<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X Quarterly Report Pursuant to Section 13 or 15(d) of The Securities Exchange
Act of 1934.
For the Quarterly Period Ended: March 31, 2000
Commission File Number: 333-57201
Advanstar, Inc.
(Exact name of registrant as specified in its charter)
Delaware 94-3243499
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
545 Boylston Street, Boston, Massachusetts 02116
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 267-6500
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 X No _________
-------
As of May 15, 2000, 33,630,000 shares of the Registrant's common stock were
outstanding.
<PAGE>
PART I Financial Information
Item 1. Financial Statements:
<TABLE>
<CAPTION>
Page in this
Quarterly
Report
------
<S> <C>
Condensed Consolidated Balance Sheets at March 31, 2000 (unaudited)
and December 31, 1999................................................... 2
Condensed Consolidated Statements of Operations (unaudited) for the three
months ended March 31, 2000 and 1999.................................... 3
Condensed Consolidated Statements of Cash Flows (unaudited) for the
three months ended March 31, 2000 and 1999.............................. 4
Notes to Condensed Consolidated Financial Statements (unaudited)............ 5
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations............................................................. 12
PART II Other Information
Item 4. Submissions of Matters to a Vote of Security Holders........................ 19
Item 6(a). Exhibits.................................................................... 19
Item 6(b). Reports on Form 8-K......................................................... 19
Signature................................................................... 20
Exhibit Index............................................................... 21
Exhibits....................................................................
</TABLE>
1
<PAGE>
ADVANSTAR, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
---- ----
ASSETS (Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents............................................................ $ 16,871 $ 11,237
Investments.......................................................................... 9,321 52,456
Accounts receivable, net............................................................. 32,165 29,447
Prepaid expenses..................................................................... 13,845 15,380
Other................................................................................ 2,014 2,220
-------- --------
Total current assets.............................................................. 74,216 110,740
-------- --------
DEFERRED INCOME TAXES.................................................................. 16,442 16,442
PROPERTY, PLANT AND EQUIPMENT, net..................................................... 23,196 20,866
-------- --------
GOODWILL AND INTANGIBLE ASSETS, net.................................................... 681,226 684,547
-------- --------
Total Assets...................................................................... $795,080 $832,595
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt................................................. $ 16,176 $ 13,740
Accounts payable..................................................................... 30,298 18,691
Accrued liabilities.................................................................. 33,730 39,495
Deferred revenue..................................................................... 41,810 69,483
-------- --------
Total current liabilities......................................................... 122,014 141,409
-------- --------
LONG-TERM DEBT, net of current maturities.............................................. 505,012 509,414
OTHER LONG-TERM LIABILITIES............................................................ 6,537 6,645
MINORITY INTEREST...................................................................... 15,524 15,161
COMMITMENTS AND CONTINGENCIES
STOCKHOLDER'S EQUITY
Common stock, $.01 par value; 40,000 shares authorized; 33,630 shares
issued and outstanding at March 31, 2000 and December 31, 1999..................... 336 336
Capital in excess of par............................................................. 186,656 186,578
Accumulated deficit.................................................................. (36,864) (49,772)
Accumulated other comprehensive income (loss)........................................ (4,135) 22,824
-------- --------
Total stockholder's equity........................................................ 145,993 159,966
-------- --------
Total liabilities and stockholder's equity........................................ $795,080 $832,595
======== ========
</TABLE>
The accompanying notes to financial statements are an integral part of these
consolidated statements.
2
<PAGE>
ADVANSTAR, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data - Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
2000 1999
-------------------------
<S> <C> <C>
Net revenue................................................................... $133,348 $99,084
-------- -------
Operating expenses:
Costs of production..................................................... 28,081 20,515
Selling, editorial and circulation...................................... 49,648 37,810
General and administrative.............................................. 13,141 13,129
Depreciation and amortization........................................... 12,245 10,524
-------- -------
Total operating expenses.......................................... 103,115 81,978
-------- -------
Operating income.............................................................. 30,233 17,106
Other income (expense):
Interest expense, net................................................... (12,359) (8,827)
Other income (expense), net........................................... 3,716 (15)
-------- -------
Income before income taxes and minority interest.............................. 21,590 8,264
Provision for income taxes.................................................... 8,319 494
Minority interest in losses (earnings) of subsidiary......................... (363) 379
-------- -------
Net income.................................................................... $ 12,908 $ 8,149
======== =======
Earnings per share:
Basic and Diluted....................................................... $ 0.38 $ 0.24
======== =======
Weighted average shares outstanding:
Basic................................................................... 33,630 33,494
Diluted................................................................. 34,321 34,486
</TABLE>
The accompanying notes to financial statements are an integral part of these
consolidated statements.
3
<PAGE>
ADVANSTAR, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands - Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
2000 1999
---------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income................................................................... $12,908 $ 8,149
Adjustments to reconcile net income to net cash provided by
operating activities
Depreciation and amortization........................................... 12,245 10,524
Non-cash interest....................................................... 299 266
Non-cash stock option compensation...................................... 111 2,997
Loss on sales of assets and other....................................... 863 396
Gain on sale of investments............................................. (3,662) -
Changes in operating assets and liabilities............................. (7,835) (12,603)
------- --------
Net cash provided by operating activities............................ 14,929 9,729
------- --------
INVESTING ACTIVITIES
Additions to property, plant and equipment.................................. (4,180) (791)
Change in notes receivable.................................................. (87) 102
Acquisition of publications and trade shows, net............................ (7,803) (2,621)
Additions to intangible assets.............................................. (868) -
Proceeds from sale of investments and other assets.......................... 5,705 13
------- --------
Net cash used in investing activities.................................. (7,233) (3,297)
------- --------
FINANCING ACTIVITIES
Net payments on revolving credit loan....................................... -- (7,000)
Payments on long-term debt.................................................. (1,975) (885)
------- --------
Net cash used in financing activities............................... (1,975) (7,885)
------- --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH....................................... (87) 367
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS.......................... 5,634 (1,086)
CASH AND CASH EQUIVALENTS, beginning of period................................ 11,237 14,016
------- --------
CASH AND CASH EQUIVALENTS, end of period...................................... $16,871 $ 12,930
======= ========
</TABLE>
The accompanying notes to financial statements are an integral part of these
consolidated statements.
