorded no income tax benefit related to the netoperating losses we generated during 2005 or 2004 because we have established avaluation allowance to offset any related tax benefits due to uncertainty aboutrealization of these benefits.

*Discontinuedoperations*

See information regarding discontinued operations in “—Resultsof Operations—Three Months Ended June 30, 2006 compared to the three monthsended June 30, 2005—Discontinued operations.”

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**Liquidityand Capital Resources**

The following discussion presents our liquidity andcapital resources on a consolidated basis, including that of our subsidiaries.

We are a holding company and have no direct materialoperations.  Our principal assets are ourownership of Communications, and Advanstar.com, and our only materialliabilities are the senior discounts notes and our guarantee of the Communicationscredit facility.  Our principal liquidityneeds are for debt service on the senior discount notes.

Communications’ principal cash needs are for debtservice, capital expenditures, investmentsin our products and selective acquisitions, as well as to provide uswith cash to finance our cash needs.  Itsprincipal sources of liquidity will be cash flow from operations and borrowingsunder its credit facility.

*Sources and usesof funds*

Operating cash flows may be significantly affected bythe working capital characteristics of our business. We generally operate withnegative working capital, excluding cash and current maturities of long-termdebt, due to the impact of deferred revenue from shows, which is billed andcollected as deposits up to one year in advance of the respective show. Deferredrevenue increases on the balance sheet in the quarters immediately precedingour busy first quarter show season as we collect deposits for booth spaceseveral months in advance of the shows. Revenue and contribution margin are recognized in the quarter that theevents are held, resulting in the reversal of the deferred revenue.

We anticipate that our operating cash flow, togetherwith borrowings under the credit facility and other future financings andrefinancings, will be sufficient to fund our anticipated future operatingexpenses, capital expenditures, debt service and other obligations as theybecome due.  However, our ability to makescheduled payments of principal, to pay interest on or to refinance our indebtednessand to satisfy our other debt obligations will depend upon our future operatingperformance. Our future performance and continued compliance with the covenantscontained in our credit facility will be affected by general economic,financial, competitive, legislative, regulatory, business and other factorsbeyond our control.  We expect to be in compliance with our debtcovenants during 2006 and 2007.

Historically, our financing requirements have beenfunded primarily through cash generated by operating activities and borrowingsunder Communications’ revolving credit facility.  From time to time, we have also raisedadditional funds through sales of common stock, high yield offerings and termborrowings under Communications’ credit facility for purposes of completingselective acquisitions.

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Asof June 30, 2006, we had cash and cash equivalents of $51.9 million and alsohad $47.9 million in availability under Communications’ revolving creditfacility.  The following table shows ourcash flow activity for the three months ended June 30, 2006 and 2005 andincludes the results of discontinued operations, and should be read inconjunction with the consolidated statements of cash flows (in thousands):

|                                                           | ** ** | **Six Months Ended  June 30,** | ** ** |
|-----------------------------------------------------------|------------|-----------------------------------------------|------------|
| ** **                                                | ** ** | **2006**                                      | ** ** | **2005** | ** ** |
| Net cash provided by  (used in) operating activities |       | $                                             | 3,324      |   | $ | (13,696 | ) |
| Net cash (used in)  provided by investing activities      |       | (6,131                                        | )          | 163,523 |   |
| Net cash provided by  (used in) financing activities      |       | 8,324                                         |       | (153,146 | ) |
| Effect of exchange rate  changes on cash                  |       | (303                                          | )          | 384 |   |
| Net increase (decrease)  in cash and cash equivalents     |       | $                                             | 5,214      |   | $ | (2,935 | ) |

 

The $17.0 million increase in cash provided byoperating activities as compared to the first six months of 2005 was dueprincipally to the $11.0 million in improved operating results, an increase incash collected in advance of our third quarter events of $6.8 million and areduction in outstanding accounts receivable of $4.7 million, partially offsetby an increase in cash interest payments of $7.3 million as we made our firstinterest payment on the Senior Discount Notes in the second quarter of 2006.

