SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-Q

|(Mark One)                                    |                                                                                         
|--------------------------------------------- | ----------------------------------------------------------------------------------------
|ý                                             | Quarterly Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934.
|For the quarterly period ended: June 30, 2004
|OR                                           
|                                              | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number: 333-57201

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

Delaware(State or other jurisdiction of
incorporation or organization)

94-3243499(I.R.S. Employer
Identification No.)

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

10016(Zip Code)

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

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

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

As of August 16, 2004, 100 shares of the registrant's common stock were outstanding.



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PART I    FINANCIAL INFORMATION

Item 1.Financial Statements:

|           |  |                                                                                                               |  | Page in this
Quarterly
Report
|---------- |  | ------------------------------------------------------------------------------------------------------------- |  | -----------------------------
|           |  | Condensed Consolidated Balance Sheets at June 30, 2004 (unaudited) and December 31, 2003                      |  | 2                            
|           |  | Condensed Consolidated Statements of Operations (unaudited) for the three months ended June 30, 2004 and 2003 |  | 3                            
|           |  | Condensed Consolidated Statements of Operations (unaudited) for the six months ended June 30, 2004 and 2003   |  | 4                            
|           |  | Condensed Consolidated Statements of Cash Flows (unaudited) for the six months ended June 30, 2004 and 2003   |  | 5                            
|           |  | Notes to Condensed Consolidated Financial Statements (unaudited)                                              |  | 6                            
|Item 2.    |  | Management's Discussion and Analysis of Financial Condition and Results of Operations                         |  | 17                           
|Item 3.    |  | Quantitative and Qualitative Disclosures About Market Risk                                                    |  | 32                           
|Item 4.    |  | Controls and Procedures                                                                                       |  | 33                           
|           |  |                                                                                                               |  |                              
|PART II    |  | Other Information                                                                                             |  |                              
|Item 5.    |  | Other Information                                                                                             |  | 34                           
|Item 6.    |  | Exhibits and Reports on Form 8-K                                                                              |  | 34                           
|Signatures |  | 35                                                                                                           

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PART I FINANCIAL INFORMATION

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

|                                                                          |                                                                                                                                  | June 30,
2004                          |         | December 31,
2003 |        
|------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------- | ------- | ----------------- | -------
|
|ASSETS                                                                    |                                                                                                                                  |                                        |         |                   |        
|Current assets:                                                           |                                                                                                                                  |                                        |         |                   |        
|                                                                          | Cash and cash equivalents                                                                                                        |                                        | $       | 22,544            |        
|                                                                          | Accounts receivable, net of allowance of $1,223 and $1,006 at June 30, 2004 and December 31, 2003                                |                                        |         | 34,341            |        
|                                                                          | Prepaid expenses                                                                                                                 |                                        |         | 6,884             |        
|                                                                          | Other                                                                                                                            |                                        |         | 2,390             |        
|                                                                          | Current assets of discontinued operations and assets held for sale                                                               |                                        |         | 892               |        
|                                                                          |                                                                                                                                  |                                        |         |                   |        
|                                                                          |                                                                                                                                  | Total current assets                   |         |                   | 67,051 
|Due from parent                                                           |                                                                                                                                  |                                        | 266     |                   |        
|Property, plant and equipment, net                                        |                                                                                                                                  |                                        | 23,882  |                   |        
|Intangible and other assets:                                              |                                                                                                                                  |                                        |         |                   |        
|                                                                          | Goodwill                                                                                                                         |                                        |         | 711,384           |        
|                                                                          | Intangibles and other, net                                                                                                       |                                        |         | 126,149           |        
|                                                                          |                                                                                                                                  |                                        |         |                   |        
|                                                                          |                                                                                                                                  | Total intangible and other assets, net |         |                   | 837,533
|Non current assets of discontinued operations and assets held for sale    |                                                                                                                                  |                                        | 2,768   |                   |        
|                                                                          |                                                                                                                                  |                                        |         |                   |        
|                                                                          |                                                                                                                                  | $                                      | 931,500 |                   | $      
|                                                                          |                                                                                                                                  |                                        |         |                   |        
|LIABILITIES AND STOCKHOLDER'S EQUITY                                      |                                                                                                                                  |                                        |         |                   |        
|Current liabilities:                                                      |                                                                                                                                  |                                        |         |                   |        
|                                                                          | Current maturities of long-term debt                                                                                             |                                        | $       | 2,300             |        
|                                                                          | Accounts payable                                                                                                                 |                                        |         | 16,749            |        
|                                                                          | Accrued compensation                                                                                                             |                                        |         | 5,328             |        
|                                                                          | Other accrued expenses                                                                                                           |                                        |         | 24,411            |        
|                                                                          | Deferred revenue                                                                                                                 |                                        |         | 46,392            |        
|                                                                          | Current liabilities of discontinued operations and assets held for sale                                                          |                                        |         | 1,127             |        
|                                                                          |                                                                                                                                  |                                        |         |                   |        
|                                                                          |                                                                                                                                  | Total current liabilities              |         |                   | 96,307 
|Long-term debt, net of current maturities                                 |                                                                                                                                  |                                        | 741,761 |                   |        
|Deferred income taxes                                                     |                                                                                                                                  |                                        | 10,730  |                   |        
|Other long-term liabilities                                               |                                                                                                                                  |                                        | 4,216   |                   |        
|Due to Parent                                                             |                                                                                                                                  |                                        | 844     |                   |        
|Minority interests                                                        |                                                                                                                                  |                                        | 3,952   |                   |        
|Long term liabilities of discontinued operations and assets held for sale |                                                                                                                                  |                                        | 696     |                   |        
|Commitments and contingencies                                             |                                                                                                                                  |                                        |         |                   |        
|Stockholder's equity:                                                     |                                                                                                                                  |                                        |         |                   |        
|                                                                          | Common stock, $.01 par value, 10,000 shares authorized; 100 shares issued and outstanding at June 30, 2004 and December 31, 2003 |                                        |         |                  |        
|                                                                          | Capital in excess of par value                                                                                                   |                                        |         | 370,424           |        
|                                                                          | Accumulated deficit                                                                                                              |                                        |         | (299,581          | )      
|                                                                          | Accumulated other comprehensive loss                                                                                             |                                        |         | 2,151             |        
|                                                                          |                                                                                                                                  |                                        |         |                   |        
|                                                                          |                                                                                                                                  | Total stockholder's equity             |         |                   | 72,994 
|                                                                          |                                                                                                                                  |                                        |         |                   |        
|                                                                          |                                                                                                                                  | $                                      | 931,500 |                   | $      

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

2

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

|                                                                           |                                                                                                                                                                                         | For the
Three Months Ended
June 30, |        
|-------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------- | -------
|
|
|Net revenue                                                                |                                                                                                                                                                                         | $                                   | 85,314 
|Operating expenses:                                                        |                                                                                                                                                                                         |                                     |        
|                                                                           | Cost of production                                                                                                                                                                      |                                     |        
|                                                                           | Selling, editorial and circulation                                                                                                                                                      |                                     |        
|                                                                           | General and administrative                                                                                                                                                              |                                     |        
|                                                                           | Restructuring (see Note 5)                                                                                                                                                              |                                     |        
|                                                                           | Amortization of intangibles                                                                                                                                                             |                                     |        
|                                                                           | Depreciation                                                                                                                                                                            |                                     |        
|                                                                           |                                                                                                                                                                                         |                                     |        
|                                                                           |                                                                                                                                                                                         | Total operating expenses            |        
|                                                                           |                                                                                                                                                                                         |                                     |        
|Operating income (loss)                                                    |                                                                                                                                                                                         |                                     | 7,188  
|Other income (expense):                                                    |                                                                                                                                                                                         |                                     |        
|                                                                           | Interest expense, net                                                                                                                                                                   |                                     |        
|                                                                           | Other income (expense), net                                                                                                                                                             |                                     |        
|                                                                           |                                                                                                                                                                                         |                                     |        
|Loss from continuing operations before income taxes and minority interests |                                                                                                                                                                                         |                                     | (15,467
|Provision (benefit) for income taxes                                       |                                                                                                                                                                                         |                                     | 3,437  
|Minority interests                                                         |                                                                                                                                                                                         |                                     | 113    
|                                                                           |                                                                                                                                                                                         |                                     |        
|Loss from continuing operations                                            |                                                                                                                                                                                         |                                     | (18,791
|Discontinued operations (see Note 3):                                      |                                                                                                                                                                                         |                                     |        
|                                                                           | (Loss) income from operations of discontinued businesses (including a goodwill impairment charge of $9,420 net of minority interest of $5,072 for the three months ended June 30, 2004) |                                     |        
|                                                                           |                                                                                                                                                                                         |                                     |        
|Net loss                                                                   |                                                                                                                                                                                         | $                                   | (27,564
|                                                                           |                                                                                                                                                                                         |                                     |        