4
<PAGE>
ADVANSTAR, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. Basis of Presentation
The accompanying unaudited Condensed Consolidated Financial Statements have
been prepared by Advanstar, Inc. (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. Although management believes that the disclosures are
adequate to make the information presented not misleading, these condensed
consolidated financial statements should be read in conjunction with the
audited financial statements and the related notes, included in the Company's
Form 10-K for the year ended December 31, 1999. The results of operations for
the three month period ended March 31, 2000, are not necessarily indicative of
the operating results that may be expected for the entire year ending December
31, 2000.
2. Recently Issued Accounting Standards
Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and hedging Activities," as amended, is effective for
fiscal years beginning after June 15, 2000. Because of the Company's minimal
use of derivatives, management does not anticipate that the adoption of the new
statement will have a significant effect on earnings or the financial position
of the Company.
3. Investments
As part of an agreement with PurchasePro.com, Inc., a developer and
operator of web-based e-commerce solutions, to provide business-to-business
electronic commerce services, Advanstar IH, Inc., a wholly owned subsidiary of
the Company, received stock purchase warrants to purchase 525,000 shares of
PurchasePro.com, Inc. common stock at an exercise price of $37.58 per share, to
expire in May 2000. The Company has classified these warrants as available for
sale under the provisions of SFAS No. 115, "Accounting for Certain Investments
in Debt and Equity Securities." In January 2000, Advanstar IH, Inc. exercised
141,000 warrants and subsequently sold the common stock received upon exercise
for proceeds of $5.7 million. A gain of $3.7 million was recorded on the sale
and is included in other income in the consolidated financial statements as of
March 31, 2000. The remaining 384,000 warrants have been recorded at their fair
value on March 31, 2000 as estimated using the Black-Scholes option pricing
model using quoted market prices, resulting in an unrealized gain of $2.4
million, net of applicable taxes, reported in other comprehensive income.
4. Acquisitions
On July 28, 1999, the Company acquired certain trade show and publishing
properties of Larkin-Pluznik-Larkin, LLC and LPL/Style Group, LLC,
(collectively, Larkin) which operates apparel trade shows. The purchase price
was approximately $135.4 million in cash and assumed liabilities. Concurrent
with the Larkin acquisition, the Company amended and restated its credit
agreement to provide additional borrowing capacity to finance the acquisition.
From January 1, 1999 through December 31, 1999, the Company completed three
other acquisitions of trade shows, conferences and publishing properties, with a
cumulative purchase price totaling approximately $17.3 million in cash and
assumed liabilities.
On January 7, 2000, the Company acquired the Documents, Messaging and
Security (DMS) tradeshow and Info 21 magazine from Gruppe 21 Informations-GmbH
for approximately $7.8 million in cash and assumed liabilities.
The acquisitions have been accounted for using the purchase method of
accounting and, accordingly, the assets acquired and liabilities assumed have
been recorded at their fair values as of the dates of the acquisitions. The
excess of the purchase price over the fair value of the assets acquired and
5
<PAGE>
ADVANSTAR, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
liabilities assumed has been recorded as goodwill. Certain of the liabilities
assumed have been recorded based upon preliminary estimates as of the dates of
acquisition. The Company does not believe the final allocation of purchase price
will be materially different from preliminary allocations. Any changes to the
preliminary estimates will be reflected as an adjustment to goodwill. Results of
operations for these acquisitions have been included in the accompanying
consolidated financial statements since their respective dates of acquisition.
The following are unaudited pro forma operating results as if the
acquisitions had taken place at January 1, 1999 (in thousands, except per share
amounts):
Three months ended
------------------
March 31,
---------
2000 1999
---- ----
(in thousands, except per
share data)
Total revenues................................. $133,348 $117,195
Operating income............................... 30,233 21,925
Net income..................................... 12,908 10,382
Earnings per share diluted..................... $ 0.38 $ 0.30
5. Earnings Per Share
Earnings per share are calculated in accordance with Statement of Financial
Accounting Standards (SFAS) No. 128 "Earnings Per Share".
The following table is a reconciliation of the earnings numerator and the
weighted-average shares denominator used in the calculations of basic and
diluted earnings per share (in thousands, except per share amounts):
Three months ended
March 31,
2000 1999
---- ----
Net income
Basic and diluted earnings per share............... $12,908 $ 8,149
Weighted Average Shares
Basic.............................................. 33,630 33,494
Adjustments for dilutive securities:
Employee stock options....................... 691 992
------- -------
Diluted............................................ 34,321 34,486
======= =======
Earnings per share, basic and diluted................... $ 0.38 $ 0.24
======= =======
6
<PAGE>
ADVANSTAR, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
6. Debt
Long-term debt consists of the following:
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
--------- -----------
(in thousands)
<S> <C> <C>
Tranche A term loan, interest at LIBOR plus 2.25%, 8.38% at March 31, 2000
due October 31, 2003...................................................... $ 88,235 $ 90,210
Tranche B term loan, interest at LIBOR plus 2.50%, 8.63% at March 31, 2000
due April 30, 2005........................................................ 147,223 147,223
Tranche C term loan, Interest at LIBOR plus 3.00%, 9.13% at March 31, 2000
due June 30, 2007......................................................... 136,043 136,043
Senior subordinated notes at 9.25%, due May 31, 2008, Net of discount............ 149,687 149,678
-------- ---------
521,188 523,154
Less--Current maturities......................................................... (16,176) (13,740)
-------- ---------
$505,012 $ 509,414
======== =========
</TABLE>
The Amended Credit Facility contains certain financial covenants, including
a minimum fixed charge coverage ratio and a maximum leverage ratio. The Company
was in compliance with all covenants as of March 31, 2000.