Net cash used in investing activities increased$169.7 million to $6.1 million in the first six months of 2006, from$163.5 million provided by investing activities in the first six months of2005.  This increase was principally dueto the proceeds received in the second quarter of 2005 from the sale of thePortfolio Group.  We also increasedcapital expenditures in 2006 for computer upgrades, applications developmentand for build-outs and furnishing of our new downsized office in New York.  We incurred capital expenditures of $6.1million and $2.7 million in the first six months of 2006 and 2005,respectively.  We anticipate that we willspend approximately $10.0 million on capital expenditures in 2006, whichwill be funded by cash flows from operations. The majority of these expenditures are related to expansions andenhancements to our IT and communications infrastructure and management andoperating group information systems, and office build-outs arising from ourrecent office consolidations.  We believethat this amount of capital expenditure will be adequate to grow our businessaccording to our business strategy and to maintain the key tradeshows, publicationsand business of our continuing operations.

We did not complete any acquisitions in the first halfof 2006. In connection with any future acquisitions, as a part of our on-goingbusiness strategy, we may require additional funding, which may be provided inthe form of additional debt or equity financing or a combination thereof.  There can be no assurance that any additionalfinancing will be available to us on acceptable terms or in a manner thatcomplies with the restrictive covenants in our debt instruments.  Consistent with our longstanding strategy, wecontinue to pursue potential acquisitions of complementary businesses.

Cash provided by financing activities in the first sixmonths of 2006 was$8.3 million compared to cash used in financing activities of$153.1 million in the first six months of 2005.  Communications borrowed an additional $10.0million and incurred financing costs of $1.5 million in connection with theamendment and restatement of its credit facility (see “—Credit facilityamendment and restatement”).  In thefirst six months of 2005, Communications repaid $4.6 million of our outstandingTerm Loan B with the proceeds from the sale of a tradeshow business in thefirst quarter of 2004.  In the secondquarter of 2005, Communications repaid its outstanding Term Loan B of $20.4million and repurchased $126.5 million of its floating and fixed rate notes,using the proceeds from the sale of the Portfolio Group.

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*Debt service*

As of June 30, 2006, we had total indebtedness of$631.0 million and $47.9 million of borrowings available under ourrevolving credit facility.  Our principaldebt obligations are described below.

*Credit facilityamendment and restatement*

On May 24, 2006, Communications amended and restatedits existing credit facility. The amended credit facility reduced the revolvingloan commitment amount from $60.0 million to $50.0 million, added a $10.0million Term Loan, modified certain restrictive covenants and extended thematurity date from April 2007 to May 2009 for the entire Credit Facility.  The amendment also eliminated the minimum quarterly fixed charge coverage ratiocovenant.

*Credit Facilityand Second Priority Secured and Floating Rate Notes Repayment*

As a result of the sale of the Portfolio Group,Communications’ second priority senior secured notes indenture required thatCommunications either use the remaining net proceeds (after repayment of theCredit Facility borrowings) to invest in Communications’ business or to offerto purchase Communications’ second priority senior secured notes at par plusaccrued interest.  In June 2005,Communications offered to purchase up to $140.0 million of the second liennotes.  Holders of the $8.7 millionprincipal amount of the 10.75% Second Priority Senior Secured Notes (the “fixedrate notes”) tendered their notes for purchase, and Communications purchasedall such notes.

Also in June 2005, Communications completed a cashtender offer for any and all of Communications’ outstanding Second PrioritySenior Secured Floating Rate Notes due 2008 (the “floating rate notes”).  Holders of the $117.8 million aggregateoutstanding principal amount of the floating rate notes tendered their notesfor purchase, and Communications purchased all such notes at a price equal to107.3% (including a 3% consent fee) of outstanding principal plus accruedinterest.  In connection with the tenderoffer, Communications received consents to proposed amendments to the indenturegoverning the notes, resulting in the elimination of substantially all of the restrictivecovenants and certain default provisions with respect to the floating ratenotes.

