Penton Media Reports Third-Quarter 2002 Results

CLEVELAND--(BUSINESS WIRE)--Nov. 1, 2002--Penton Media, Inc. (NYSE: PME)
  • Adjusted EBITDA improves for first time since Q1 2001
  • Restructuring and impairment charges of $266 million recorded
  • Company to fall short of 2002 adjusted EBITDA guidance
  • Liquidity sufficient to meet operating and financing needs

Penton Media, Inc. (NYSE: PME), a leading, global business-to-business media company, today announced revenues for the third quarter ended September 30, 2002, of $48.6 million and an adjusted EBITDA loss of $1.5 million, compared with revenues of $61.5 million and an adjusted EBITDA loss of $7.8 million in the third quarter of 2001.

Penton reported a net loss of $282.9 million in the third quarter of 2002 compared with a net loss of $29.5 million for the same period in 2001. The net loss applicable to common stockholders was $283.5 million, or $8.71 per diluted share, for the 2002 quarter, compared with $29.5 million, or $0.92 per diluted share, for the same period in 2001.

Third-quarter results for 2002 included:

  • A non-cash goodwill impairment charge of $39.7 million, or $1.22 per diluted share, related to the adoption of SFAS No. 142, "Goodwill and Other Intangible Assets" ("SFAS 142"), as of January 1, 2002. This impairment charge has been recorded as a cumulative effect of accounting change on the Consolidated Statements of Operations.
  • A non-cash impairment charge of $203.3 million, or $6.25 per diluted share after tax, related to an additional impairment review required under SFAS 142 as of September 30, 2002. In addition, Penton recorded a non-cash impairment charge related to other intangible assets of approximately $20.0 million, or $0.61 per diluted share after tax.
  • A restructuring charge of $3.4 million, or $0.10 per diluted share after tax, related primarily to additional staff reductions.

Third-quarter results for 2001 included:

  • A restructuring charge of $9.5 million, or $0.18 per diluted share after tax, related to the discontinuation of certain media properties, staff reductions and facility closings.
  • A non-cash charge of $9.7 million, or $0.18 per diluted share after tax, for goodwill write-downs and asset impairments.

Excluding non-cash and one-time items for the three months ended September 30, 2002 and 2001, as well as the amortization of goodwill in 2001, Penton would have recorded a net loss of $13.9 million, or $0.43 per diluted share, for the third quarter of 2002, compared with a net loss of $12.4 million, or $0.39 per diluted share, for the same period in 2001.

"Revenues in the third quarter came in short of our expectations, reflecting continued difficult business conditions, particularly for our media properties serving the global technology and manufacturing sectors," said Thomas L. Kemp, chairman and CEO. "However, Penton did achieve the first quarterly year-on-year improvement in adjusted EBITDA since the first quarter of 2001, as cost reductions we've made in this economic downturn have more than offset revenue declines."

PRODUCT LINE REVIEW

Publishing

Publishing represented 86.7% of revenues for the Company in the third quarter. While third-quarter Publishing revenues declined $7.7 million, or 15.3% on a year-on-year basis, Publishing revenues on a sequential basis showed only a modest seasonal variance. Publishing adjusted EBITDA increased $0.6 million, or 8.1%, in the third quarter compared with the same quarter last year, representing the first year-on-year quarterly increase since the second quarter of 2001. Publishing adjusted EBITDA margins grew to 19.6% in the third quarter from 15.3% in the same period last year, and also increased on a sequential basis.

Penton Media, Inc. - Publishing Performance
----------------------------------------------------------------------
($ in millions)         Q1     Q2     Q3     Q4     Q1     Q2     Q3
                       2001   2001   2001   2001   2002   2002   2002
----------------------------------------------------------------------
Revenue               $57.2  $58.4  $49.8  $44.9  $41.6  $43.3  $42.1
----------------------------------------------------------------------
Adjusted EBITDA        $6.8   $8.6   $7.6   $3.3   $5.6   $7.2   $8.2
----------------------------------------------------------------------
Adjusted EBITDA
 Margin (before
 corporate expense)   11.9%  14.7%  15.3%   7.3%  13.5%  16.7%  19.6%
----------------------------------------------------------------------

Trade Shows and Conferences

The third quarter is the Company's lightest quarter for trade show activity in 2002, with events generating 7.0% of revenues. Trade Shows and Conferences revenues declined $5.4 million, or 61.4%, to $3.4 million in the third quarter compared with the same 2001 quarter. Adjusted EBITDA improved $0.2 million, or 3.5%, for the same period, from a loss of $6.1 million to a loss of $5.9 million.

