Penton Media Reports Third-Quarter 2002 Results
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Penton Media Reports Third-Quarter 2002 Results

CLEVELAND--(BUSINESS WIRE)--Nov. 1, 2002--Penton Media, Inc. (NYSE: PME)

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:

Third-quarter results for 2001 included:

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.

Penton reported a net loss of $299.2 million for the nine months ended September 30, 2002, compared with a net loss of $36.3 million for the same period in 2001. The net loss applicable to common stockholders was $344.7 million, or $10.71 per diluted share, for the year-to-date period, compared with $36.3 million, or $1.14 per diluted share, for the same nine-month period in 2001.

Year-to-date results for 2002 included:

Year-to-date results for 2001 included:

Excluding non-cash and one-time items for the nine months ended September 30, 2002 and 2001, as well as the amortization of goodwill in 2001, Penton would have recorded a net loss of $25.2 million, or $0.78 per diluted share, for the nine months ended September 30, 2002, compared with a net loss of $3.3 million, or $0.10 per diluted share, for the same period in 2001.

BUSINESS OUTLOOK AND GUIDANCE

Kemp said the Company is experiencing challenging business conditions in the fourth quarter, particularly in its core technology and manufacturing sectors.

"Our business in the technology and manufacturing sectors has continued to be sluggish as customers conserve cash while recovery in their markets remains elusive. Uncertainty about the economic recovery and geopolitical events hangs over our markets," said Kemp.

Penton's global portfolio of Internet/broadband trade shows is expected to experience significant declines in revenue and EBITDA from last year's fourth-quarter events as a result of continuing depressed market conditions. These events are coming in slightly below reduced expectations, primarily because cancellations have outpaced new sales. However, two of the Company's largest fourth-quarter events, Natural Products Expo East and Leisure Industry Week in the United Kingdom, were very successful, with very strong exhibit floors and record attendance levels and re-sign rates for next year.

Penton had expected at least a modest improvement in publishing results over last year's post-September 11 fourth quarter. However, fourth-quarter Publishing revenues are forecasted to be below year-ago levels. The Company expects that the rate of quarterly year-on-year decline will be less than that experienced in the first two quarters of 2002. Publishing revenues in the fourth quarter are expected to remain sequentially stable against previous 2002 quarters, with continuing improvement in adjusted EBITDA and margins over 2001.

Sluggish economic conditions are expected to result in a rate of total-company revenue decline consistent with the third-quarter year-on-year decline, and adjusted EBITDA will likely perform modestly below last year's $11.5 million in the fourth quarter. As a result, the Company will not achieve its adjusted EBITDA guidance of $25 million to $35 million for 2002, and revenues will be near the low end of earlier guidance of $245 million to $270 million.

Kemp said Penton's planning does not forecast any real revenue recovery in 2003 because of the uncertainty of the global economy and a lack of visibility in key markets. The Company anticipates a stabilization of business, consistent with recent trending in its portfolio, as well as with trends in the business-to-business advertising industry. However, the Company is expecting to benefit from the full-year impact of its aggressive cost reductions executed during 2002, which should result in improved adjusted EBITDA and margins for 2003 even without the benefit of any revenue recovery.

Liquidity

Penton anticipates adequate liquidity for operations, and expects to meet all interest payment obligations on its bonds. It has no principal repayment requirements until its senior secured notes mature in October 2007. Penton has no bank debt and no maintenance covenants on its existing bond debt. In addition to cash on hand at September 30 of $20.7 million, the Company has access to an asset-based, maintenance covenant-free revolver of up to $40.0 million. The revolver is currently undrawn, and the current borrowing base is approximately $23 million.

Kemp said that, as another possible means of enhancing liquidity, Penton is considering strategic alternatives for a few small, non-core assets, which could generate cash through the combination of sale proceeds and/or tax benefits. The Company cannot be assured of its ability to execute asset sales in the existing merger and acquisition environment for business-to-business media properties.

The Company believes it has the potential capacity available to carry back its net tax loss for 2002 of up to $153.1 million, for a total tax refund capacity of approximately $53.5 million. Penton expects that it will receive a tax refund in excess of $20.0 million as a result of its updated estimate for its net operating loss for 2002. The Company cannot, however, guarantee the amount of any tax benefits it will actually realize. Receipt of the tax refund is expected in the first quarter of 2003.