*Credit facility*

Communications’ Credit Facility consists of a$50.0 million revolving credit facility which terminates in May 2009, and$10.0 million term loan which matures in May 2009.  Borrowings under the Credit Facilitygenerally bear interest based on a margin over, at our option, the base rate orLIBOR.  The applicable margin forrevolving credit loans varies based upon our ratio of consolidated debt toEBITDA, as defined in the credit facility, and is currently 2.50% over LIBOR or2.50% over the base rate.  Communications’obligations under the credit facility are guaranteed by Advanstar HoldingsCorp. (“Advanstar Holdings” or “Holdings”), our parent company, us,Communications, and all Communications’ existing and future domesticsubsidiaries. Communications’ obligations under the Credit Facility arecollateralized by substantially all of the assets of Communications and thesubsidiary guarantors, including a pledge of the capital stock of all Communicationsexisting and future domestic subsidiaries, a pledge of no more than 65% of thevoting stock of any foreign subsidiary directly owned by Communications or anydomestic subsidiary, a pledge of all intercompany indebtedness in favor ofCommunications and Communications domestic subsidiaries, a pledge ofCommunications, and Advanstar IH, Inc’s capital stock held by us and a pledgeof our capital stock held by Advanstar Holdings.   The Credit Facility contains restrictivecovenants, including limitations on certain asset dispositions, dividends,investments and other restricted payments. Failure to complywith the covenants could cause an event of default under the Credit Facility.

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*Second prioritysenior secured notes*

Communications’ $9.8 million of floating ratenotes mature in 2008.  The floating ratenotes bear interest at an annual rate equal to the three-month LIBOR,which is reset quarterly, plus 7.50%. Interest on the floating rate notes, along with amortization of 0.25% ofthe principal of such floating rate notes, is payable quarterly in cash.  In connection with the tender offer describedabove, Communications and the trustee entered into a supplementalindenture that eliminated substantially all of the restrictive and reportingcovenants, certain events of default and certain other provisions with respectto the floating rate notes and released the floating rate notes’ lien on thecollateral under the indenture.  Thefixed rate notes remain collateralized and subject to the restrictive covenantsin the indenture.

In June 2006, Communications notified the trustee ofits intention to redeem all of the remaining outstanding Second Priority SeniorSecured Floating Rate Notes due 2008 (“floating rate notes”).  The redemption date for all $9.8 million ofthe floating rate notes will be August 15, 2006, and such redemption will be atpar value.

Communications’ $292.0 million of fixed ratenotes mature in 2010.  The notes areguaranteed by each of Communications’ existing and future domestic restrictedsubsidiaries and collateralized by second-priority liens on the assetscollateralizing Communications’ credit facility (other than certain subsidiarystock and assets of its parent companies). The fixed rate notes bear interest at an annual rate of 10.75%, which ispayable semi-annually in cash.  The notescontain restrictive covenants that, among other things, limit Communications’ability to incur debt, pay dividends and make investments.

*Seniorsubordinated notes*

Communications’ $160 million 12% seniorsubordinated notes mature in 2011 and are guaranteed by each of Communications’existing and future domestic restricted subsidiaries.  Interest on the notes is payablesemi-annually in cash.  The notes containrestrictive covenants that, among other things, limit Communications’ abilityto incur debt, pay dividends and make investments.

*Senior discountnotes*

As part of the financing for the acquisition ofsubstantially all of the common stock of Holdings, our parent company, bycertain DLJ Merchant Banking funds in October 2000, we issued senior discountnotes due October 2011 with a principal amount at maturity of$103.2 million.  Concurrently withthe closing of the offering of Communications’ 12% senior subordinated notes,we sold additional senior discount notes due October 2011 with anadditional aggregate principal amount at maturity of $68.6 million.  These notes do not require cash interestpayments until April 2006 and contain restrictive covenants that, among otherthings, limit our ability and that of our subsidiaries to incur debt, paydividends and make investments.  However,we are a holding company and our ability to pay interest on these notes will bedependent upon the receipt of dividends from our subsidiaries.  Communications’ credit facility, the seniorsubordinated notes and second priority senior secured notes impose substantialrestrictions on our subsidiaries’ ability to pay dividends.