Certain financial covenants under the senior subordinated notes (the Notes)
issued by Advanstar Communications Inc. (Communications), a wholly-owned
subsidiary of the Company, include a maximum leverage ratio, a minimum fixed
charge coverage ratio, limitations on certain asset dispositions, dividends and
other restricted payments. The Company was in compliance with all covenants as
of March 31, 2000.
7. Comprehensive Income
The table below presents comprehensive income, defined as changes in the
equity of the Company excluding changes resulting from investments by and
distributions to shareholders.
<TABLE>
<CAPTION>
Three months ended
March 31,
--------------------
2000 1999
---- ----
(in thousands)
<S> <C> <C>
Net income (loss)............................................................... $ 12,908 $ 8,149
Change in cumulative translation adjustment, net of tax......................... (938) (3,378)
Change in unrealized gains on securities arising during the period, net of tax.. (23,703) --
Less reclassification adjustment for gains included in net income, net of tax... (2,318) --
-------- -------
Comprehensive income (loss)..................................................... $(14,051) $ 4,771
======== =======
</TABLE>
7
<PAGE>
ADVANSTAR, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
8. Segment Information
<TABLE>
<CAPTION>
Trade Shows Corporate
and Trade Marketing and
Conferences Publications Services Other Totals
----------- ------------ --------- --------- -----------
(in thousands)
<S> <C> <C> <C> <C> <C>
Three months ended March 31, 2000
Revenues.................................... $ 93,629 $ 34,974 $4,294 $ 451 $133,348
Gross profit................................ 47,045 7,250 1,665 (341) 55,619
Segment assets.............................. 475,403 230,485 2,310 86,882 795,080
Three months ended March 31, 1999
Revenues.................................... 61,573 33,272 4,084 155 99,084
Gross profit................................ 32,247 6,872 1,630 10 40,759
Segment assets.............................. 348,187 242,228 2,133 50,790 643,338
</TABLE>
The reconciliation of total segment gross profit to consolidated pre-tax
income for the three months ended March 31, 2000 and 1999 is as follows:
<TABLE>
<CAPTION>
March 31, March 31,
2000 1999
-------- --------
(in thousands)
<S> <C> <C>
Total segment gross profit............................ $ 55,619 $ 40,759
General and administrative expense.................... (13,141) (13,129)
Depreciation and amortization......................... (12,245) (10,524)
Other expense......................................... (8,643) (8,842)
-------- --------
Consolidated income before minority
interest and taxes............................. $ 21,590 $ 8,264
======== ========
</TABLE>
9. Supplemental Guarantor Condensed Consolidating Financial Statements
Basis of presentation
The Notes are fully and unconditionally guaranteed on a senior
subordinated basis, jointly and severally, by the Company and the wholly-owned
domestic subsidiaries of Communications. With the exception of Advanstar IH,
Inc., Communications is the only direct subsidiary of the Company. Both
Advanstar IH, Inc. and Communications are wholly-owned by the Company. Advanstar
IH, Inc., a non-guarantor, was created for the purpose of operating and
developing the Company's internet business. The subsidiary guarantors are Mens
Apparel Guild In California, Inc. (MAGIC); and Applied Business
TeleCommunications, Inc. (ABC). Communications, the subsidiary guarantors and
the non-guarantor subsidiaries comprise all of the direct and indirect
subsidiaries of the Company. The condensed consolidated financial statements of
the guarantors are presented below and should be read in connection with the
consolidated financial statements of the Company. Separate financial statements
of the guarantors are not presented because the guarantors are jointly,
severally and unconditionally liable under the guarantees and the Company
believes the condensed consolidated financial statements presented are more
meaningful in understanding the financial position of the guarantors and
management has determined that such information is not material to investors.
There are no significant restrictions on the ability of the subsidiary
guarantors to make distributions to the Company.
8
<PAGE>
ADVANSTAR, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
At March 31, 2000
(in thousands - Unaudited)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Non-
Communica- Guarantor Guarantor Consolidated
----------
Company tions Magic ABC Subsidiaries Subsidiaries Eliminations Total
------- ----- -------- -------- ------------ ------------ ------------ ------------
- -----------------------------------------------------------------------------------------------------------------------------------
ASSETS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents.......... $ -- $ 5,931 $ 39 $ -- $ 39 $ 10,901 $ -- $ 16,871
Investments........................ -- -- -- -- 9,321 -- 9,321
Accounts receivable, net........... -- 26,217 764 55 819 5,129 -- 32,165
Prepaid expenses................... -- 7,257 2,983 235 3,218 3,370 -- 13,845
Intercompany receivable (payable).. 180 (73,675) 83,061 1,081 84,142 (10,467) (180) --
Other.............................. -- 1,762 -- -- -- 252 -- 2,014
-------- ---------- -------- -------- -------- -------- --------- ----------
Total current assets.............. 180 (32,508) 86,847 1,371 88,218 18,506 (180) 74,216
-------- ---------- -------- -------- -------- -------- --------- ----------
Deferred taxes...................... -- 16,442 -- -- -- -- -- 16,442
Property, plant and equipment, net.. -- 20,755 764 20 784 1,657 -- 23,196
Investment in subsidiaries.......... 150,128 328,572 -- -- -- (1,564) (477,136) --
Net intangible assets, net.......... -- 416,338 195,658 16,761 212,419 52,469 681,226
-------- ---------- -------- -------- -------- -------- --------- ----------
$150,308 $ 749,599 $283,269 $ 18,152 $301,421 $ 71,068 $(477,316) $ 795,080
======== ========== ======== ======== ======== ======== ========= ==========
LIABILITIES AND
STOCKHOLDER'S EQUITY
Current liabilities:
Current portion of long-term debt.. $ -- $ 16,176 $ -- $ -- $ -- $ -- $ -- $ 16,176
Accounts payable................... 124 21,380 2,200 246 2,446 6,472 (124) 30,298
Deferred revenue................... -- 17,998 10,381 2,256 12,637 11,175 -- 41,810
Accrued liabilities................ 56 18,930 10,477 -- 10,477 4,323 (56) 33,730
-------- ---------- -------- -------- -------- -------- --------- ----------
Total current liabilities......... 180 74,484 23,058 2,502 25,560 21,970 (180) 122,014
-------- ---------- -------- -------- -------- -------- --------- ----------
Long term debt, net of current