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

3

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

|                                                                           |                                                                                                                                                                                       | For the
Six Months Ended
June 30, |        
|-------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------- | -------
|
|
|Net revenue                                                                |                                                                                                                                                                                       | $                                 | 205,701
|Operating expenses:                                                        |                                                                                                                                                                                       |                                   |        
|                                                                           | Cost of production                                                                                                                                                                    |                                   |        
|                                                                           | Selling, editorial and circulation                                                                                                                                                    |                                   |        
|                                                                           | General and administrative                                                                                                                                                            |                                   |        
|                                                                           | Restructuring (see Note 5)                                                                                                                                                            |                                   |        
|                                                                           | Amortization of intangibles                                                                                                                                                           |                                   |        
|                                                                           | Depreciation                                                                                                                                                                          |                                   |        
|                                                                           |                                                                                                                                                                                       |                                   |        
|                                                                           |                                                                                                                                                                                       | Total operating expenses          |        
|                                                                           |                                                                                                                                                                                       |                                   |        
|Operating income                                                           |                                                                                                                                                                                       |                                   | 37,427 
|Other income (expense):                                                    |                                                                                                                                                                                       |                                   |        
|                                                                           | Interest expense, net                                                                                                                                                                 |                                   |        
|                                                                           | Other income (expense), net                                                                                                                                                           |                                   |        
|                                                                           |                                                                                                                                                                                       |                                   |        
|Loss from continuing operations before income taxes and minority interests |                                                                                                                                                                                       |                                   | (7,141 
|Provision for income taxes                                                 |                                                                                                                                                                                       |                                   | 6,562  
|Minority interests                                                         |                                                                                                                                                                                       |                                   | (437   
|                                                                           |                                                                                                                                                                                       |                                   |        
|Loss from continuing operations                                            |                                                                                                                                                                                       |                                   | (14,140
|Discontinued operations (see Note 3):                                      |                                                                                                                                                                                       |                                   |        
|                                                                           | (Loss) income from operations of discontinued businesses (including a goodwill impairment charge of $9,420 net of minority interest of $5,072 for the six months ended June 30, 2004) |                                   |        
|                                                                           |                                                                                                                                                                                       |                                   |        
|Net loss                                                                   |                                                                                                                                                                                       | $                                 | (16,262
|                                                                           |                                                                                                                                                                                       |                                   |        

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

4

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Advanstar, Inc.        Condensed Consolidated Statements of Cash Flows        (In thousands)

|                                               |                                                                                           | For the
Six Months Ended
June 30,                   |       
|---------------------------------------------- | ----------------------------------------------------------------------------------------- | --------------------------------------------------- | ------
|
|
|Operating activities:                          |                                                                                           |                                                     |       
|                                               | Net loss                                                                                  |                                                     | $     
|                                               | Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |                                                     |       
|                                               |                                                                                           | Depreciation and amortization                       |       
|                                               |                                                                                           | Restructuring charge                                |       
|                                               |                                                                                           | Goodwill impairment                                 |       
|                                               |                                                                                           | Gain on derivative financial instruments            |       
|                                               |                                                                                           | Undistributed earnings of minority interest holders |       
|                                               |                                                                                           | Noncash interest                                    |       
|                                               |                                                                                           | (Gain) loss on sale of business and other assets    |       
|                                               |                                                                                           | Deferred income taxes                               |       
|                                               |                                                                                           | Provision for bad debts                             |       
|                                               |                                                                                           | Changes in operating assets and liabilities         |       
|                                               |                                                                                           |                                                     |       
|                                               |                                                                                           | Net cash (used in) provided by operating activities |       
|                                               |                                                                                           |                                                     |       
|Investing activities:                          |                                                                                           |                                                     |       
|                                               | Additions to property, plant and equipment                                                |                                                     |       
|                                               | Acquisitions of publications and trade shows, net of cash acquired                        |                                                     |       
|                                               | Proceeds from sale of business and other assets                                           |                                                     |       
|                                               |                                                                                           |                                                     |       
|                                               |                                                                                           | Net cash provided by (used in) investing activities |       
|                                               |                                                                                           |                                                     |       
|Financing activities:                          |                                                                                           |                                                     |       
|                                               | Proceeds from revolving credit loan                                                       |                                                     |       
|                                               | Payments on revolving credit loan                                                         |                                                     |       
|                                               | Payments of long-term debt                                                                |                                                     |       
|                                               | Deferred financing costs                                                                  |                                                     |       
|                                               |                                                                                           |                                                     |       
|                                               |                                                                                           | Net cash used in financing activities               |       
|                                               |                                                                                           |                                                     |       
|Effect of exchange rate changes on cash        |                                                                                           |                                                     | (545  
|                                               |                                                                                           |                                                     |       
|Net decrease in cash and cash equivalents      |                                                                                           |                                                     | (7,177
|Cash and cash equivalents, beginning of period |                                                                                           |                                                     | 29,721
|                                               |                                                                                           |                                                     |       
|Cash and cash equivalents, end of period       |                                                                                           | $                                                   | 22,544
|                                               |                                                                                           |                                                     |       

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

5

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Advanstar, Inc.        Notes to Condensed Consolidated Financial Statements

1.    Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared by Advanstar, Inc. ("Advanstar"), its wholly owned subsidiary,
Advanstar Communications Inc. ("Communications"), and Communications' majority owned subsidiaries (collectively, the "Company") in accordance with the instructions to
Form 10-Q and, therefore, do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. Management
believes that all adjustments, consisting solely of normal recurring items considered necessary for a fair presentation have been included. These condensed consolidated financial statements, however,
should be read in conjunction with the audited financial statements and the related notes included in the Company's annual report on Form 10-K filed with the Securities and Exchange
Commission on March 29, 2004. The results of operations for the three and six month periods ended June 30, 2004 are not necessarily indicative of the operating results that may be
expected for the entire year ending December 31, 2004.

2.    Summary of Significant Interim Accounting Policies



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

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

|                                                  |  | For the
Three Months Ended
June 30, |         | For the
Six Months Ended
June 30, |  
|------------------------------------------------- |  | ----------------------------------- | ------- | --------------------------------- | -
|
|Net lossas reported                              |  | $                                   | (27,564 | )                                 | $
|Less: pro forma stock based employee compensation |  |                                     | (705    | )                                 |  
|                                                  |  |                                     |         |                                   |  
|Net losspro forma                                |  | $                                   | (28,269 | )                                 | $
|                                                  |  |                                     |         |                                   |  



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



In December 2003, the Financial Accounting Standards Board ("FASB") issued Interpretation No. 46R,Consolidation of Variable
Interest Entities, which addresses accounting for special-purpose and variable interest entities and which superseded Interpretation No. 46. The provisions of
Interpretation No. 46R are effective for the Company in the first quarter of 2005. Based upon the Company's preliminary analysis, the Company does not expect adoption to have a material effect
on its financial position, results of operations or cash flows.

6

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3.    Acquisitions and Divestitures



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

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

The
following table provides the unaudited pro forma operating results of the Company for the three and six month periods ended June 30, 2003 as if the Thomson acquisition had
taken place at January 1, 2003. The pro forma operating results do not include the effect of the IVT acquisition described above because the acquisition is not material (in thousands):

|                                  |  | For the
Three Months Ended
June 30,
2003 |         | For the
Six Months Ended
June 30,
2003 |  
|--------------------------------- |  | ---------------------------------------- | ------- | -------------------------------------- | -
|Revenue                           |  | $                                        | 80,592  |                                        | $
|Income from continuing operations |  |                                          | (22,831 | )                                      |  
|Net income                        |  |                                          | (22,339 | )                                      |  

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



On March 12, 2004, the Company completed the sale of its art industry trade shows and magazines (the "Art Group") for a total selling price of
$19.6 million in cash. The portfolio included three trade shows and two publications. The Company recorded a gain on the sale of $1.0 million plus a tax benefit of $2.4 million.

The
results of the Art Group have been reported in discontinued operations in the condensed consolidated statements of operations for the three and six months ended June 30, 2004
and 2003. In addition, the assets and liabilities of the Art Group are reported in discontinued operations in the condensed consolidated balance sheet at June 30, 2004 and December 31,
2003. Prior year consolidated financial statements have been restated to present the Art Group in discontinued operations.

Revenues
of the Art Group, included in discontinued operations in the condensed consolidated statements of operations, were $8.5 million for the period from January 1, 2004
to March 12, 2004. For the three and six months ended June 30, 2003, Art Group revenues were $0.4 and $9.7 million. Pretax results of the Art Group reported in discontinued
operations in the condensed consolidated statements

7

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of
operations, which excludes the gain on sale, was a profit of $3.4 million for the period from January 1, 2004 to March 12, 2004 and a loss of $0.4 million and a profit
of $2.9 million for the three and six months ended June 30, 2003.

During
June 2004, the Company committed to the sale of its 65% ownership in its French joint venture ("SeCA"), which consisted of one trade show. On August 5, 2004, the
Company completed the sale for a total selling price of $3.1 million in cash. In connection with the sale, the Company recorded a goodwill impairment charge of $9.4 million in the second
quarter of 2004. We measured the impairment charge as the excess of our carrying value of the Company's interest in SeCA over the selling price, less costs to sell SeCA. This charge is reported
separately as a component of discontinued operations for the three and six months ended June 30, 2004.