The restrictive covenants in Communications’ seniorsecured notes indenture and senior subordinated notes indenture provide thatCommunications can pay dividends only if its leverage ratio (as defined) is 6.0to 1.0 or better and only from “a basket” equal to the amount by which itscumulative EBITDA (as defined) since January 1, 2001 exceeds 150% of its cumulativeinterest expense in that same period plus other items, including proceeds fromequity offerings. In addition to the basket and notwithstanding the leverageratio limitation on restricted payments, Communications can make additionalrestricted 

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payments in an aggregate amount of up to $20million to us.  As of December 31, 2005, Communications’ leverageratio under the most restrictive of these indentures was 5.96 to 1.0.In March 2006, Communications declared and paid a dividend of $12.9 million tous to be used for servicing our debt obligations.  As of June 30, 2006, Communications’ leverageratio under the most restrictive of these indentures was 5.50 to 1.0.

Debt service on the discount notes will be $38.7million during the next 18 months ending December 31, 2007.  We expect Communications’ results will allowit to continue to make dividend payments to us for purposes of debtservice.  However, Communications’results are subject to a variety of factors, including general economicconditions and conditions in its markets, and we cannot assure youCommunications will be able to make distributions.   Communicationsmay not generate sufficient cash flow from operations or be permitted by theterms of its debt instruments to pay dividends or distributions to us inamounts sufficient to allow us to pay cash interest on the notes.   If we are unable to meet our debt serviceobligations, we could attempt to restructure or refinance our indebtedness orseek additional equity capital.   Wecannot assure you that we will be able to accomplish these actions onsatisfactory terms or at all.  A defaultunder the senior discount notes could result in an acceleration of alloutstanding loans under Communications’ credit facility which, in turn, wouldtrigger a cross-default under both Communications’ second priority seniorsecured notes and their senior subordinated notes.

*Contractual andcontingent obligations*

Our contractual obligations (excluding accountspayable and accrued expenses), as of June 30, 2006 are as set forth below (in millions):
| ** **                          | ** ** | **Payments Due By Period** | ** ** |
|-------------------------------------|------------|-------------------------------------------|------------|
| ** **                          | ** ** | **2006 (1)**                         | ** ** | **2007** | ** ** | **2008** | ** ** | **2009** | ** ** | **2010** | ** ** | **2011** | ** ** | **After  2011** | ** ** | **Total** | ** ** |
| Indebtedness                        |       | $                                         | 0.1        |   | $ | 0.1 |   | $ | 9.7 |   | $ | 10.0 |   | $ | 291.9 |   | $ | 319.2 |   | $ | — |   | $ | 631.0 |   |
| Interest on indebtedness  (2)       |       | 38.9                                      |       | 77.8 |   | 77.7 |   | 76.9 |   | 68.5 |   | 30.0 |   | — |   | 369.8 |   |
| Operating lease  obligations        |       | 3.2                                       |       | 5.6 |   | 5.3 |   | 3.9 |   | 2.0 |   | 1.0 |   | 4.0 |   | 25.0 |   |
| Total contractual cash  obligations |       | $                                         | 42.2       |   | $ | 83.5 |   | $ | 92.7 |   | $ | 90.8 |   | $ | 362.4 |   | $ | 350.2 |   | $ | 4.0 |   | $ | 1,025.8 |   |

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(1)            Forthe period from July 1, 2006 through December 31, 2006.