CONFERENCE CALL ON THE WEB

Penton will host a conference call to discuss its third-quarter and year-to-date results and its business outlook at 10 a.m. Eastern time today, November 1. The dial-in number for the conference call is 973-633-1010. A taped replay of the call will be available beginning the afternoon of November 1 until 6 p.m. Eastern time, Friday, November 8, by calling 402-220-1156 (no access code is needed). The live call will also be accessible via the Investors section of Penton's Web site, www.penton.com, and will be archived on the site.

ABOUT PENTON MEDIA

Penton Media is a leading, global business-to-business media company that produces market-focused magazines, trade shows and conferences, and a broad offering of online media products. Penton's integrated media portfolio serves 12 industries: Internet/broadband; information technology; electronics; natural products; food/retail; manufacturing; design/engineering; supply chain; aviation; government/compliance; mechanical systems/construction; and leisure/hospitality.

The statements contained in the above guidance and other statements in this document that are not historical in nature are forward-looking statements that involve risks and uncertainties. Although management of Penton believes that its expectations are based upon reasonable assumptions within the bounds of its knowledge of Penton's business, there can be no assurance that the Company's financial goals will be realized. Numerous factors may affect the Company's actual results and may cause results to differ materially from those expressed in forward-looking statements made by or on behalf of the Company. Factors that could cause actual results to differ materially include: fluctuations in advertising revenue with general economic cycles; the performance of Internet/broadband trade shows and conferences; the seasonality of revenue from publishing and trade shows and conferences; the success of new products; increases in paper and postage cost; the infringement or invalidation of Penton's intellectual property rights; the inability to dispose of assets on acceptable terms or to realize the full benefits of its disposition strategy; and other such factors listed from time to time in Penton's reports filed with the Securities and Exchange Commission. Penton does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

                          PENTON MEDIA, INC.
                 CONSOLIDATED STATEMENTS OF OPERATIONS
  (Unaudited; dollars and shares in thousands, except per share data)

                         Three Months Ended      Nine Months Ended
                            September 30,           September 30,
                           2002        2001        2002        2001
                           ----        ----        ----        ----
REVENUES                $  48,609   $  61,523   $ 177,793   $ 280,993
                        ----------  ----------  ----------  ----------

OPERATING EXPENSES:
  Editorial, production
   and circulation         23,888      33,148      78,545     117,160
  Selling, general and
   administrative          26,483      36,655      92,389     136,291
  Impairment of
   assets                 223,288       9,663     223,424       9,663
  Restructuring charges     3,354       9,468      10,860      15,035
  Depreciation and
   amortization             5,351      11,211      15,491      33,925
                        ----------  ----------  ----------  ----------
                          282,364     100,145     420,709     312,074
                        ----------  ----------  ----------  ----------

OPERATING LOSS           (233,755)    (38,622)   (242,916)    (31,081)
                        ----------  ----------  ----------  ----------

OTHER INCOME (EXPENSE):
  Interest expense         (9,532)     (8,772)    (28,452)    (21,841)
  Interest income             133         509         593       1,328
  Gain on
   sale of investments          -           -       1,491           -
  Miscellaneous, net          162        (794)       (179)     (2,244)
                        ----------  ----------  ----------  ----------
                           (9,237)     (9,057)    (26,547)    (22,757)
                        ----------  ----------  ----------  ----------

LOSS BEFORE INCOME TAXES,
 EXTRAORDINARY ITEM AND
 CUMULATIVE EFFECT OF
 ACCOUNTING CHANGE       (242,992)    (47,679)   (269,463)    (53,838)

BENEFIT (PROVISION)
 FOR INCOME TAXES            (172)     18,184       9,842      17,582
                        ----------  ----------  ----------  ----------

LOSS BEFORE
 EXTRAORDINARY ITEM
 AND CUMULATIVE EFFECT
 OF ACCOUNTING CHANGE    (243,164)    (29,495)   (259,621)    (36,256)

EXTRAORDINARY ITEM,
 net of tax                     -           -         166           -

CUMULATIVE EFFECT OF
 ACCOUNTING CHANGE,
 net of tax               (39,700)          -     (39,700)          -
                        ----------  ----------  ----------  ----------
   NET LOSS              (282,864)    (29,495)   (299,155)    (36,256)