The
results of SeCA have been reported as a component of discontinued operations in the condensed consolidated statements of operations for the three and six months ended June 30,
2004 and 2003. Prior year consolidated financial statements have been restated to present SeCA in discontinued operations. In addition, the assets and liabilities of SeCA are reported as assets and
liabilities of discontinued operations and assets held for sale in the condensed consolidated balance sheet at June 30, 2004 and December 31, 2003.

Revenues
of SeCA were $2.9 million for both the three and six months ended June 30, 2004, and $3.4 million and $3.7 million for the three and six months ended
June 30, 2003. Pretax results of SeCA, including the goodwill impairment charge of $9.4 million, net of minority interest, reported in discontinued operations in the condensed
consolidated statements of operations were a loss of $8.4 million and $8.5. million for the three and six months ended June 30, 2004 and income of $1.4 million and
$1.1 million for the three and six months ended June 30, 2003.

8

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The
discontinued operations and assets held for sale of SeCA and the Art Group included in the condensed consolidated Balance Sheets as of June 30, 2004 and December 31,
2003 are as follows (in thousands):

|            |                                             | June 30, 2004                                                                   |   | December 31, 2003 |      
|----------- | ------------------------------------------- | ------------------------------------------------------------------------------- | - | ----------------- | -----
|
|Assets      |                                             |                                                                                 |   |                   |      
|            | Accounts receivable                         |                                                                                 | $ | 892               |      
|            | Prepaid expenses                            |                                                                                 |   |                  |      
|            |                                             |                                                                                 |   |                   |      
|            |                                             | Total current assets of discontinued operations and assets held for sale        |   |                   | 892  
|            | Property, plant and equipment, net          |                                                                                 |   | 3                 |      
|            | Goodwill                                    |                                                                                 |   | 2,706             |      
|            | Intangibles and other, net                  |                                                                                 |   | 59                |      
|            |                                             |                                                                                 |   |                   |      
|            |                                             | Total non current assets of discontinued operations and assets held for sale    |   |                   | 2,768
|Liabilities |                                             |                                                                                 |   |                   |      
|            | Accounts payable and other accrued expenses |                                                                                 |   | 1,127             |      
|            | Deferred revenue                            |                                                                                 |   |                  |      
|            |                                             |                                                                                 |   |                   |      
|            |                                             | Total current liabilities of discontinued operations and assets held for sale   |   |                   | 1,127
|            | Due to parent                               |                                                                                 |   | (844              | )    
|            | Minority interests                          |                                                                                 |   | 1,540             |      
|            |                                             |                                                                                 |   |                   |      
|            |                                             | Total long term liabilities of discontinued operations and assets held for sale |   |                   | 696  
|            |                                             |                                                                                 |   |                   |      
|            |                                             | Net assets of discontinued operations and assets held for sale                  |   | $                 | 1,837
|            |                                             |                                                                                 |   |                   |      

The
Art Group and SeCA assets included discontinued operations in the Company's reportable segments are as follows (in thousands):

|                                    |  | Trade Shows
and
Conferences |  | Trade
Publications |  | Marketing
Services |  | Corporate
and Other |  | Total 
|----------------------------------- |  | --------------------------- |  | ------------------ |  | ------------------ |  | ------------------- |  | ------
|Segment assets at June 30, 2004     |  | 3,657                       |  |                   |  |                   |  | 3                   |  | 3,660 
|Segment assets at December 31, 2003 |  | 34,635                      |  | 3,391              |  |                   |  | 108                 |  | 38,134

9

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4.    Goodwill and Other Intangible Assets

The changes in the carrying amount of goodwill for the six months ended June 30, 2004, by operating segment, are as follows (in thousands):

|                                                         |  | Trade Shows
and
Conferences |         | Trade
Publications |   | Marketing
Services |  | Totals |       
|-------------------------------------------------------- |  | --------------------------- | ------- | ------------------ | - | ------------------ |  | ------ | ------
|Balance as of December 31, 2003                          |  | $                           | 466,043 |                    | $ | 210,977            |  | $      | 31,078
|Goodwill acquired or finally allocated during the period |  |                             | 3,029   |                    |   | 987                |  |        |      
|Foreign currency translation                             |  |                             | (950    | )                  |   | 230                |  |        | (10   
|                                                         |  |                             |         |                    |   |                    |  |        |       
|Balance as of June 30, 2004                              |  | $                           | 468,122 |                    | $ | 212,194            |  | $      | 31,068
|                                                         |  |                             |         |                    |   |                    |  |        |       

Trade
exhibitor and advertiser lists are amortized on a double-declining balance method over six years and five years, respectively, subscriber lists and other intangible assets are
amortized on a straight-line basis over three to ten years, trademarks and trade names are amortized on
a straight-line basis over twenty years. These intangible assets consist of the following as of June 30, 2004 and December 31, 2003 (in thousands):

|                           |                                        | June 30,
2004 |          | December 31,
2003 |  
|-------------------------- | -------------------------------------- | ------------- | -------- | ----------------- | -
|Trade exhibitor lists      |                                        | $             | 156,749  |                   | $
|Advertiser lists           |                                        |               | 62,236   |                   |  
|Subscriber lists           |                                        |               | 28,153   |                   |  
|Trade names and trademarks |                                        |               | 18,018   |                   |  
|Other intangible assets    |                                        |               | 26,604   |                   |  
|Deferred financing costs   |                                        |               | 23,365   |                   |  
|                           |                                        |               |          |                   |  
|                           |                                        |               | 315,125  |                   |  
|Accumulated amortization   |                                        |               | (188,976 | )                 |  
|                           |                                        |               |          |                   |  
|                           | Total intangible and other assets, net |               | $        | 126,149           |  
|                           |                                        |               |          |                   |  

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

|2004 |  | $ | 22,795
|---- |  | - | ------
|2005 |  |   | 38,533
|2006 |  |   | 27,928
|2007 |  |   | 11,385
|2008 |  |   | 7,769 
|2009 |  |   | 3,679 

5.    Restructuring

In March 2001, the Company more closely integrated certain activities of its wholly owned subsidiary Advanstar.com, Inc (Advanstar.com) with
Communications. As a result of the integration, restructuring charges were incurred. All restructuring charges were finalized by the end of 2001 other than facility lease costs. The restructuring
charge accrual relating to the facility lease costs was

10

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$6.2 million
at December 31, 2003. The facility lease obligation was settled in May 2004 for less than amounts owed under the lease. The $3.9 million favorable settlement
(net of fees and related expenses) of the lease obligation was recognized as an offset to operating expense for the three and six months ended June 30, 2004. As of June 30, 2004, no
liability exists on the Company's balance sheet relating to this restructuring.

6.    Financial Derivative Instruments

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



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

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



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

At
June 30, 2004, the Company had foreign exchange derivative contracts to sell with a notional amount totaling $3.9 million and to buy totaling $1.1 million. The
estimated fair value of the foreign exchange contracts based upon market quotes was a net liability of $0.1 million.

11

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The following table summarizes the effects of SFAS 133 on the Company's accumulated other comprehensive income as of June 30, 2004 and 2003 (in
thousands):

|                                                                             |  | Interest Rate
Collar
Agreements |        | Foreign
Exchange
Contracts |   | Total |  
|---------------------------------------------------------------------------- |  | ------------------------------- | ------ | -------------------------- | - | ----- | -
|Accumulated other comprehensive income (loss) balance at December 31, 2003   |  | $                               | (42    | )                          | $ |      |  
|Unwound from accumulated other comprehensive income (loss) during the period |  |                                 | 244    |                            |   |      |  
|Mark to market hedge contracts                                               |  |                                 | (52    | )                          |   |      |  
|                                                                             |  |                                 |        |                            |   |       |  
|Accumulated other comprehensive income (loss) balance at June 30, 2004       |  | $                               | 150    |                            |   |      |  
|                                                                             |  |                                 |        |                            |   |       |  
|Accumulated other comprehensive income (loss) balance at December 31, 2002   |  | $                               | (4,350 | )                          | $ |      |  
|Unwound from accumulated other comprehensive income (loss) during the period |  |                                 | 2,760  |                            |   |      |  
|Mark to market hedge contracts                                               |  |                                 | (2,215 | )                          |   | (42   | )
|                                                                             |  |                                 |        |                            |   |       |  
|Accumulated other comprehensive income (loss) balance at June 30, 2003       |  | $                               | (3,805 | )                          | $ | (42   | )
|                                                                             |  |                                 |        |                            |   |       |  

At
June 30, 2004, the Company estimates that it will reclassify out of accumulated other comprehensive income approximately $0.1 million of deferred gains into earnings
within the next 12 months. The fair value of the Company's derivatives was a net liability position of $0.1 million and $1.5 million at June 30, 2004 and
December 31, 2003, respectively, which is included in other accrued expenses in the accompanying condensed consolidated balance sheets.