(2)            Intereston our variable rate debt is calculated using LIBOR of 5.33%, the rate ineffect on June 30, 2006.  Because ourvariable rate debt bears interest at a variable rate, actual payments coulddiffer.

We have no material capital lease obligations orpurchase obligations.  We have contingentobligations composed of $2.1 million of letters of credit securing ourlease facilities. Additionally, as a result of acquisitions discussed above, wemay have future cash consideration payable to the former selling shareholdersbased on the acquired businesses’ future periods operating results.

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*Off-balance sheetarrangements*

We have no material off-balance sheet arrangements.

*Recently issuedaccounting pronouncements*

In July, 2006 the Financial Accounting Standards Board(“FASB”) issued Interpretation No. 48 (“FIN 48”) *Accountingfor Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109*” FIN 48 prescribes a recognition threshold and measurement process for thefinancial statement recognition and measurement of a tax position taken orexpected to be taken in a tax return.  Additionally, FIN 48 providesguidance on the derecognition, classification, accounting in interim periodsand disclosure requirements for uncertain tax positions.  The accountingprovisions of FIN 48 will be effective for the Company beginning January 1,2007.  The Company is in the process of determining the effect, if any,that the adoption of FIN 48 will have on its consolidated financial statements.

**Item 3.  *Quantitativeand Qualitative Disclosures about**Market Risk***

We are exposed to various market risks, which are thepotential losses arising from adverse changes in market rates and prices, suchas foreign currency exchange and interest rates.  We do not enter into derivatives or otherfinancial instruments for trading or speculative purposes.  We have previously entered into financialinstruments to manage and reduce the impact of changes in interest rates andforeign currency exchange rates.

**Interest Rates**

At June 30, 2006, we had fixed rate debt of$611.2 million and variable rate debt of $19.8 million.  A change in interest rates of 1% would not bematerial to our operating results.

**Currencies**

Outside of the United States, we maintain assets andoperations in the United Kingdom. These assets and operations, and our exposureto any currency gains or losses, are not material to our operating results.

# **Item 4. *****Controls and Procedures***

*Evaluation ofdisclosure controls and procedures.*

Advanstar’s Chief Executive Officer and ChiefFinancial Officer, after evaluating the effectiveness of the Company’sdisclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as ofthe end of the period covered by this report (the “Evaluation Date”), haveconcluded that as of the Evaluation Date, our disclosure controls andprocedures were effective.

*Changes ininternal controls.*

There were no significant changes during the Company’ssecond fiscal quarter in our internal controls over financial reporting thathave materially affected or are reasonably likely to materially affect theCompany’s internal controls over financial reporting.

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** **

**PART II OTHER INFORMATION**

Items 1 to 5 ofform 10-Q are not applicable.
| Item 6. | ** ** | **Exhibits**                                                                                               |
|---------|------------|------------------------------------------------------------------------------------------------------------|
| 31.1    |       | Certification of  principal executive officer required by Rule 13a-14(a) or 15d-14(a) of the  Exchange Act |
| 31.2    |       | Certification of  principal financial officer required by Rule 13a-14(a) or 15d-14(a) of the  Exchange Act |
| 32.1    |       | Certification of  principal executive officer required by Rule 13a-14(b) or 15d-14(b) of the  Exchange Act |
| 32.2    |       | Certification of  principal financial officer required by Rule 13a-14(b) or 15d-14(b) of the  Exchange Act |

 

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** **

**SIGNATURES**

Pursuant to therequirements of the Securities Exchange Act of 1934, the Registrant has dulycaused this report to be signed on its behalf by the undersigned thereunto dulyauthorized.
|                 | ADVANSTAR, INC.         |
|-----------------|-------------------------|
|            |                    |
|            |                    |
| August 14, 2006 | /s/ DAVID W. MONTGOMERY |
|            |                    | David W. Montgomery  Vice President-Finance, Secretary and  Chief Financial Officer  (Principal Financial Officer and Authorized  Representative of the Registrant) |

 

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

 

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