Year-on-year comparisons were impacted by the cancellation of several global Internet industry events and small regional manufacturing events, as well as by the shift in timing of four events, with three events moving to the fourth quarter and one taking place in the first quarter.

Online Media

Online Media revenues, which generated 6.3% of Penton's third-quarter 2002 revenues, grew 4.9% to $3.1 million. Online Media generated adjusted EBITDA of $0.7 million compared with a loss of $0.8 million in the third quarter last year. Increases for this product line were driven primarily by year-on-year growth of online products and organic product development within the Technology Media segment.

THIRD-QUARTER SEGMENT RESULTS

Industry Media

The Industry Media segment represented 48.2% of total revenues in the third quarter and generated $23.4 million in revenues, a decline of $3.5 million, or 12.9%, compared with the same prior-year quarter. Adjusted EBITDA for the segment was $3.7 million, an increase of $1.1 million, or 41.6%, compared with the same 2001 quarter.

Revenue decline for the segment was due largely to cancelled manufacturing trade shows and advertising declines for certain manufacturing-related titles, reflecting overall economic softness in that sector. The revenue decline in the Industry Media segment was more than offset by cost reductions.

Technology Media

The Technology Media segment, which comprises media portfolios serving the Internet/broadband, corporate information technology and electronics OEM markets, represented 33.6% of third-quarter revenues. Segment revenues of $16.3 million in the quarter declined $9.2 million, or 36.1%, compared with the third quarter of 2001. Adjusted EBITDA loss of $3.6 million was an improvement of $2.3 million, or 39.5%, compared with the same 2001 quarter.

With few technology trade shows taking place in the quarter, revenue for the Technology Media segment was derived mostly from publishing operations, which experienced declines across all markets. Aggressive cost reductions more than offset technology publishing revenue declines. Online products in the segment saw both revenue and adjusted EBITDA improvement.

Retail Media

The Retail Media segment, which includes products serving food, retail and hospitality markets, represented 11.4% of third-quarter revenues. The segment generated $5.6 million in revenues and $1.9 million of adjusted EBITDA, compared with $5.2 million and $1.3 million, respectively, for the same period in 2001. Publishing, event and online media in the segment experienced both revenue and adjusted EBITDA gains in the 2002 quarter.

Lifestyle Media

The Lifestyle Media segment represented 6.8% of third-quarter revenues. The segment produced $3.3 million in revenues in the quarter compared with $3.9 million in the third quarter last year. Adjusted EBITDA for the segment was a loss of $0.3 million, flat with year-ago levels. The loss was due primarily to the accounting of trade show period costs in a quarter during which no trade shows were held.

Most properties in the segment, which serves the global natural products industry, continued to perform well, reflecting the general strength of the natural products sector and effective cost management.

YEAR-TO-DATE RESULTS

Revenues for the nine-month period ended September 30, 2002, declined $103.2 million, or 36.7%, to $177.8 million. Adjusted EBITDA for the same period declined $20.8 million, or 70.7%, to $8.6 million. Penton's nine-month results were adversely impacted by continued cutbacks in marketing spending in the technology and manufacturing sectors. Weak performance of the Company's global portfolio of Internet/broadband trade shows represented 54.2% of the revenue decline and 117.0% of the decrease in adjusted EBITDA, before corporate expense. In response, these properties have been undergoing significant restructuring.

Given challenging market conditions, Penton has aggressively sought to reduce operating costs. Through the first nine months of 2002, operating costs were reduced by $82.5 million, or 32.6%, compared with the same period in 2001. As of October 31, Penton has experienced a net reduction in workforce of 405 positions, or 27.6%, primarily through layoffs and attrition. Outsourcing initiated this year, as well as internal process/operating improvements, also have contributed significantly to cost reductions.

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