The following tables summarize the effects of SFAS No. 133 included in other income (expense) in the Company's statement of operations related to the
ineffective portion of the Company's interest rate protection agreements and foreign exchange contracts not designated as hedging instruments for the three and six months ended June 30, 2004
and 2003 (in thousands):

|                                 |  | Interest Rate
Collar
Agreements |       | Foreign
Exchange
Contracts |   | Total |  
|-------------------------------- |  | ------------------------------- | ----- | -------------------------- | - | ----- | -
|Three months ended June 30, 2004 |  | $                               |      |                            | $ | (16   | )
|                                 |  |                                 |       |                            |   |       |  
|Three months ended June 30, 2003 |  |                                 | 43    |                            |   | 223   |  
|                                 |  |                                 |       |                            |   |       |  
|Six months ended June 30, 2004   |  |                                 | 1,273 |                            |   | (9    | )
|                                 |  |                                 |       |                            |   |       |  
|Six months ended June 30, 2003   |  |                                 | 575   |                            |   | 134   |  
|                                 |  |                                 |       |                            |   |       |  

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7.    Debt



The credit facility (the "Credit Facility") originally consisted of (i) $415.0 million of term loans A and B payable in quarterly installments
through October 11, 2008, and (ii) $80.0 million of revolving loan availability through April 11, 2007. The Credit Facility contained restrictive covenants which required
the Company to, among other things, maintain a maximum quarterly leverage ratio (as defined) that declined quarterly through the fourth quarter of 2004, and to maintain a minimum fixed charge ratio
(as defined).

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



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

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

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

13

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

The
Company's senior discount notes due October 2011 (the "Discount Notes") with a principal amount at maturity of $171.8 million bear interest at 15%, payable semiannually
beginning October 2005, and
have an implied yield to maturity of approximately 17.2%. The notes are redeemable at the Company's option at specified premiums through 2007 and at par thereafter. The notes may also be redeemed at a
premium upon a qualifying change of control of the Company.

The
Discount Notes do not require cash interest payments until 2006 and contain restrictive covenants that, among other things, limit Advanstar's ability and that of its subsidiaries to
incur debt, pay dividends and make investments. Since Advanstar is a holding company and its subsidiaries serve as its only source of cash flow, its ability to pay interest on these notes will be
dependent upon the receipt of dividends from its subsidiaries. The Credit Facility, the Senior Secured Notes and the Senior Subordinated Notes impose substantial restrictions on
Advanstar, Inc.'s subsidiaries' ability to pay dividends to Advanstar, Inc. Additionally, the Discount Notes are not guaranteed by Advanstar's subsidiaries.

Accretion
of the debt discount on the Discount Notes was $5.2 million and $4.4 million during the three months ended June 30, 2004 and 2003 and $10.1 million
and $8.6 million in the six months ended June 30, 2004 and 2003, respectively. These amounts are included in interest expense in the respective accompanying consolidated statements of
operations.

14

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

|                                                                                                                                                                         |  | June 30,
2004 |         | December 31,
2003 |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------- | ------- | ----------------- | -
|Term loan B, interest at LIBOR plus 4.50%; 5.78% at June 30, 2004, due quarterly through October 11, 2008                                                                |  | $             | 25,000  |                   | $
|Revolving credit loan, interest at LIBOR plus 3.75%; 4.85% at June 30, 2004, due April 11, 2007                                                                          |  |               |        |                   |  
|Second priority senior secured floating rate notes, interest at LIBOR plus 7.5%, 8.62% at June 30, 2004, due 2008                                                        |  |               | 129,025 |                   |  
|10.75% Second priority senior secured notes, due 2010, plus unamortized premium of $919 and $994 at June 30, 2004 and December 31, 2003, respectively                    |  |               | 300,919 |                   |  
|Senior subordinated notes, interest at 12.00%, due 2011                                                                                                                  |  |               | 160,000 |                   |  
|Senior discount notes, interest at 15.00%, due October 11, 2011, net of unamortized discount of $48,907 and $53,790 at June 30, 2004 and December 31, 2003, respectively |  |               | 128,117 |                   |  
|Acquisition note payable, interest at 5.50%, due monthly through 2004                                                                                                    |  |               | 1,000   |                   |  
|Acquisition note payable, interest at 6.00%, due April 1, 2004                                                                                                           |  |               |        |                   |  
|                                                                                                                                                                         |  |               |         |                   |  
|                                                                                                                                                                         |  |               | 744,061 |                   |  
|Less current maturities                                                                                                                                                  |  |               | (2,300  | )                 |  
|                                                                                                                                                                         |  |               |         |                   |  
|                                                                                                                                                                         |  | $             | 741,761 |                   | $
|                                                                                                                                                                         |  |               |         |                   |  

8.    Comprehensive Income

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

|                                                                |  | Three Months Ended
June 30, |         | Six Months Ended
June 30, |  
|--------------------------------------------------------------- |  | --------------------------- | ------- | ------------------------- | -
|
|Net loss                                                        |  | $                           | (27,564 | )                         | $
|Change in cumulative translation adjustment                     |  |                             | (1,402  | )                         |  
|Change in unrealized losses on derivative financial instruments |  |                             |        |                           |  
|                                                                |  |                             |         |                           |  
|Comprehensive loss                                              |  | $                           | (28,966 | )                         | $
|                                                                |  |                             |         |                           |  

9.    Segments

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

The
Company evaluates the performance of, and allocates resources to, its segments based on contribution margindefined as net revenue less cost of production and selling,
editorial, and

15

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circulation
costs. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies. There are no inter-segment sales or transfers.
Segment assets are primarily intangible assets, prepaid expenses and accounts receivable. Revenues, contribution margins and segment assets of the Company's reportable segments are as follows (in
thousands):

|                                 |                            | Trade Shows
and
Conferences |   | Trade
Publications |  | Marketing
Services |         | Corporate
and Other |   | Total 
|-------------------------------- | -------------------------- | --------------------------- | - | ------------------ |  | ------------------ | ------- | ------------------- | - | ------
|Three months ended June 30, 2004 |                            |                             |   |                    |  |                    |         |                     |   |       
|                                 | Revenues                   |                             | $ | 21,573             |  | $                  | 57,985  |                     | $ | 5,756 
|                                 | Contribution margin (loss) |                             |   | 8,098              |  |                    | 18,436  |                     |   | 3,368 
|                                 | Segment assets             |                             |   | 525,786            |  |                    | 305,752 |                     |   | 33,283
|Three months ended June 30, 2003 |                            |                             |   |                    |  |                    |         |                     |   |       
|                                 | Revenues                   |                             | $ | 20,526             |  | $                  | 35,039  |                     | $ | 4,528 
|                                 | Contribution margin (loss) |                             |   | 6,634              |  |                    | 12,184  |                     |   | 2,095 
|                                 | Segment assets             |                             |   | 574,910            |  |                    | 177,448 |                     |   | 32,622
|Six months ended June 30, 2004   |                            |                             |   |                    |  |                    |         |                     |   |       
|                                 | Revenues                   |                             | $ | 89,798             |  | $                  | 105,154 |                     | $ | 10,749
|                                 | Contribution margin (loss) |                             |   | 46,935             |  |                    | 31,622  |                     |   | 6,339 
|                                 | Segment assets             |                             |   | 525,786            |  |                    | 305,752 |                     |   | 33,283
|Six months ended June 30, 2003   |                            |                             |   |                    |  |                    |         |                     |   |       
|                                 | Revenues                   |                             | $ | 86,098             |  | $                  | 65,606  |                     | $ | 8,845 
|                                 | Contribution margin (loss) |                             |   | 44,911             |  |                    | 20,858  |                     |   | 4,091 
|                                 | Segment assets             |                             |   | 574,910            |  |                    | 177,448 |                     |   | 32,622

The
reconciliation of total segment contribution margin to consolidated loss from continuing operations before income taxes, and minority interests is as follows (in thousands):

|                                   |                                                                            | Three Months Ended
June 30, |         | Six Months Ended
June 30, |  
|---------------------------------- | -------------------------------------------------------------------------- | --------------------------- | ------- | ------------------------- | -
|
|Total segment contribution margin  |                                                                            | $                           | 27,139  |                           | $
|Restructuring charge               |                                                                            |                             | 3,895   |                           |  
|General and administrative expense |                                                                            |                             | (10,978 | )                         |  
|Depreciation and amortization      |                                                                            |                             | (12,868 | )                         |  
|Other expense (primarily interest) |                                                                            |                             | (22,655 | )                         |  
|                                   |                                                                            |                             |         |                           |  
|                                   | Loss from continuing operations before income taxes and minority interests |                             | $       | (15,467                   | )
|                                   |                                                                            |                             |         |                           |  

10.    Related-Party Transactions



The Company has agreed to pay Credit Suisse First Boston Corporation ("CSFB"), an affiliate of the DLJ Merchant Banking funds, an annual advisory fee of
$0.5 million until the earlier of (i) an initial public offering of Holdings, (ii) the date when the DLJ Merchant Banking funds own less than 162/3 percent of the
shares of Holdings' common stock held by them on the closing date of the DLJ Acquisition or (iii) October 11, 2005.