maturities...................... -- 505,012 -- -- -- -- -- 505,012
Other long term liabilities......... -- 6,537 -- -- -- -- -- 6,537
Minority interest................... -- 15,524 -- -- -- -- -- 15,524
Stockholder interest
Common stock....................... 336 10 1 2 3 436 (449) 336
Capital in excess of par value..... 186,656 186,992 220,627 15,739 236,366 58,466 (481,824) 186,656
Retained earnings (deficit)........ (36,864) (38,961) 39,583 (91) 39,492 (5,668) 5,137 (36,864)
Accumulated other comprehensive
income.......................... -- 1 -- -- -- (4,136) -- (4,135)
-------- ---------- -------- -------- -------- -------- --------- ----------
Total stockholder's equity....... 150,128 148,042 260,211 15,650 275,861 49,098 (477,136) 145,993
-------- ---------- -------- -------- -------- -------- --------- ----------
$150,308 $ 749,599 $283,269 $ 18,152 $301,421 $ 71,068 $(477,316) $ 795,080
======== ========== ======== ======== ======== ======== ========= ==========
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
9
<PAGE>
ADVANSTAR, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended March 31, 2000
(in thousands - Unaudited)
<TABLE>
<CAPTION>
Non-
Communica- Guarantor Guarantor Consolidated
----------
Company tions Magic ABC Subsidiaries Subsidiaries Eliminations Total
------- ----- -------- -------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenue......................... $ -- $ 85,878 $ 29,833 $ 1,042 $ 30,875 $ 16,595 $ -- $133,348
-------- ---------- -------- -------- -------- -------- -------- --------
Operating expenses:
Cost of sales and selling, editorial
And circulation................... -- 56,064 8,188 1,197 9,385 12,280 -- 77,729
General and administrative......... -- 9,642 193 -- 193 3,306 -- 13,141
Depreciation and amortization...... -- 8,165 3,000 225 3,225 855 -- 12,245
-------- ---------- -------- -------- -------- -------- -------- --------
Total operating expenses.......... -- 73,871 11,381 1,422 12,803 16,441 -- 103,115
-------- ---------- -------- -------- -------- -------- -------- --------
Operating income (loss)............. -- 12,007 18,452 (380) 18,072 154 -- 30,233
Other income (expense):
Interest income (expense), net..... -- (12,016) -- -- -- (343) -- (12,359)
Other income (expense), net........ -- 1,075 -- -- -- 2,641 -- 3,716
-------- ---------- -------- -------- -------- -------- -------- --------
Income (loss) before income taxes... -- 1,066 18,452 (380) 18,072 2,452 -- 21,590
Provision (benefit) for income tax.. -- 555 7,700 (30) 7,670 94 -- 8,319
Minority interest in earnings....... -- (363) -- -- -- -- -- (363)
Equity in earnings of subsidiaries.. 12,908 10,663 -- -- -- (1,564) (22,007) --
-------- ---------- -------- -------- -------- -------- -------- --------
Net income (loss)................... $ 12,908 $ 10,811 $ 10,752 $ (350) $ 10,402 $ 794 $(22,007) $ 12,908
======== ========== ======== ======== ======== ======== ======== ========
</TABLE>
10
<PAGE>
ADVANSTAR, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Three Months Ended March 31, 2000
(in thousands - Unaudited)
<TABLE>
<CAPTION>
Guarantor Non-Guarantor
Company Communications Magic ABC Subsidiaries Subsidiaries
--------- --------------- --------- ------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Operating Activities:
Net income (loss)............................... $ 12,908 $ 10,811 $ 10,752 $(350) $ 10,402 $ 794
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Undistributed earnings of subsidiaries......... (12,908) (10,663) -- -- -- 1,564
Depreciation and amortization.................. -- 8,165 3,000 225 3,225 855
Non cash Items................................. -- 1,273 -- -- -- (3,662)
Change in working capital items................ -- 10,730 (13,592) 125 (13,467) (5,098)
-------- -------- -------- ------ -------- -------
Net cash provided by (used in)
operating activities........................... -- 20,316 160 -- 160 (5,547)
-------- -------- -------- ------ -------- -------
Investment Activities:
Investment in subsidiaries...................... -- (13,630) -- -- -- --
Additions to property, plant and
equipment, net................................. -- (3,713) (154) -- (154) (296)
Acquisitions of publications and
trade shows and other.......................... -- (679) -- -- -- (8,079)
Proceeds from sale of investments............... -- -- -- -- -- 5,688
-------- -------- -------- ------ -------- -------
Net cash provided by (used in)
investing activities........................... -- (18,022) (154) -- (154) (2,687)
-------- -------- -------- ------ -------- -------
Financing Activities:
Proceeds from sale of common
stock and capital contributions................ -- -- -- -- -- 13,630
Borrowings of long-term debt, net............... -- (1,975) -- -- -- --
-------- -------- -------- ------ -------- -------
Net cash provided by (used in)
financing activities........................... -- (1,975) -- -- -- 13,630
-------- -------- -------- ------ -------- -------
EFFECT OF EXCHANGE RATE ON CASH.................. -- -- -- -- -- (87)
NET INCREASE IN CASH AND CASH EQUIVALENTS:....... -- 319 6 -- 6 5,309
CASH AND CASH EQUIVALENTS,
beginning of period:............................ -- 5,612 33 -- 33 5,592
-------- -------- -------- ------ -------- -------
CASH AND CASH EQUIVALENTS,
end of period:.................................. $ -- $ 5,931 $ 39 $ -- $ 39 $10,901
======== ======== ======== ====== ======== =======
<CAPTION>
Consolidated
Eliminations Total
------------- -------------
<S> <C> <C>
Operating Activities:
Net income (loss)............................... $(22,007) $12,908
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Undistributed earnings of subsidiaries......... 22,007 --
Depreciation and amortization.................. -- 12,245
Non cash Items................................. -- (2,389)
Change in working capital items................ -- (7,835)
------------ -------
Net cash provided by (used in)
operating activities........................... -- 14,929
------------ -------
Investment Activities:
Investment in subsidiaries...................... 13,630 --
Additions to property, plant and
equipment, net................................. -- (4,163)
Acquisitions of publications and
trade shows and other.......................... -- (8,758)
Proceeds from sale of investments............... -- 5,688
------------ -------
Net cash provided by (used in)
investing activities........................... 13,630 (7,233)
------------ -------
Financing Activities:
Proceeds from sale of common
stock and capital contributions................ (13,630) --
Borrowings of long-term debt, net............... -- (1,975)
------------ -------
Net cash provided by (used in)
financing activities........................... (13,630) (1,975)