AMORTIZATION OF DEEMED
 DIVIDEND AND ACCRETION
 OF PREFERRED STOCK          (652)          -     (45,513)          -
                        ----------  ----------  ----------  ----------

NET LOSS
 APPLICABLE TO
 COMMON STOCKHOLDERS    $(283,516)  $ (29,495)  $(344,668)  $ (36,256)
                        ==========  ==========  ==========  ==========

ADJUSTED EBITDA         $  (1,531)  $  (7,837)  $   8,634   $  29,430
                        ==========  ==========  ==========  ==========

NET LOSS
 PER COMMON
 SHARE - Basic and
 Diluted
  Loss from operations  $   (7.49)  $   (0.92)  $   (9.48)  $   (1.14)
  Extraordinary item,
   net of tax                   -           -           -           -
  Cumulative effect of
   Accounting Change,
   net of tax               (1.22)          -       (1.23)          -
                        ----------  ----------  ----------  ----------
  Net loss
   per common share     $   (8.71)  $   (0.92)  $  (10.71)  $   (1.14)
                        ==========  ==========  ==========  ==========
WEIGHTED AVERAGE NUMBER
 OF SHARES OUTSTANDING
 - Basic and Diluted       32,548      31,935      32,179      31,914
                        ==========  ==========  ==========  ==========


                          PENTON MEDIA, INC.
                       SUPPLEMENTAL INFORMATION
                               SEGMENTS
                 (Unaudited; all amounts in thousands)

                           Three Months Ended     Nine Months Ended
                              September 30,          September 30,
                            2002        2001       2002        2001
                            ----        ----       ----        ----
Revenues

  Industry Media        $  23,435   $  26,899   $  72,645   $  95,521

  Technology Media         16,321      25,536      68,594     148,897

  Lifestyle Media           3,294       3,920      22,049      22,060

  Retail Media              5,559       5,168      14,505      14,515
                        ----------  ----------  ----------  ----------

Total Revenues          $  48,609   $  61,523   $ 177,793   $ 280,993
                        ==========  ==========  ==========  ==========

Adjusted EBITDA

  Industry Media        $   3,735   $   2,638   $  11,330   $  15,314

  Technology Media         (3,594)     (5,942)     (1,554)     22,713

  Lifestyle Media            (305)       (151)      7,622       7,625

  Retail Media              1,887       1,305       4,165       3,303
                        ----------  ----------  ----------  ----------

     Subtotal               1,723      (2,150)     21,563      48,955

  Corporate Costs          (3,254)     (5,687)    (12,929)    (19,525)
                        ----------  ----------  ----------  ----------

Total Adjusted EBITDA   $  (1,531)  $  (7,837)  $   8,634   $  29,430
                        ==========  ==========  ==========  ==========


                          PENTON MEDIA, INC.
                       SUPPLEMENTAL INFORMATION
                               PRODUCTS
                 (Unaudited; all amounts in thousands)

                           Three Months Ended     Nine Months Ended
                              September 30,          September 30,
                            2002        2001       2002        2001
                            ----        ----       ----        ----
Revenues

  Publishing            $  42,118   $  49,751   $ 126,995   $ 165,316

  Trade Shows
   & Conferences            3,416       8,842      41,469     106,209

  Online Media              3,075       2,930       9,329       9,468
                        ----------  ----------  ----------  ----------

Total Revenues          $  48,609   $  61,523   $ 177,793   $ 280,993
                        ==========  ==========  ==========  ==========

Adjusted EBITDA

  Publishing            $   8,243   $   7,625   $  21,018   $  22,957

  Trade Shows
   & Conferences           (5,868)     (6,083)      2,801      35,233

  Online Media                653        (777)      2,021      (2,707)
                        ----------  ----------  ----------  ----------

     Subtotal               3,028         765      25,840      55,483

  General
   & Administrative        (4,559)     (8,602)    (17,206)    (26,053)
                        ----------  ----------  ----------  ----------

Total Adjusted EBITDA   $  (1,531)  $  (7,837)  $   8,634   $  29,430
                        ==========  ==========  ==========  ==========