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

This quarterly report on Form 10-Q contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Investors are cautioned not to place undue reliance on these forward-looking statements, including statements about plans and objectives of management, potential
acquisitions, market growth and opportunity. These forward-looking statements are neither promises nor guarantees and involve risks and uncertainties that could cause actual results to differ
materially from those indicated by such forward-looking statements. You should not expect that these forward-looking statements will be updated or supplemented as a result of changing circumstances or
otherwise, and we disavow and disclaim any obligation to do so. Important cautionary statements and risk factors that would affect actual results are discussed in the our periodic reports and
registration statements filed with the Securities and Exchange Commission, including those under the caption entitled "Certain Factors Which May Affect Future Results" in the our annual report on
Form 10-K filed with the Securities and Exchange Commission on March 29, 2004.

Overview

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

We
report our business in three segments:



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

Trade
shows and conferences accounted for 44% and 54% of total revenue in the six months ended June 30, 2004 and 2003, respectively. Trade publications accounted for 51% and 41%
of total revenue in the six months ended June 30, 2004 and 2003, respectively, while marketing services accounted for 5% and 5% of total revenue in the six months ended June 30, 2004 and
2003, respectively. We expect that publications will constitute slightly more than 50% of our full year 2004 revenue as a result of the acquisition in October 2003 of the Thomson healthcare
properties. Our revenue reaches its highest levels during the first and third quarters of the year due to the timing of the MAGIC trade shows and our other large trade shows and conferences. Because
trade shows and conferences revenue is recognized when a particular event is held, we may experience fluctuations in quarterly revenue based on the movement of trade show dates from one quarter to
another.

Industry Trends and Developments

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

17

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Our
trade shows and conferences continued to perform well in the first half. Our MAGIC and License events posted gains in square footage, revenue and attendance over the first half of
2003. Our Powersports motorcycle events also increased revenue significantly over the first half last year. Our trade shows serving technology markets had mixed results but our AIIM and On Demand
events servicing the document management and digital printing markets and ourSensorsevent in the system design and engineering markets began to
stabilize after three years of technology market declines. Our
recently acquired IVT conferences, which address FDA validation and compliance issues for the pharmaceutical industry, have performed ahead of our expectations.

The
primary driver in the growth of our publishing segment to date 2004 came from the acquisition of the Thomson healthcare properties. Our legacy healthcare and pharmaceutical
publications are continuing their strong growth trend from 2003 in the first half of 2004 and many of the flagship healthcare publications we recently acquired from Thomson are performing to our
acquisition expectations and should offer us opportunities for additional growth as we continue through the year. Trade advertising in aggregate across our other market sectors in the first half of
2004 continues to show reasonable growth over the first half of 2003 with the exception of our travel sector, which continues to mirror the decline in total travel industry advertising pages. Our
technology publications stabilized in the first half with revenue declining less than 3.0% and pages increasing 5.0% from the first half of 2003 after two years of double digit percentage declines. We
do not anticipate significant near term recovery in either our technology or travel based publications..

We
have identified new opportunities and initiatives that we will be pursuing throughout the year, including opportunities to expand customer relationships and our market position in our
MAGIC events and the healthcare sector. We are also investing in a significant new product development initiative in our Powersports group with the launch of several new publications and tradeshows in
the off-road truck market.

Presentation of Financial Information

Acquisitions and Divestitures

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

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

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

On
December 31, 2003, we sold a portfolio of automotive and technology industry trade shows and magazines operated by our U.K. subsidiary for a total sales price of
$2.2 million in cash, subject to a working capital adjustment. Total revenue for these properties in the second quarter and first half of 2003 was $0.9 million and $2.9 million
and contribution margin loss of $0.6 million and $0.7 million for second quarter and first half 2003, respectively.

On
March 12, 2004, we completed the sale of our art industry trade shows and magazines (the "Art Group") for a total selling price of $19.6 million in cash. The portfolio
included three trade shows, with 186,216 aggregate square feet in 2003, and two publications, with 935 aggregate advertising pages in 2003. We recorded a gain on the sale of $1.0 million plus a
tax benefit of $2.4 million. The results of the Art Group, along with the after tax gain, are reported in discontinued operations in the condensed consolidated statements of operations for the
three and six months ended June 30, 2004 and 2003.

18

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During
June of 2004, we committed to the sale of our 65% ownership in our French joint venture ("SeCA"), which consisted of one trade show. On August 5, 2004, we completed the
sale for $3.1 million in cash. In the second quarter, we recorded a goodwill impairment charge of $9.4 million based the sale of SeCA for less than its carrying value. This charge is
reported separately as a component of discontinued operations for the three and six months ended June 30, 2004. The results of SeCA have been reported in discontinued operations in the
condensed consolidated statements of operations for the three and six months ended June 30, 2004 and 2003.

See
Note 3 to our condensed consolidated financial statements

Private Placement of Second Priority Senior Secured Notes and Refinancing of Credit Facility

In August 2003, Communications amended the Credit Facility to permit the issuance of $360.0 million of second priority senior secured notes and the
use of the proceeds thereof, eliminate the leverage ratio covenant and amend certain other covenants contained in the Credit Facility and reduce the revolving loan commitments thereunder from
$80 million to $60 million. Communications recorded an expense of $11.3 million in the third quarter of 2003 to reflect the write-off of deferred financing costs
related to the term loans, which were repaid with the proceeds of the offering. Communications' interest expense and cash interest is higher as a result of this refinancing. In addition,
Communications reclassified $1.8 million of deferred losses related to their interest rate collar and swap agreements
previously reported as a component of accumulated other comprehensive income into other expenses in the third quarter of 2003. Gains and losses on the portion of these agreements not designated as
hedges of the second priority senior secured floating rate notes at the end of each fiscal quarter (which are calculated as the net amount payable upon termination at the date of determination) are
recognized in current earnings.

In
September 2003, Communications issued $70 million of second priority senior secured notes and used the net proceeds to repay $12 million of outstanding borrowings
under their revolving Credit Facility and to purchase short-term investments pending completion of the Thomson acquisition. On October 1, 2003, Communications used
$136.5 million in cash, including $56 million of the net proceeds of the September offering to finance the Thomson acquisition.

Sources of Revenue

Trade Shows and Conferences

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

Trade Publications

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

19

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issue
date, and subscription revenue, if any, is recognized over the subscription period, typically one year.

Marketing Services

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

Components of Expenses

Trade Shows and Conferences

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

Trade Publications

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

Marketing Services

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

Significant Accounting Policies and Estimates

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

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

Revenue Recognition

We recognize revenue as discussed in the "Sources of Revenue" section above. The balance of deferred revenue was $46.3 million at June 30, 2004;
$13.1 million for trade publications and $33.2 million for trade shows. On a relative basis, deferred revenue reaches its highest levels during the second and fourth quarters of the year
largely due to the timing of theMAGICtrade shows and our other large trade shows and conferences.

Allowance for Doubtful Accounts

We maintain an allowance for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. The balance of the
allowance for doubtful accounts at June 30, 2004 and December 31, 2003 was $1.2 million and $1.0 million, respectively. If the financial condition of our customers were to
deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.

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

Deferred Taxes

Pursuant to the requirements of SFAS No. 109, we record a valuation allowance to reduce our deferred tax assets to the amount that we determine is more
likely than not to be realized. At June 30, 2004 we have recorded a valuation allowance to offset the deferred tax benefit associated with all of our U.S. and foreign net operating loss
carryforwards because the realization of these benefits is not considered
likely. We have considered future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for the valuation allowance. In the event we were to subsequently
determine that we would be able to realize our deferred tax assets in the future in excess of our net recorded amount, a reduction in the valuation allowance would result in an income tax benefit and
would increase net income or reduce net loss in the period such determination was made.

Amortization of Intangible Assets

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

21

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any
changes in useful lives or a determination that the carrying value of an intangible asset is impaired would be accounted for in the period that such determination was made. In addition to the
deferred tax assets, which are fully reserved, we have established a deferred tax liability equal to the excess of the carrying value of our goodwill for financial reporting purposes over the tax
basis of this goodwill. We establish this liability because we do not amortize goodwill for financial reporting purposes but we do amortize goodwill for tax reporting purposes.

Impairment of Long-Lived Assets

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

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

As
a result of our sale of SeCA, we recorded a goodwill impairment charge of $9.4 million in the second quarter of 2004. We measured the fair value of SeCA using the selling
price, less our costs to sell SeCA. This charge is reported separately as a component of discontinued operations for the three and six months ended June 30, 2004.