------------ -------
EFFECT OF EXCHANGE RATE ON CASH.................. -- (87)
NET INCREASE IN CASH AND CASH EQUIVALENTS:....... -- 5,634
CASH AND CASH EQUIVALENTS,
beginning of period:............................ -- 11,237
------------ -------
CASH AND CASH EQUIVALENTS,
end of period:.................................. $ -- $16,871
============ =======
</TABLE>
11
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations:
This quarterly report on Form 10-Q contains forward-looking statements made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Investors are cautioned not to place undue reliance on
these forward-looking statements, including statements about plans and
objectives of management and market growth and opportunity. These forward-
looking statements involve risks and uncertainties that could cause actual
results to differ materially from those indicated by such forward-looking
statements. Important cautionary statements and risk factors that would affect
actual results are discussed in Advanstar's periodic reports and registration
statements filed with the Securities and Exchange Commission, including those
under the caption entitled "Factors That May Affect Future Results" in
Advanstar's Annual Report on Form 10-K files with the Securities and Exchange
Commission on March 30, 2000.
General
Advanstar is a worldwide provider of integrated, business-to-business
marketing communications solutions 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, directories, guides, reference books and
internet based advertising, sponsorships and custom projects.
Advanstar reports its business in three segments: trade shows and
conferences, which consists primarily of the management of expositions and
seminars held in convention and conference centers; publications, which consists
primarily of the creation and distribution of controlled circulation trade,
business and professional magazines; and marketing services, which consists
primarily of sales of a variety of direct mail and database products, magazine
editorial reprints, and directory and classified advertising.
Trade shows and conferences accounted for 70.2% and 62.1% of total revenue
for the three months ended March 31, 2000 and 1999, respectively. Publications
accounted for 26.2% and 33.6% of total revenue for the three months ended March
31, 2000 and 1999, respectively. Marketing services accounted for 3.6% and 4.3%
of total revenue for the three months ended March 31, 2000 and 1999,
respectively. 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 annual trade show dates from one
quarter to another.
In late 1999, we began a development and launch program to extend our
market communities to the online environment of the Internet and deepen our
involvement in the commercial transactions within these communities. This
development program includes strategic alliances with developers of Web-based e-
commerce software and operators of Web community and exchange sites. In 2000
we incorporated a wholly-owned subsidiary, Advanstar IH, Inc. and its wholly-
owned subsidiary, Advanstar.com Inc. to operate our internet business. We
anticipate development of the first market communities will be completed during
2000.
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 its events. Events are generally held on an annual
basis in major metropolitan or convention areas such as New York City or Las
Vegas. At many of our trade shows, a portion of exhibit space is reserved and
partial payment is received as much as a year in advance. For example, over 70%
of exhibit space at our MAGIC, ScanTech, ICCM and TeleCon shows is reserved
prior to the end of the preceding show. The sale of exhibit space is affected by
the on-going quality and quantity of attendance, venue selection and
availability, industry life cycle and general market conditions. Revenue and
related direct event expenses are recognized in the month in which the event is
held. Cash is collected in advance of an event and is recorded on our balance
sheet as deferred revenue.
12
<PAGE>
Publications. The publications segment derives revenue principally from the
sale of advertising in its business-to-business magazines. Additionally, certain
publications derive revenue from paid subscriptions, custom publishing, and
internet based advertising and sponsorship activities. Paid subscriptions
comprise less than 5% of total publishing revenue. Most publications are
produced monthly with advertising sold both on an annual schedule and single
insertion basis. The sale of advertising is affected by new product releases,
circulation quality, readership and general market conditions. Advertising
revenue is recognized on the publication issue date, and subscription revenue,
if any, is recognized over the subscription period, typically one year.
Marketing services. The marketing services segment derives its revenue from
the sale of value-added marketing products such as classified advertising, both
print and internet based, direct mail services, reprints, database marketing,
directories, guides and reference books. These products complement and, in many
cases, utilize the content or databases generated by our trade shows,
conferences and publications. The sale of these products is affected by the
success of the event or publication from which these products are derived, the
quality of the sales team and general market conditions. Revenue is generally
recognized when the applicable product is shipped.
Components of Expenses
Trade shows and conferences. Costs incurred by the trade shows and
conferences segment include facility rent, outsourced services such as
registration, security and decorator, and attendee and exhibitor promotion.
Exhibitors generally contract directly with third parties for on-site services
such as electrical, booth set-up and drayage. Staff salaries and related payroll
expenses are treated as monthly period expenses. All other direct costs are
expensed in the month the event occurs. General and administrative costs are not
allocated to the segments. Our trade shows normally contract for event venue
space one to two years in advance of the given events. We currently are
contracted with our venue for facility rent for MAGIC, our largest trade show,
through the fall 2005 event.
Publications. Costs incurred by the publications segment include printing,
paper and postage; selling and promotion; editorial and prepress; and
circulation acquisition and fulfillment. Additionally, publisher, sales,
production, editorial and circulation staff costs, with related payroll taxes
and benefits, are charged to the publications. We outsource the actual printing
of our publications. General and administrative costs are not allocated to the
segments.