                           PENTON MEDIA, INC
                       SUPPLEMENTAL INFORMATION
               RECONCILIATION FOR GOODWILL AMORTIZATION
          (Unaudited; dollars and share amounts in thousands,
                      except for per share data)

                           Three Months Ended     Nine Months Ended
                              September 30,          September 30,
                            2002        2001       2002        2001
                            ----        ----       ----        ----

Net loss                 (282,864)    (29,495)   (299,155)    (36,256)

Goodwill amortization,
 net of tax                     -       4,114           -      12,478
                        ----------  ----------  ----------  ----------

Adjusted net loss        (282,864)    (25,381)   (299,155)    (23,778)

Amortization of deemed
 dividend and accretion
 of preferred stock          (652)          -     (45,513)          -
                        ----------  ----------  ----------  ----------

Adjusted net loss
 applicable to
 common stockholders    $(283,516)  $ (25,381)  $(344,668)  $ (23,778)
                        ==========  ==========  ==========  ==========

Basic and diluted
 earnings per share:
   Net loss             $   (8.69)  $   (0.92)  $   (9.30)  $   (1.14)
   Goodwill
    amortization,
    net of tax                  -        0.13           -        0.39
   Amortization of
    deemed dividend
    and accretion           (0.02)          -       (1.41)          -
                        ----------  ----------  ----------  ----------

   Adjusted net loss
    applicable
    to common
    stockholders        $   (8.71)  $   (0.79)  $  (10.71)  $   (0.75)
                        ==========  ==========  ==========  ==========

Weighted average
 shares outstanding
 - basic and diluted       32,548      31,935      32,179      31,914
                        ==========  ==========  ==========  ==========


                           PENTON MEDIA, INC
                       SUPPLEMENTAL INFORMATION
                   RECONCILIATION TO ADJUSTED EBITDA
                 (Unaudited; all amounts in thousands)

                           Three Months Ended     Nine Months Ended
                              September 30,          September 30,
                            2002        2001       2002        2001
                            ----        ----       ----        ----

Net loss                $(282,864)  $ (29,495)  $(299,155)  $ (36,256)

Addbacks (deductions)
 to reconcile to
 Adjusted EBITDA:

  Interest expense          9,532       8,772      28,452      21,841

  Interest income            (133)       (509)       (593)     (1,328)

  Gain on sale
   of investments               -           -      (1,491)          -

  Restructuring charges     3,354       9,468      10,860      15,035

  Impairment of assets    223,288       9,663     223,424       9,663

  Non-cash compensation       231         443       1,775       1,888

  (Benefit) Provision
    from income taxes         172     (18,184)     (9,842)    (17,582)

  Depreciation
   and amortization         5,351      11,211      15,491      33,925

  Extraordinary item            -           -        (166)          -

  Cumulative effect of
   accounting change       39,700           -      39,700           -

  Miscellaneous, net         (162)        794         179       2,244
                        ----------  ----------  ----------  ----------

     Adjusted EBITDA    $  (1,531)  $  (7,837)  $   8,634   $  29,430
                        ==========  ==========  ==========  ==========


                           PENTON MEDIA, INC
                       SUPPLEMENTAL INFORMATION
                             BALANCE SHEET
                 (Unaudited; all amounts in thousands)

                                 September 30, 2002  December 31, 2001
                                 ------------------  -----------------
ASSETS
Current assets                        $  95,611          $ 107,243
Property, plant
 and equipment, net                      26,603             30,176
Goodwill                                251,363            493,141
Other intangibles, net                   35,546             56,800
Other assets                                  -             13,117
                                      ----------         ----------
                                      $ 409,123          $ 700,477
                                      ==========         ==========

LIABILITIES AND
 STOCKHOLDER EQUITY (DEFICIT)
Current liabilities                   $  93,928          $ 115,688
Long-term debt                          328,546            345,472
Other long-term liabilities              16,414             18,787
Mandatorily redeemable
 convertible preferred stock             45,513                  -
Stockholders' equity (deficit)          (75,278)           220,530
                                      ----------         ----------
                                      $ 409,123          $ 700,477
                                      ==========         ==========


Contact:
     Penton Media, Inc.
     Mary Abood, 216/931-9551 or 216/696-7000 Ext. 9551
     
http://www.penton.com



Source: Penton Media, Inc.