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Selected Financial Data

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

|                                                                           |                                                                                                                                                                                               | Three Months Ended
June 30,          |         | Six Months Ended
June 30, |       
|-------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------ | ------- | ------------------------- | ------
|
|
|Income Statement Data:                                                     |                                                                                                                                                                                               |                                      |         |                           |       
|Revenue                                                                    |                                                                                                                                                                                               |                                      |         |                           |       
|                                                                           | Trade shows and conferences                                                                                                                                                                   |                                      | $       | 21,573                    |       
|                                                                           | Publications                                                                                                                                                                                  |                                      |         | 57,985                    |       
|                                                                           | Marketing services and other                                                                                                                                                                  |                                      |         | 5,756                     |       
|                                                                           |                                                                                                                                                                                               |                                      |         |                           |       
|                                                                           |                                                                                                                                                                                               | Total revenue                        |         |                           | 85,314
|Cost of production and selling                                             |                                                                                                                                                                                               |                                      |         |                           |       
|                                                                           | Trade shows and conferences                                                                                                                                                                   |                                      |         | 13,475                    |       
|                                                                           | Publications                                                                                                                                                                                  |                                      |         | 39,549                    |       
|                                                                           | Marketing services and other                                                                                                                                                                  |                                      |         | 2,696                     |       
|                                                                           | Department and support costs                                                                                                                                                                  |                                      |         | 2,455                     |       
|                                                                           |                                                                                                                                                                                               |                                      |         |                           |       
|                                                                           |                                                                                                                                                                                               | Total cost of production and selling |         |                           | 58,175
|General and administrative expenses                                        |                                                                                                                                                                                               |                                      | 10,978  |                           |       
|Restructuring (see Note 5)                                                 |                                                                                                                                                                                               |                                      | (3,895  | )                         |       
|Depreciation and amortization                                              |                                                                                                                                                                                               |                                      | 12,868  |                           |       
|                                                                           |                                                                                                                                                                                               |                                      |         |                           |       
|Operating income (loss)                                                    |                                                                                                                                                                                               |                                      | 7,188   |                           |       
|Other income (expense):                                                    |                                                                                                                                                                                               |                                      |         |                           |       
|                                                                           | Interest expense                                                                                                                                                                              |                                      |         | (22,653                   | )     
|                                                                           | Other income (expense), net                                                                                                                                                                   |                                      |         | (2                        | )     
|                                                                           |                                                                                                                                                                                               |                                      |         |                           |       
|Loss from continuing operations before income taxes and minority interests |                                                                                                                                                                                               |                                      | (15,467 | )                         |       
|Provision for income taxes                                                 |                                                                                                                                                                                               |                                      | 3,437   |                           |       
|Minority interests                                                         |                                                                                                                                                                                               |                                      | 113     |                           |       
|                                                                           |                                                                                                                                                                                               |                                      |         |                           |       
|Loss from continuing operations                                            |                                                                                                                                                                                               |                                      | (18,791 | )                         |       
|Discontinued operations (see Note 3):                                      |                                                                                                                                                                                               |                                      |         |                           |       
|                                                                           | (Loss) income from operations of discontinued business (including a goodwill impairment charge of $9,420, net of minority interest of $5,072 for the three and six months ended June 30, 2004 |                                      |         | (8,773                    | )     
|                                                                           |                                                                                                                                                                                               |                                      |         |                           |       
|Net loss                                                                   |                                                                                                                                                                                               | $                                    | (27,564 | )                         | $     
|                                                                           |                                                                                                                                                                                               |                                      |         |                           |       

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Results of Operations

THREE MONTHS ENDED JUNE 30, 2004 COMPARED TO THE THREE MONTHS ENDED JUNE 30, 2003

Revenue

Revenue in the second quarter of 2004 increased 42.0% to $85.3 million from $60.1 million in the second quarter of 2003.

Revenue
from trade shows and conferences increased $1.1 million, or 5.1%, to $21.6 million in the second quarter of 2004 from $20.5 million in the second quarter of
2003. Revenue for events held in the second quarter of both 2004 and 2003 increased $2.0 million in the second quarter of 2004. This increase was primarily due to the strong performances of our
License and Sensors events. Two trade shows held in the second quarter of 2003 shifted into the first quarter of 2004 and two trade shows held in the first quarter of 2003 shifted into the second
quarter of 2004 reducing revenue by $1.9 million, net, in the second quarter of 2004. Our acquisition in March 2004 of conferences from the Institute of Validation
Technology, Inc. ("IVT"), combined with a new pharmaceutical conference launch, contributed $2.5 million of revenue in the second quarter of 2004. These revenue gains were partially
offset by holding two fewer events serving our technology and beauty markets.

Revenue
from publications increased $23.0 million, or 65.5%, to $58.0 million in the second quarter of 2004 from $35.0 million in the second quarter of 2003. The
increase in revenue was driven by the acquisition of the Thomson healthcare properties acquired in October 2003, which contributed $21.5 million in the second quarter of 2004. Revenue
was also impacted by strong performances fromAmerican Salon, American Spa, our pre-Thomson healthcare publications, Video Store, our science publications,DVMand the launch of a Licensedirectory. These increases were partially
offset by revenue reductions of $0.8 million attributable to the sale of certain U.K. publications in December 2003. Overall advertising pages increased 27.8%, principally due to our
acquired healthcare properties. For publishing properties, other than properties acquired or sold during the second quarters of 2004 and 2003, advertising pages increased 2.5% and revenue increased
$2.0 million, or 5.9%.

Revenue
from marketing services and other in the second quarter of 2004 increased 27.1% to $5.8 million from $4.5 million in the second quarter of 2003, due to positive
results in classified and recruitment advertising, list sales and permissions, principally from the Thomson healthcare acquisition.

Cost of production and selling

Cost of production and selling expenses in the second quarter of 2004 increased 42.8% to $58.2 million from $40.8 million in the second quarter of
2003 primarily due to the acquisition of the healthcare properties in October 2003.

Expenses
of trade shows and conferences in the second quarter of 2004 declined 3.0% to $13.5 million from $13.9 million in the second quarter of 2003. This decline was due
primarily to cost savings associated with holding two fewer events serving our technology and beauty markets and the effect of trade show shifts between quarters as discussed above. These declines
were partially offset by increased costs associated with the IVT acquisition and the launch of a new pharmaceutical conference.

Expenses
of trade publications in the second quarter of 2004 increased 73.0% to $39.5 million from $22.9 million in the second quarter of 2003. Operating costs were
impacted by $17.5 million of additional costs associated with our healthcare publications, principally our acquisition of the Thomson healthcare publications in October 2003, due to new
investments in sales resources and product enhancements. These cost increases were partially offset by cost savings of $1.3 million attributable to the sale of certain of our U.K. based
properties at the end of 2003. Prices for printing, paper and

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postage
remained stable in the second quarter compared to second quarter 2003, however we have indications that paper prices may increase 5% to 8% in the second half of 2004.

Expenses
of marketing services and other were unchanged at $2.7 million in the second quarter of 2004 and 2003.

Department
and support costs of $2.5 million in the second quarter of 2004 increased $1.2 million from the second quarter of 2003 due primarily to increased group
management and departmental production staff related to the Thomson acquisition.

General and administrative expenses

General and administrative expenses increased $2.6 million to $11.0 million in the second quarter of 2004 from $8.4 million in the second
quarter of 2003 due in part to increased office and administrative costs attributable to the acquisition of the Thomson healthcare properties with the addition of three offices and approximately 300
employees. During the second quarter of 2004 we also appointed a new executive vice president to manage and develop our healthcare, pharmaceutical and science properties.

Restructuring

In March 2001, we announced plans to more tightly focus the activities of our wholly owned subsidiary Advanstar.com, Inc. (Advanstar.com). These
plans had the effect of more closely integrating many of the sales, marketing, technology and operating functions of Advanstar.com with Communications and its core activities in publishing, tradeshows
and marketing services. The restructuring activities were completed by the end of 2001, except for facility lease costs, were to continue through June 2010. In April 2004, we settled the
remaining facility lease commitment for a total of $1.9 million, resulting in second quarter 2004 offset to operating expense of $3.9 million as we released the remaining accrual.

Depreciation and amortization

Depreciation and amortization expense in the second quarter of 2004 declined $0.8 million to $12.9 million from $13.7 million in the second
quarter of 2003 primarily due to the effect of the declining balance method of accelerated amortization on our exhibitor and advertiser lists, partially offset by additional amortization related to
the Thomson acquisition.

Interest expense

Interest expense in the second quarter of 2004 increased $5.6 million, or 33.1%, to $22.7 million from $17.0 million in the second quarter of
2003 due to an increase in our weighted-average interest rate of
approximately 190 basis points and an increase in our weighted-average debt outstanding of approximately $81.0 million as a result of Communications 2003 financings discussed below.

In
August 2003, Communications issued $360 million of Senior Secured Notes and used the net proceeds to repay and terminate all outstanding term A loans under their Credit
Facility and all but $25 million of the outstanding term B loans and a portion of our revolving credit borrowings under their Credit Facility. In September 2003, Communications issued
$70 million of the Senior Secured Notes to finance, in part, the Thomson acquisition. Communications' interest expense will be higher in future periods as a result of these financings. See
"Presentation of Financial InformationPrivate Placement of Second Priority Senior Secured Notes and Refinancing of Credit Facility".

At
June 30, 2004, $590.0 million, or 79% of our total debt is at a fixed rate with the balance subject to interest rate fluctuations. A 100 basis point increase in interest
rates on our current variable rate debt would result in an increase in annual interest expense of $1.5 million. We previously entered

25

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into
an interest rate collar agreement to hedge our interest rate risk on these variable rate borrowings. The agreement expired in February 2004 and we currently have no plans to renew this
interest rate collar agreement or otherwise hedge our remaining floating rate debt.