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. General and
administrative costs are not allocated to the segments.
Selected Financial Data
The following table sets forth selected statements of operations and other
financial data.
We define "EBITDA" as operating income plus amortization and depreciation.
EBITDA does not represent, and should not be considered to be, an alternative to
net income or cash flow from operations as determined in accordance with GAAP,
and our calculation thereof may not be comparable to that reported by other
companies. We believe that EBITDA provides useful information regarding our
ability to service and/or incur indebtedness and is used by many other
companies. Our key financial covenants under our existing credit facility,
which impact the amount of indebtedness we are permitted to incur, are based, in
part, on our EBITDA. EBITDA does not take into account our working capital
requirements, debt service requirements and other commitments. Accordingly,
EBITDA is not necessarily indicative of amounts that may be available to us for
discretionary uses.
To calculate EBITDA for the three months ended March 31, 2000 and 1999, we
adjusted operating income by $(0.9) million and $0.2 million, respectively, to
reflect minority interest.
13
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended
March 31,
2000 1999
-------- -------
(in thousands)
<S> <C> <C>
Net revenue:
Trade shows and conferences...................................... $ 93,629 $61,573
Publications..................................................... 34,974 33,272
Marketing services and other..................................... 4,745 4,239
-------- -------
Total net revenues............................................ 133,348 99,084
Production, selling and other direct expenses:
Trade shows and conferences...................................... 46,584 29,326
Publications..................................................... 27,724 26,400
Marketing services and other..................................... 3,421 2,599
-------- -------
Total production, selling and other direct expenses........... 77,729 58,325
General and administrative expenses................................ 14,350 11,000
Non-cash stock option compensation................................. 111 2,997
Amortization....................................................... 10,925 9,656
-------- -------
Operating income.............................................. 30,233 17,106
Other income (expense):
Interest expense (net)........................................... (12,359) (8,827)
Other income (expense)........................................... 3,353 364
Provision (benefit) for income taxes............................... 8,319 494
-------- -------
Net income (loss).................................................. $ 12,908 $ 8,149
======== =======
EBITDA............................................................. $ 41,595 $27,807
</TABLE>
Three Months Ended March 31, 2000 Compared to the Three Months Ended March 31,
1999
Revenue
Revenue increased $34.2 million or 34.6% from $99.1 million for the quarter
ended March 31, 1999 to $133.3 million for the comparable period in 2000.
Revenue from trade shows and conferences increased $32.0 million or 52.1%
from $61.6 million in the first quarter of 1999 to $93.6 million for the first
quarter of 2000. Of this increase, $12.6 million was due to the full year
effect of acquisitions completed in 1999, and $12.9 million was caused by the
movement of events from one quarter to another. Major acquisitions in 1999
include Larkin and Art Miami among others. In addition to acquisitions and the
movement of events, the first quarter of 2000 was impacted by a number of events
that were either discontinued or sold in 1999 and 2000. Revenue from these
properties in the first quarter of 1999 was $1.6 million for which there was no
comparable revenue in 2000. Adjusting for these items, total revenue from trade
shows and conferences grew by $8.1 million or 14.1% during the first quarter of
2000.
Revenue from publications increased $1.7 million or 5.1% from $33.3 million
in the first quarter of 1999 to $35.0 million for the comparable period in 2000.
Of this increase, $0.8 million was due to the full year effect of acquisitions
completed in 1999. In addition to acquisitions, the first quarter of 2000 was
impacted by the discontinuation of a small number of publications in 1999 and
2000. Revenue from these properties in the first quarter of 1999 was $1.3
million for which there was no comparable revenue in 2000. Adjusting for these
items, total revenue grew by $2.2 million or 6.8% during the first three months
of 2000. Our publishing properties operate in many different markets and
industries which are subject to economic conditions prevalent in those
industries. Accordingly, publishing properties' advertising pages and revenues
may fluctuate in connection with the markets in which they operate.
14
<PAGE>
Revenue from marketing services increased $0.5 million or 11.9% from $4.2
million for the first quarter of 1999 to $4.7 million for first quarter of 2000.
Growth in revenue from list rentals, reprints and directories was primarily
responsible for the increase.
Production, Selling and Other Direct Expenses
Production, selling and other direct expenses increased $19.4 million or
33.3% from $58.3 million for the first quarter of 1999 to $77.7 million for the
first quarter of 2000.
Expenses of trade shows and conferences increased $17.3 million or 58.8%
from $29.3 million for the first quarter of 1999 to $46.6 million for the
comparable period in 2000. This increase was primarily due to increases in
operations, promotion and management costs associated with our acquisitions as
well as costs attributable to growth in existing events. These increases were
offset by costs associated with the movement of events between quarters and
discontinued events.
Publications production, selling and other direct expenses increased $1.3
million or 5.0% from $26.4 million for the first quarter of 1999 to $27.7
million for the first quarter of 2000. This increase was primarily attributable
to direct costs related to acquisitions as well as selected investments and
product development in certain of our publications.
Marketing services production, selling and other direct expenses increased
$0.8 million or 31.6% from 2.6 million for the first quarter of 1999 to $3.4
million for the first quarter of 2000. This increase was primarily due to
increased selling expenses incurred as a result of our efforts to market these
products as well as increased costs of production as a result of the growth in
those respective product lines.
General and Administrative Expenses
General and administrative expenses before non-cash stock option
compensation charges increased $3.4 million or 30.5% from $11.0 million for the
three months ended March 31, 1999 to $14.4 million for the three months ended
March 31, 2000. Of this increase, approximately $1.7 million is related to the
development of our internet management infrastructure and Web-based e-commerce
communities. We also completed five acquisitions during or after the quarter
ended March 31, 1999. As we integrated these acquisitions into our existing
structure we incurred additional overheads necessary to support the acquired
business. The balance of the increase was due to continued implementation of the
Company's market focused cluster management structure; increases in central
services groups such as finance, legal and human resources in line with the
Company's growth in scale and complexity; development and expansion of our
information technology infrastructure; and office expansions in several
locations due to our growth. These were partially offset by a $2.9 million
reduction in non-cash stock option compensation expense.