Provision (benefit) for income taxes

The provision for income taxes was $3.4 million in the second quarter of 2004 compared to a benefit of $0.1 million in the second quarter of 2003.
The second quarter 2004 provision relates to income taxes in certain foreign jurisdictions and a deferred tax liability related to the basis of goodwill for tax purposes being less than the carrying
value of goodwill for financial reporting purposes. We recorded no income tax benefit related to the net operating losses we generated during 2003 because we have established a valuation allowance to
offset any related tax benefits due to uncertainty about realization of these benefits. Our second quarter 2003 provision relates to income tax benefits in certain foreign jurisdictions.

Discontinued operations

In conjunction with the sale of the Art Group in the first quarter of 2004, we recorded a gain on the sale of $1.0 million plus a tax benefit of
$2.4 million. Pretax profit of the Art Group was $3.4 million for the period from January 1, 2004 to March 12, 2004 and pretax loss of $0.4 million for the three
months ended June 30, 2003.

In
the second quarter 2004, as a result of the sale of SeCA we recorded a goodwill impairment charge as a component of discontinued operations of $9.4 million Pretax results of
SeCA, net of minority interest, was a loss of $8.4 million and income of $1.4 million for the three months ended June 30, 2004 and 2003.

See
further information regarding discontinued operations of the Art Group and SeCA in "Presentation of Financial Information".

SIX MONTHS ENDED JUNE 30, 2004 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 2003

Revenue

Revenue in the first half of 2004 increased 28.1% to $205.7 million from $160.5 million in the first half of 2003.

Revenue
from trade shows and conferences increased $3.7 million, or 4.3%, to $89.8 million in the first half of 2004 from $86.1 million in the first half of 2003.
Revenue for events held in the first six months of both 2004 and 2003 increased $3.4 million in the first half of 2004. The increase reflects strong performances from MAGIC, our Powersports
motorcycle events, License event and our Sensors event. MAGIC revenue and square footage in the first six months of 2004 increased 4.7% and 4.5%, respectively, over the first half of 2003. Attendance
at MAGIC increased compared to Spring 2003 and the August 2003 events. Revenue for the first six months of 2004 from the Powersports events, including the Dealer Expo trade show and the
International Motorcycle Show tour, increased 14.6% over the first half of last year, and revenue from our License event increased 24.1% over the first half of last year. Our acquisition in
March 2004 of conferences from IVT, combined with new product launches, contributed revenue of $3.0 million in first half of 2004. These revenue gains were partially offset by holding
two fewer events serving our technology and beauty markets.

Revenue
from publications increased $39.6 million, or 60.3%, to $105.2 million in the first half of 2004 from $65.6 million in the first half of 2003, principally
due to the expansion of our healthcare business with the acquisition of the Thomson healthcare properties in October 2003. The acquired healthcare properties contributed $39.1 million of
revenue in the first half of 2004. We also had strong performances from our pre-Thomson healthcare publications,DVM, American Spa, Pharm Tech Europe,

26

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Video Storeand our telecom publications. For publishing properties, other than properties acquired or sold during the comparative periods, advertising pages increased 2.0% and
revenue increased $1.9 million, or 3.0% in the first half of 2004 over the first half of 2003. These increases were partially offset by revenue reductions of $1.6 million attributable to
the sale of certain U.K. publications in December 2003.

Revenue
from marketing services and other in the first half of 2004 increased 21.5% to $10.7 million from $8.8 million in the first half of 2003, due to positive results in
classified and recruitment advertising, list sales and reprints, principally from the Thomson healthcare acquisition.

Cost of production and selling

Cost of production and selling expenses in the first half of 2004 increased 34.0% to $124.9 million from $93.2 million in the first half of 2003
primarily due to the acquisition of the healthcare properties in October 2003.

Expenses
of trade shows and conferences in the first half of 2004 increased 4.1% to $42.9 million from $41.2 million in the first half of 2003. This increase was due in
part to the impact of investments made in our MAGIC and Powersports events to pursue future revenue growth opportunities, several launches of new events in the U.S. and Europe and the IVT acquisition,
partially offset by cost savings associated with holding two fewer events serving our technology and beauty markets in 2004 and with the sale of certain of our U.K. based properties at the end of
2003.

Expenses
of trade publications in the first half of 2004 increased 64.3% to $73.5 million from $44.7 million in the first half of 2003. Operating costs were impacted by
$30.9 million of additional costs associated with our healthcare publications, principally our acquisition of the Thomson healthcare publications in October 2003. These cost increases
were partially offset by cost savings of $2.2 million attributable to the sale of certain of our U.K. based properties at the end of 2003. Prices for printing, paper and postage remained stable
in the first half of 2004 compared to the first half 2003, however we have indications that paper prices may increase 5% to 8% in the second half of 2004.

Expenses
of marketing services and other in the first half declined 5.4% to $5.0 million from $5.3 million in the first half of 2003, due to cost savings associated with
the reorganization of our marketing services department.

Department
and support costs in the first half of 2004 increased $1.5 million to $3.5 million, due to increased group management and departmental production staff related
to the Thomson acquisition.

General and administrative expenses

General and administrative expenses increased $4.2 million to $22.8 million in the first half of 2004 from $18.6 million in the first half
2003, due in part to increased office and administrative costs attributable to the acquisition of the Thomson healthcare properties with the addition of three offices and approximately 300 employees.
During the second quarter of 2004 we also appointed a new executive vice president to manage and develop our healthcare, pharmaceutical and science properties.

Restructuring

In March 2001, we announced plans to more tightly focus the activities of our wholly owned subsidiary Advanstar.com, Inc. (Advanstar.com). These
plans had the effect of more closely integrating many of the sales, marketing, technology and operating functions of Advanstar.com with Communications and its core activities in publishing, tradeshows
and marketing services. The restructuring activities were completed by the end of 2001, except for facility lease costs, were to continue through June 2010. In April 2004, we settled the
remaining facility lease commitment for a

27

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total
of $1.9 million, resulting in second half of 2004 offset to operating expense of $3.9 million as we released the remaining accrual.

Depreciation and amortization

Depreciation and amortization expense in the first half of 2004 declined $2.7 million to $24.5 million from $27.2 million in the first half
of 2003 primarily due to the effect of the declining balance method
of accelerated amortization on our exhibitor and advertiser lists, partially offset by additional amortization related to the Thomson acquisition.

Interest expense

Interest expense in the first half of 2004 increased $12.5 million, or 37.4%, to $45.8 million from $33.3 million in the first half of 2003
due to an increase in our weighted-average interest rate of approximately 220 basis points and an increase in our weighted-average debt outstanding of approximately $84.2 million as a result of
our financings discussed above.

Other income (expense), net

Other income in the first half of 2004 increased $0.9 million to $1.2 million from $0.3 million in the first half of 2003. This increase is
attributable to gains associated with our interest rate protection agreement, which expired in February 2004 and foreign exchange gains.

Provision (benefit) for income taxes

The provision for income taxes was $6.6 million in the first half of 2004 compared to $0.3 million in the first half of 2003. Our income tax
provision for the first half 2004 relates to income taxes in certain foreign jurisdictions and a deferred tax liability related to the basis of goodwill for tax purposes being less than the carrying
value of goodwill for financial reporting purposes. We recorded no income tax benefit related to the net operating losses we generated during 2003 because we have established a valuation allowance to
offset any related tax benefits due to uncertainty about realization of these benefits. Our first half 2003 provision relates to income taxes in certain foreign jurisdictions.

Discontinued operations

In conjunction with the sale of the Art Group in the first quarter of 2004, we recorded a gain on the sale of $1.0 million plus a tax benefit of
$2.4 million. Pretax profits of the Art Group reported were $3.4 million for the period from January 1, 2004 to March 12, 2004 and $2.9 million for the six months
ended June 30, 2003.

In
the second quarter 2004, in conjunction with the sale of SeCA we recorded a goodwill impairment charge of $9.4 million. Pretax results of SeCA, net of minority interest, were a
loss of $8.5 million and income of $1.1 million for the six months ended June 30, 2004 and 2003.

See
further information regarding discontinued operations of the Art Group and SeCA in "Presentation of Financial Information".

Liquidity and Capital Resources

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

We
are a holding company and have no direct material operations. Our principal assets are our ownership of Advanstar Communications Inc. ("Communications"), and Advanstar.com, and
our only material liabilities are the senior discount notes and our guarantee of the Communications Credit

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Facility.
Our principal liquidity needs are for debt service on the senior discount notes and investments in Advanstar.com, which currently does not generate positive cash flow.

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

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

Sources and Uses of Funds

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

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

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

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

Operating
cash flows may be significantly affected by the working capital characteristics of our business, in particular the trade shows and conferences business. Deferred revenue
increases on the balance sheet in the quarters immediately preceding our busy first quarter trade show season as we collect deposits for booth space several months in advance of the trade shows.
Revenue and contribution margin are recognized in the quarter as the events are held, releasing the deferred revenue from the balance sheet resulting in a use of cash from the increase in net
operating assets.

Cash flows from operating activities.Net cash provided by operations in the first half of 2004 declined $16.6 million
to a use of cash of $3.7 million compared to a source of cash of $12.9 million in the first half of 2003. This decline was principally due to an increase in interest expense of
$10.9 million and a reduction in our negative working capital due to the release of deferred revenue in the first half of 2004 attributable to advertising programs for our healthcare
publications which were

29

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prepaid
in the fourth quarter of 2003 and to changes in our payment processing of accounts payable in the first half of 2004. These declines were partially offset by an increase in operating income of
$12.0 million, net of non-cash restructuring income of $3.9 million, in the first half of 2004 compared to the first half of 2003.

Cash flows provided by (used in) investing activities.Net cash provided by investing activities in the first half of 2004
was $7.4 million compared to net cash used of $3.3 million in the first half of 2003. This change was principally due to the sale in March 2004 of our art industry trade shows and
magazines for a total sales price of $19.5 million in cash, partially offset by $8.0 million in cash used for the acquisition of the pharmaceutical publications and conferences as
further discussed below.

We
incurred capital expenditures of $4.0 million and $3.1 million in the half of 2004 and 2003, respectively. We anticipate that we will spend approximately
$7.6 million on capital expenditures in 2004. The majority of these expenditures are related to expansions and enhancements to our IT and communications infrastructure and management and
operating group information systems. We believe that this amount of capital expenditure will be adequate to meet the needs of our business according to our business strategy and to maintain the key
trade shows, publications and business of our continuing operations.

Cash
used for acquisitions in the first half of 2004 increased $7.9 million relative to the first half of 2003 due to the acquisition in March 2004 the IVT conferences and
magazines for $8.0 million in cash. Our business strategy includes the consummation of strategic acquisitions. In connection with any future acquisitions, we may require additional funding,
which may be provided in the form of additional debt or equity financing or a combination thereof. There can be no assurance that any additional financing will be available to us on acceptable terms
or in a manner that complies with the restrictive covenants in our debt instruments.

Cash flows used in financing activities.Net cash flows used in financing activities decreased $0.4 million to
$10.4 million in the first half of 2004 from $10.8 million in the first half of 2003. We paid down $10.1 million in debt during the first half of 2004, including
$8.0 million on our revolver.

Debt service.

As of June 30, 2004, we had total indebtedness of $744.1 million and $59.1 million of borrowings available under our Credit Facility, subject
to customary conditions.

Credit Facility

The Credit Facility consists of a $60.0 million revolving credit facility and $25.0 million outstanding under the Term Loan B facility. The
revolving credit facility will terminate in April 2007 and the Term Loan B matures in October 2008. Borrowings under the Credit Facility generally bear interest based on a margin over,
at Communications' option, the base rate or LIBOR. The applicable margin for revolving credit loans varies based upon Communications' ratio of consolidated debt to EBITDA, as defined in the Credit
Facility, and is currently 3.75% over LIBOR and 2.50% over the base rate. The applicable margin for the Term Loan B varies based upon the rating assigned by S&P and Moody's to our Credit Facility and
is currently 4.50% over LIBOR and 3.25% over the base rate. Communications' obligations under the credit facility are guaranteed by Advanstar Holdings Corp. ("Advanstar Holdings"), our ultimate parent
company, and all Communications' existing and future domestic subsidiaries and are collateralized by substantially all of the assets of Communications' and the subsidiary guarantors, including a
pledge of the capital stock of all Communications' existing and future domestic subsidiaries, a pledge of no more than 65% of the voting stock of any foreign subsidiary directly owned by
Communications or any domestic subsidiary, a pledge of all intercompany indebtedness in favor of Communications and our domestic subsidiaries, a pledge of Communications' and Advanstar
IH, Inc.'s capital stock by us, and a pledge of our capital stock by Advanstar Holdings.

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Our
Credit Facility contains restrictive covenants, which require us to, among other things, maintain a minimum fixed charge coverage ratio (as defined in the credit facility documents) as of the end
of each fiscal quarter. Although there can be no assurance, we believe, based on our anticipated performance and expected economic conditions, that we will be able to comply with the amended financial
covenant contained in the Credit Facility in 2004.

Second Priority Senior Secured Notes

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

Senior Subordinated Notes

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

Senior discount notes

As part of the financing for the Thomson acquisition, we issued senior discount notes due October 2011 with a principal amount at maturity of
$103.2 million. Concurrently with the closing of the offering of the 12.00% senior subordinated notes, we sold additional senior discount notes due October 2011 with an additional
aggregate principal amount at maturity of $68.6 million. These notes do not require cash interest payments until 2006 and contain restrictive covenants that, among other things, limit our
ability and that of our subsidiaries to incur debt, pay dividends and make investments. However, we are a holding company and our ability to pay interest on these notes will be dependent upon the
receipt of dividends from our subsidiaries. The Credit Facility and the senior subordinated notes impose substantial restrictions on our subsidiaries' ability to pay dividends.

Contractual and contingent obligations

Our contractual obligations (excluding accounts payable and accrued expenses), as of June 30, 2004 are as set forth below (in millions):

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

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We
have no material capital lease obligations or purchase obligations. Our contingent obligations are primarily composed of $0.9 million of letters of credit and our interest rate
and foreign currency derivatives discussed more fully below in Item 3. "Quantitative and Qualitative Disclosure About Market Risk."

Off-Balance Sheet Arrangements.

We have no material off-balance sheet arrangements.

Recently Issued Accounting Standards

In December 2003, the FASB issued Interpretation No. 46R,Consolidation of Variable Interest
Entities, which addresses accounting for special-purpose and variable interest entities and which superseded Interpretation No. 46. The provisions of Interpretation
No. 46R are effective for us in the first quarter of 2005. Based upon our preliminary analysis, we do not expect adoption to have a material effect on its financial position, results of
operations or cash flows.

ITEM 3.Quantitative and Qualitative Disclosures about Market Risk

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

Interest Rates.At June 30, 2004, we had fixed rate debt of $590.0 million and variable rate debt of
$154.0 million. The annual pre-tax earnings and cash flows impact resulting from a 100 basis point increase in interest rates on variable rate debt, holding other variables constant
and excluding the impact of the hedging agreements described below, would be approximately $1.5 million per year.

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

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

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

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Our
strategy for management of currency risk relies primarily on conducting our operations in a country's respective currency and may, from time to time, involve currency derivatives,
primarily forward exchange contracts, to reduce our exposure to currency fluctuations. As of June 30, 2004, we had open foreign exchange derivative contracts to sell with a notional amount
totaling $3.9 million, and to buy with a notional amount totaling $1.1 million. The estimated fair value of the foreign exchange contracts based upon market quotes was a net liability of
approximately $0.1 million. The potential loss in fair value resulting from a hypothetical 10% adverse change in quoted foreign currency exchange rates amounts to an additional loss of
approximately $0.3 million. Actual results may differ.

ITEM 4.Controls and Procedures

Evaluation of Disclosure Controls and Procedures.Advanstar's Chief Executive Officer and Chief Financial Officer, after
evaluating the effectiveness of the Company's disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period
covered by this report (the "Evaluation Date"), have concluded that as of the Evaluation Date, our disclosure controls and procedures were adequate and designed to ensure that material information
relating to the Company would be made known to them by others within the Company.

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

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PART II    OTHER INFORMATION

Item 5.
Other InformationThe Company has the following changes to its directors.On March 23, 2004, James Quella, who has served as a director since October 2000, resigned as a director.On July 31, 2004, David M. Wittels, who has served as a director since October 2000, resigned as a director.Messrs. Quella and Wittels were both appointed to our Board by the DLJ Merchant Banking funds pursuant to their right to appoint directors under our stockholders agreement. Both men resigned from the Board in connection with their departure from
DLJ Merchant Banking. They have been replaced by Thompson Dean and Charles Pieper effective August 15, 2004. Messrs. Dean and Pieper are both employed by the DLJ Merchant Banking funds and were appointed by such funds.On July 31, 2004, Robert L. Krakoff, who has served as Chairman since he joined Advanstar in July 1996, resigned as a director due to his retirement.James M. Alic, who has served on the Board of Directors since he joined Advanstar in July 1996, was appointed to the position of Chairman effective August 5, 2004.Item 6.
Exhibits and Reports on Form 8-KItem 6(a).
Exhibits31.1
Certification of principal executive officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act31.2
Certification of principal financial officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act32.1
Certification of principal executive officer required by Rule 13a-14(b) or 15d-14(b) of the Exchange Act32.2
Certification of principal financial officer required by Rule 13a-14(b) or 15d-14(b) of the Exchange ActItem 6(b).
Reports on Form 8-KThe Company filed no reports on Form 8-K during the three months ended June 30, 2004


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SIGNATURES

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

|                | ADVANSTAR, INC.                                                                                                                                                                      
|--------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                |                                                                                                                                                                                      
|August 16, 2004 | /s/ DAVID W. MONTGOMERYDavid W. Montgomery Vice President-Finance, Secretary and Chief Financial Officer(Principal Financial Officer and Authorized Representative of the Registrant)

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Exhibit Index

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

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