Amortization
Amortization expense increased $1.2 million from $9.7 million for the three
months ended March 31, 1999 to $10.9 million for the three months ended March
31, 2000 primarily due to increased amortization of intangible assets related to
the acquisitions.
Other Income
Other income increased $3.0 million from $0.4 million for the three months
ended March 31, 1999 to $3.4 million for the three months ended March 31, 2000.
This increase was primarily due to the recognition of a gain of $3.7 million on
the sale of a portion of the PurchasePro warrants.
Operating Income
Operating income increased $13.1 million or 76.7% from $17.1 million for
the three months ended March 31, 1999 to $30.2 million for the three months
ended March 31, 2000. The increase was due to revenue growth
15
<PAGE>
across our segments partially offset by increased costs attributable to our
acquisitions and investments in the Company's infrastructure, as described
above.
Interest Expense
Net interest expense increased $3.6 million or 40.0% from $8.8 million for
the three months ended March 31, 1999 to $12.4 million for the three months
ended March 31, 2000 due to the additional indebtedness necessary to fund
acquisitions and an aggregate increase in interest rates of approximately 0.7%.
In July 1999, we obtained an additional $138.0 million in term debt financing
that was used to fund the Larkin and other acquisitions during the year.
Income Taxes
Provision for income taxes increased $7.8 million from $0.5 million for the
three months ended March 31, 1999 to $8.3 million for the three months ended
March 31, 2000. This increase was primarily due to the utilization in 1999 of a
significant portion of the Company's net operating loss carryforward and an
increase in taxable earnings.
Net Income
Net income increased $4.8 million or 58.4% from $8.1 million for the three
months ended March 31, 1999 to $12.9 million for the three months ended March
31, 2000 due to the improvements in operating results described above.
EBITDA
EBITDA increased $13.8 million or 49.6% from $27.8 million for the three
months ended March 31, 1999 to $41.6 million for the three months ended March
31, 2000. The increase was due to the increase in our revenue, operating
performance and other changes as described above.
Liquidity and Capital Resources
Historically, our financing requirements have primarily been funded through
cash generated by operating activities and the use of our revolving credit
facility. Financing for certain larger acquisitions has been funded through
expansion of our senior term loan borrowings and, in 1998, the issuance of
$150.0 million of the Senior Subordinated Notes.
Cash flows from operating activities. Net cash provided by operations in
the first quarter of 2000 increased $5.2 million, or 53.4%, from $9.7 million in
1999 to $14.9 million in the first quarter of 2000. The increase was due
primarily to an increase in earnings of $4.8 million, additional depreciation
and amortization of $1.7 million and a decrease in working capital items of $4.8
million. A gain on the sale of investments of $3.7 million and a reduction of
non-cash stock compensation expense served to offset the cash flows described
above.
Cash flows used in investing activities. Net cash used in investing
activities increased $3.9 million from $3.3 million in 1999 to $7.2 million for
the first three months of 2000. The increase is primarily due to an increase in
acquisition activity and capital expenditures as discussed below. During the
quarter ended March 31, 2000 we acquired the Documents, Messaging and Security
tradeshow and Info 21 magazine from Gruppe 21 Informations-GmbH for
approximately $7.8 million in cash and assumed liabilities. These outlays were
partially offset by proceeds of $5.7 million from the sale of investments
obtained from the Company exercising 141,000 of its 525,000 stock purchase
warrants received in connection with its agreement with PurchasePro.com, Inc.
Cash flows used in financing activities. Net cash used in financing
activities decreased $5.9 million from $7.9 million for the first three months
of 1999 to $2.0 million for the first three months of 2000. This decrease was
principally due to repayments on our revolving line of credit in 1999.
16
<PAGE>
Capital expenditures. Capital expenditures increased $3.4 million from $0.8
million for the first three months of 1999 to $4.2 million for the first three
months of 2000. The increase was due primarily to the consolidation of multiple
office locations in New York into a single office location and other strategic
investments. Capital expenditures have been financed by our cash flows from
operations.
We expect that our primary source of liquidity will be cash flow from
operations. We also have a $60.0 million revolving line of credit available for
funding capital expenditures, working capital needs, acquisitions, or for other
general corporate purposes. As of March 31, 2000, we had $60.0 million of
availability under the revolving credit facility. We generally operate with
negative working capital, excluding cash and current maturities of long-term
debt, due to the impact of deferred revenue from expositions, which are 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. We believe that we have sufficient
capital resources for ongoing operations requirements. For our long-term
capital requirements beyond December 31, 2001, we will continue to rely on
operating cash flows and believe that we will be able to access capital markets.
We make no assurance that we will have access to these markets or will be able
to negotiate terms favorable to us.
Interest payments on our Notes and interest and principal payments under
our credit facility will represent significant liquidity requirements for us.
Our credit facility includes both term loans and a revolving credit facility.
The senior term debt under our credit facility consists of three tranches,
$100.0 million of tranche A term loans amortizing over 5.5 years maturing
October 31, 2003, $150.0 million of tranche B term loans with modest
amortization over the initial 5.5 years of its term maturing with balloon
payments in 2004 and 2005 and $138.0 million of tranche C term loans with modest
amortization over the initial 7 years of its term maturing with balloon payments
in 2006 and 2007. The Chase Manhattan Bank, as administrative agent, leads our
lenders which include FleetBoston Financial Corp., Bank of New York, Dresdner
Bank AG, Heller Financial, First Source Financial LLP, Pacific Century Bank and
Trust Company of the West as well as several other institutional funds. The
$60.0 million revolving credit facility matures on October 31, 2003. Interest
rates under our senior term debt and revolving credit facility fluctuate and
significant increases in LIBOR could adversely impact our liquidity. To
mitigate such risk, we have capped our interest rate exposure by fixing interest
rates on approximately $263.8 million of long-term debt by the issuance of our
Notes and the purchase of interest rate cap agreements ranging from 8.0% to
8.5%.
We believe that cash flow from operations and borrowings under the
revolving credit facility will provide adequate funds for our working capital
needs, including the development of our Web-based e-commerce activities, planned
capital expenditures, debt service obligations (including our Notes) and other
needs. We believe such liquidity will also enable us to make selective
acquisitions to the extent of available free cash flow and remaining
availability under our revolving credit facility. There can be no assurance
that our business will generate sufficient revenue growth, or that future
borrowings will be available to enable us to service our indebtedness or to fund
our other liquidity needs.
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. We rely significantly on long-term floating rate and fixed rate
debt in our capital structure. At March 31, 2000, our debt totaled $521.2
million of which $263.8 million was either fixed rate debt or covered by
interest rate cap agreements limiting our interest rate exposure at 10.25% -
11.5%.
At March 31, 2000, we had fixed rate debt of $150.0 million and floating
rate debt of $371.2 million. Holding other variables constant (such as debt
levels) a one percentage point decrease in interest rates would have a net
17
<PAGE>
increase in the fair market value of the fixed rate debt of approximately $9.0
million. The pre-tax earnings and cash flows impact for the next year resulting
from a one percentage point increase in interest rates on variable rate debt
would be a reduction of $3.7 million, holding other variables constant and
excluding the impact of our interest rate cap agreements.
Currencies. We maintain assets and operations in Europe, South America and
Asia. The results of operations and financial position of the 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 US 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 it sells.
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 other comprehensive
income. Accordingly, our consolidated stockholder's equity will fluctuate
depending upon the weakening or strengthening of the U S dollar against the
respective foreign currency.
Our strategy for management of currency risk relies primarily upon conducting
our operations in a country's respective currency and may, from time to time,
involve currency derivatives, primarily forward exchange contracts, to reduce
our exposure to currency fluctuations. At March 31, 2000 there were open
foreign exchange derivative contracts with a notional amount totaling $20.0
million. The potential loss in fair value resulting from a hypothetical 10%
adverse change in quoted foreign currency exchange rates amounts to $0.6
million. Actual results may differ. There were no material forward exchange
contracts outstanding at March 31, 1999.
18
<PAGE>
PART II Other Information
Item 4. Submissions of Matters to a Vote of Security Holders.
None
Item 6. Exhibits and Reports filed on Form 8-K
Item 6(a). Exhibits
27 Financial Data Schedule for the three months ended March 31,
2000.
99.1 Press Release dated April 27, 2000.
Item 6(b). Reports on Form 8-K
Advanstar filed no reports on Form 8-K during the quarter ended
March 31, 2000.
19
<PAGE>
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.
By: /s/ David w. montgomery
Date: May 15, 2000
David W. Montgomery
Vice President - Finance and
Chief Financial Officer
(Authorized Officer and
Principal Financial Officer)
20
<PAGE>
Advanstar, Inc.
Exhibit Index
Exhibit No.
27 Financial Data Schedule for the three months ended March 31,
2000.
99.1 Press Release Dated April 27, 2000.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S FINANCIAL STATEMENTS FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2000
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 16,871
<SECURITIES> 9,321
<RECEIVABLES> 32,926
<ALLOWANCES> 761
<INVENTORY> 0
<CURRENT-ASSETS> 74,216
<PP&E> 32,515
<DEPRECIATION> 9,319
<TOTAL-ASSETS> 795,080
<CURRENT-LIABILITIES> 122,014
<BONDS> 505,012
0
0
<COMMON> 336
<OTHER-SE> 145,657
<TOTAL-LIABILITY-AND-EQUITY> 795,080
<SALES> 0
<TOTAL-REVENUES> 133,348
<CGS> 0
<TOTAL-COSTS> 77,729
<OTHER-EXPENSES> 24,930
<LOSS-PROVISION> 456
<INTEREST-EXPENSE> 12,359
<INCOME-PRETAX> 21,227
<INCOME-TAX> (8,319)
<INCOME-CONTINUING> 12,908
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,908
<EPS-BASIC> 0.38
<EPS-DILUTED> 0.38
</TABLE>
<PAGE>
EXHIBIT 99.1
FOR IMMEDIATE RELEASE
ADVANSTAR CONFIRMS EXPLORING STRATEGIC ALTERNATIVES
Boston, MA - April 27, 2000 - Advanstar, Inc., a worldwide business information
company, today confirmed that it has retained Morgan Stanley Dean Witter and
Peter J. Solomon Company to examine strategic alternatives, including
alternatives related to a potential sale of Hellman & Friedman's equity interest
in Advanstar.
"In response to recent unsolicited approaches from several interested parties,
the Advanstar Board of Directors now feels it is the right time to explore the
marketplace," said Robert Krakoff, Chairman & CEO of Advanstar, Inc. "Both
Advanstar's track record and its bright prospects for future growth create an
attractive opportunity for a suitable buyer."
"We are very pleased with the outstanding progress made in growing this business
over the last four years," said John Pasquesi of Hellman & Friedman. "Through
the leadership of Bob Krakoff and Jim Alic, Advanstar has more than tripled
operating profit while building a world class management team."
Advanstar is the sixth largest U.S. business-to-business publishing company and
the third largest U.S. trade exhibition company.
There can be no assurance that any transaction or other corporate action will
result from this exploration of alternatives.
This press release contains forward-looking statements made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.
Investors are cautioned not to place undue reliance on these forward-looking
statements, including statements about plans and objectives of management and
market growth and opportunity. These forward-looking statements involve risks
and uncertainties that could cause actual results to differ materially from
those indicated by such forward-looking statements. Important cautionary
statements and risk factors that would affect actual results are discussed in
the Company's periodic reports and registration statements filed with the
Securities and Exchange Commission, including those under the caption entitled
"Factors That May Affect Future Results" in the Company's Annual Report on Form
10-K filed with the Securities and Exchange Commission on March 30, 2000.
For more information contact:
Robert Krakoff David Montgomery
Chairman & CEO Chief Financial Officer
617-267-6500 440-826-2873
